Professor Laura Empson of London’s Cass Business School and Harvard Law School reports on intensive research into how to lead professional firms, such as law offices, and complex organizations, such as hospitals and universities. Her scholarly work, packed with citations and cross-references, details how leadership functions in a professional services environment. This layered study, funded by Great Britain’s Economic and Social Research Council, includes findings from interviews with 500 professionals in 16 countries. Empson’s exemplary and surprisingly engaging text could be a go-to guide to organizing and managing professional firms.
In this summary, you will learn:
- Why leading a professional firm is so difficult.
- What constitutes a “leadership constellation”.
- What 10 paradoxes confront professional firms.
Managing a Professional Firm
Leading a professional organization – a law firm, an accounting firm, an engineering firm, a management consulting firm, a university, a religious organization, a hospital, and so on – is hugely difficult. Authority within professional firms is ambiguous and diffuse, members of such firms are idiosyncratic, and internal interpersonal relationships are complex and confusing.
Establishing consensus is the only way to manage a firm under such unruly circumstances – endemic to most of these organizations. However, professionals are famously independent; they want to call their own shots and arrive at their own conclusions. That’s one of the main reasons they became professionals in the first place. Bringing them together to seek agreement can be a thankless task that’s often doomed to failure.
Compared with traditional corporations with hierarchal leadership structures, professional firms or organizations are outliers and so are their employees – doctors, lawyers, engineers, professors, or the like – at least when compared with employees in conventional companies. Professional firms and organizations, like hospitals or colleges, may have few tangible assets. Their value – which can be exceptional – is the specialized knowledge, talent, and expertise of their members.
“The hackneyed phrase ‘herding cats’ does not even begin to capture the complexity of the challenge facing leaders of professional organizations.”
“Senior professionals may choose to delegate authority to their elected leaders, but reserve the right to undermine or remove them.”
Leadership at professional firms rests on shaky ground. Leaders of these firms must depend on their partners’ cooperation – which is never guaranteed – to get anything done. Generally, the only way leaders of professional firms can move ahead is to forge deals or trade-offs with the firm’s partners. Most professional firm leaders have no formal leadership training though they may be excellent lawyers, physicians, professors, accountants, or clergy members – and often they’ve done nothing to prepare for holding leadership positions. These leaders generally stop practicing their individual professions to take the reins of their firms. Many new professional organization leaders review management literature to understand their new jobs. Unfortunately, most available instructional material deals with traditional corporations with conventional hierarchies. The best management advice for those who lead professional firms is to try to understand the “implicit power dynamics and covert political processes” at play within the firm. These leaders need to find a pragmatic midway point between confronting their professional members’ big egos and easing them into compliance. None of this is easy.
Autonomy and Authority
Professional firms have two dynamics that directly oppose each other:
- “Extensive autonomy”: Professionals prefer to be in charge of their own affairs.
- “Contingent authority”: Leaders can’t lead these firms unless their partners consent to their having control. Almost always, someone eventually contests this power.
Leaders must persuade, guide, and suggest in hopes of securing consensus and agreement. Their leadership must be “subtle and nuanced.” In such a system, politics, compromise, and negotiation are standard operating procedures. Politics isn’t a negative at a professional firm: No leader can achieve consensus without it. Professional firm leaders must inspire their partners and associates to put aside their big egos and achieve consensus.
When professionals select a company leader, all the candidates already have power. But the type of power that usually counts in filling leadership roles is “referent power” – a status that accrues to certain professionals because of their ability to bring in new clients as rainmakers. They are role models. Such leaders can earn additional respect based on their “technical expertise, client relationships, and market reputation.” Referent power confers more than formal or assigned power. A professional firm leader needs a “mandate,” which often springs from “personal credibility and authority,” in the words of one senior partner.
“The assumption is that professionals who understand their clients’ business will be well qualified to lead their own. This inference is…no more than a good guess.”
Peter Drucker’s “assertion that ‘leaders must by definition have followers’…turns out to be incorrect, or at least very unsophisticated.”
Professional firms, which are organizational collectives, often turn to plural leadership, in which leaders emerge from among the partners as a result of their interactions. “Plural leadership is a prevailing model” within professional firms. In other words, as one partner explained, the firm’s “leadership sort of happens.” Such leadership is by its nature volatile and it can change as relationships among professionals change.
Plural leadership is the opposite of personalized leadership, as exemplified by anachronistic command-and-control management. Leadership at many professional firms occurs collaboratively among people with similar goals and like-minded ideas who agree to cooperate.
The “Leadership Constellation”
A leadership constellation is a metaphor for the informal structure of leadership and power within many professional firms. It often co-exists with “the formal authority within the governance structure.” The main elements of the leadership constellation are power, politics, and “professionals (and prima donnas).” The latter are often self-important and temperamental.
Professional firm leaders don’t necessarily belong to formal teams. They determine the parameters of their leadership position and interrelationships on an ad hoc basis. People with impressive titles might not function within the leadership constellation and may have a scant influence on their peers. The firm’s true leaders – the members of the leadership constellation – may lack designated leadership roles, but they may wield great power and influence.
“Many…management professionals…take as much pride in their ability to persuade and maneuver their way around client-facing professionals as they take in the more explicit aspects of the job.”
The members of a leadership constellation include:
- “Senior leadership dyad”: This duo is at the center of any professional firm’s leadership constellation. Its members are the two primary leaders of the professional firm. Their titles might be managing partner, senior partner, or chair and chief executive. These leaders must be adept at “micropolitics [which includes] undermining assumptions, constructing identity, policing, advocating, mythologizing and enabling.”
- “Selected business heads”: These people lead the primary client-facing areas, such as the law offices and practice areas. Most leadership constellations don’t include every business head in the practice. For instance, the head of a firm’s Washington, DC, office but not the head of its New York City office – may be part of the constellation.
