5 Key Culture Change Drivers for Professional Services Firms Embracing Innovation

 
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Professional Services Firms (PSFs) face multiple challenges in the disruptive, more digital and competitive market of today.

The ability to rapidly adapt to a change in circumstances is what will set apart those that thrive. It’s why firms striving to get ahead of the curve will be prioritising creation of workplaces that are more engaged, inclusive and collaborative than in the past.

That starts with people.

Numerous research studies show that workplace culture is key to unlocking performance potential. Yet many firms struggle to see how their cultures (and purpose) are inter-linked with their profits, and, indeed, their brand.

As the forces of AI, digital and disruption grow in impact, PSFs will be forced to differentiate themselves if they are to keep market share. Many firms are working to do this by focusing on:

  • Service offering,

  • Professional standing

  • Quality of client interaction

The problem is that in a crowded market, they tend to be all delivering an indistinguishable service offering and interchangeable brand messaging. Partners or Associates, asked what makes their firm ‘unique’, will often struggle to identify a USP beyond the bland and the obvious: “client-driven”, “results-focused” or “quality and integrity”.

The answer, though, often lies in the workplace culture

Culture is a firm’s core DNA and the essence of its brand. In this sense, ‘brand’ is, or should be, far more than a marketing concept. It is this that enables any one firm to be distinct from another. Culture underpins how customers, suppliers and colleagues experience and engage with a firm. It defines what it is like to work with, and be employed by, you – and whether you are distant and condescending, for example, or, perhaps, warm and pragmatic.

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Especially within firms where the power dynamics, equity arrangements and leadership characteristics add layers of complexity, culture is multifaceted. By its very nature, culture is not an easily recognised thing. It can’t be simply measured or quantified. It takes place below the surface, is complex, inconsistent and illusive, and rooted in unspoken behaviours, mindsets, symbols and social patterns.

Culture is the invisible hand that guides and shapes how things are done. “Culture eats strategy for breakfast” is what Peter Drucker, the renowned management consultant, is often cited as saying. To be clear here, Drucker was not implying that strategy was unimportant. He was stressing that a powerful and empowering culture was a surer route to organisational success. Louis Gestner, former CEO at IBM, said, in the same vein: “Culture is not just an important factor. It is the only factor.”

What can be done to develop a culture that is compatible with the needs of today’s commercial realities for Professional Services Firms?

Culture is a set of beliefs or assumptions that have worked and give meaning to the present way of working.
— Edgar Schein, culture change expert, and Professor Emeritus at the MIT Sloan School of Management

Driver 1: Culture needs a purpose. Why do you exist?

Senior teams tend to have no difficulty in articulating their firm’s financial strategy and business goals for growth. But they’re often challenged to define their firm’s ‘purpose’.

The result is that employees can feel detached and isolated from the work they do. Recent research by Gallup shows that, across all industries, only 41% of employees really know what their firm ‘stands for’ and what makes it different from their competitors.

A recent Mori study focusing on the impact of purpose on Millennials stated that over 70% of those who understood what their organisation stood for were committed to stay with their company for at least one year. That number fell to 30% for those who did not feel there was clarity of purpose.

In short, if a firm’s leaders don’t perceive a higher reason for the company’s existence, aside from the givens of profit and growth, employee commitment is weakened.

Successful branding is what you do, not what you say or show.

Driver 2: Listen to the stories then change them

If you want to learn about a firm’s culture, the best way is to listen to its ‘stories’. If you want to change the workplace culture, then change those stories. Today, we tend to think that it’s tech and social media that are changing the culture in the workplace. Really, it is the other way around. Social media only serves to illustrate the narrative of a firm’s culture.

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Enabling, instead, groups of people at work to have structured conversations about what makes a firm’s culture special is a good way to start creating new stories.

This can also be supported by identifying a firm’s ‘cultural heroes’. These are the employees and managers whose status is elevated because they embody organisational values. These may be current day or from the firm’s past. Consider these heroes’ norms of working, approach to clients, inspiring values, key actions and any difficult decisions they took.

All these help to signpost and reinforce the type of behaviours and therefore the culture a firm is looking to create and maintain. These stories are of particular value to new people and prospective joiners as a way of communicating the behaviours, actions and beliefs that differentiate a firm.

Driver 3: Develop leaders to champion the culture you need

Actions speak louder than words. People’s behaviours are influenced and shaped by the beliefs, actions and attitudes of their leaders, at all levels. This is even more powerful at Partner and Senior Management level. What those at the top pay attention to, focus their resources on and spend their energy on, says everything about the culture as they perceive it. They set the tone and create meaning for the whole firm. Any mismatch will echo throughout the firm, corrode trust and weaken the culture.

Leaders across all teams, levels and service lines are creators of a firm’s culture. Through their beliefs, values and assumptions, new people joining will quickly work out what’s important in cultural terms – and what’s not.

Like casting pebbles into a still pond, actions and behaviours can create a positive high-performing culture or have the opposite effect. A high-performance team culture is what gives rises to sustained high performance teams.

Driver 4: Increase diversity and collaboration to coalesce ideas and people

Many Professional Services Firms have a cultural legacy associated with being conservative, risk-averse and inward-focused. Senior teams should self-check for this unconscious bias when it comes to bringing in new ideas, approaches and people.

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PSFs in the future will be employing a more diverse group of employees. They will now need to cast their recruiting nets much wider if they are to secure and retain the right people. Up-skilled professionals in their 40s are also likely to be working later in life than in the past so firms can expect to be employing a split demographic workforce.

The culture of the firm needs to support the creation of a wide, diverse and resilient workforce. This will need to both mirror the changing views and profiles of their customers whilst also enabling the process of innovation, digitization and the creation of new service offerings.

To create this receptive culture, a firm needs to look hard at how:

  • Power is held and executed,

  • Authority, autonomy and responsibility are distributed

  • What constitutes status and success, how are these marked and rewarded

All these factors play a key part in how a firm’s culture is created and developed.

Hiring a diverse group of employees, however, merely amounts to a tick-box exercise if it isn’t accompanied by a culture that allows every employee to feel they’re an ‘insider’ in their own organisation.
— Ipsos Mori

The culture of any Professional Services Firm will only change and stay changed when it has alignment between its strategy, its structures (both physical and psychological) and its people systems.

Social change is already impacting on how people engage with the place of work.

It is not just Millennials who want this joining of dots. Many PSFs need to move away from a Dickensian mechanistic approach to work to a more enlightened, flexible and equitable one.

We’ve identified three critical areas linked to brand and culture. These are:

1. Developing a work culture that centres on learning and experiences. People in future will want broader changing roles that expose them to new experiences, rather than task-driven silo-ed roles that limit their development

2. Prioritising people’s well-being needs as a key part of the DNA of a firm’s culture, as opposed to a ‘nice to do’ option

3. Using tech, social media and collaborative tools to adopt a more social enterprise model where the firm is seen as a positive force for good by customers, suppliers and employees

Building a strong culture that embodies your purpose and brand does not happen overnight. It requires everyone – and notably the senior team – to accept their responsibility, beyond the usual metrics, in helping to shape how customers, suppliers and employees experience the firm.

In the 21st century, careers are no longer narrowly defined by jobs and skills but through experiences and learning agility. The ongoing transformation of work, the need for people and organisations to constantly upgrade capabilities, and shifts in employee preferences demand new approaches to learning, job design, performance management, and career development.
— 2018 Deloitte Global Human Capital Trends

Pelorus is an organisational development and leadership consultancy whose focus is the Professional Services Firm or Partnership. An Organisational Development approach can help address the complex web of people levers that digital transformation entails.

 
sarah monaghan