- “Selected management professionals”: These positions might include the head of marketing, head of finance, and so on.
- “Key influencers”: These members don’t necessarily hold formal titles or designated leadership responsibilities. Yet they may wield substantial influence and power based on their reputation, rainmaking history, client connections and expertise.
External non-executive board members are notably absent from any professional firm’s leadership constellation. Many professional firms don’t have boards of directors. Those with boards use them as executive committees.
“Strong relationships between individual professionals and their clients are essential to the successful sale and delivery of professional services.”
“Professional services cannot be inspected in advance; they are purchased and consumed on the basis of trust.”
The “Paradoxes of Leading Professionals”
Leaders of professional firms have to be able to help their members understand and react intelligently to the demands of their professional lives and activities, which often contain basic conflicts and may be subject to the paradox theory. A paradox features “two or more elements that are inherently contradictory, interrelated, simultaneous and persistent.”
The essential tenet of paradox theory is that you can’t resolve paradoxes – so don’t try but you can develop a “dynamic equilibrium.” Firms’ leaders can help their colleagues separate and balance the elements of a paradox to increase their understanding of how to manage them.
Professional firms and complex organizations often deal with various “opposing forces which are in constant flux.” The ideal outcome is to steer these forces deliberately to create something “constructive rather than destructive.” Coping with paradoxes requires being adaptable and can be confusing and tiring. The leaders of these organizations confront 10 paradoxes:
- “Autonomy and control”: Professionals expect autonomy, but those who lead them must exert some control so the firm can run smoothly. The balance may lie in arranging a firm’s administration so professionals choose and agree to a degree of control, as managed by their leaders.
- “Reluctance and ambition”: People who wish to lead their professional firm or complex organization must walk a fine line. Professionals are reluctant to choose leaders who appear overly ambitious. They’re unlikely to cede authority willingly to those who are too eager to get it. Professionals who want to lead must not exhibit personal ambition. On the other hand, they must convince their colleagues of their overall ambition for the firm’s success.
- “Political and apolitical leadership”: Professional organizations are often political organizations, although most try to come across as apolitical. Their leaders need refined political skills, but they must never act overtly political.
- “Individual and collective interests”: All professionals in a firm have individual interests yet they share common interests as partners. The firm’s leaders must convince everyone to coalesce around collective plans and goals.
- “Harmony and conflict”: Achieving harmony promotes organizational efficiency and productivity. But, disconnections can occur when leaders operate within a “harmonious cocoon.” This can lead to groupthink among the firm’s leaders. To avoid letting tensions develop, leaders should stay alert to everyone’s feelings, recognize conflict and forthrightly try to resolve it.
- “Insecurity and confidence”: Professional firms’ clients want their lawyers, accountants or consultants to be self-confident; the higher the fee professionals charge, the more self-confident they need to be. The paradox is that professional firms often hire insecure junior employees who work around the clock to demonstrate their worth. The managing partner of a UK law firm explained, “Partners are earning more than £800,000 [$1,083,460] a year and the average guy here will be thinking, ‘I’m not worth it,’ and that keeps them motivated to prove that they are.”
- “Commercial and professional priorities”: In professional firms, senior business experts steer various commercial departments. This might include the chief financial officer, the head of HR, and so on. Of necessity, they focus on business functions like maximizing income. The firm’s professionals – attorneys or doctors, for example have professional, not commercial, priorities. For professional firms to excel, their commercial priorities must never outweigh their professional priorities. Professionals must put delivering superior service to their clients above any “commercial imperatives.”
- “Centralized power and distributed leadership”: During the evolution of a professional firm, power evolves, too. Initially, power resides with the usually small coterie of founding partners. Power broadens to the senior professionals and then to a tight group of leaders, a progression that seems to result in centralized power. This process should never be the de facto process in a professional firm. Power must always reside with the senior professionals as a group.
- “Active and passive leadership”: Traditionally, leadership is proactive. Leading means seizing the initiative and taking action. In professional firms, smart leaders may also occasionally be passive. Sometimes, it’s best for them to do nothing to provide needed room for other members of the firm – its partners – to step up and to “pursue, adopt and implement” change. Many times, a do-nothing approach by the leaders is the best way to bring about notable change within a professional firm.
- “Ambiguity and clarity” – In paradox theory, leaders must help followers “cope more effectively with ambiguity.” Such ambiguity can be useful in professional firms, serving as “the cloak under which leaders exercise authority.” In a professional firm, “authority is ambiguous and potentially contested.” Leadership is essentially insecure
- “Autonomy and control” – Professionals expect autonomy, but those who lead them must exert some control so the firm can run smoothly. The balance may lie in arranging a firm’s administration so professionals choose and agree to a degree of control, as managed by their leaders. something partners often negotiate among themselves. The result is ambiguous and never definitive.
“Your credibility is tied up with how successful you’ve been as a professional, so that’s the starting point for people who end up in leadership positions.”(practice head at a law firm)”
“By looking at leadership as something…created through interactions among professionals, we can start to understand how it is fluid and unstable, changing and adapting as relations between professionals change and adapt.”
“In a professional organization, the so-called greater good is simply the interests of the collective as defined by its leaders at a particular point in time.”
“Professionals tend to resent their leaders’ attempts to control them personally while encouraging their leaders to control their colleagues.”
“I thought once I was elected chairman I would finally have access to the levers of power. But when I moved into my new office, I realized there was nothing there – just a desk.” (accounting firm chairman)
About the Author
Laura Empson directs the Centre for Professional Service Firms at Cass Business School in London and is a senior research fellow at Harvard Law School’s Center on the Legal Profession.
Stay tuned for book review…