If your firm is puzzling over conversations about business development, inclusion, mental health in the work place, succession, stability or any aspect of how to grow, consider that this might be a sign that critical areas of your organization may not be aligned.
Not that these topics aren’t challenging. Indeed, each calls for the best a leader or leadership team can bring to the table.
But if you’re having trouble addressing these challenges, the elements essential to a highly functioning organization are either missing or out of alignment. As a result, the pressure on productivity, profitability and stability is likely to intensify.
An uncertain marketplace only adds to the pressure.
Okay — enough of the dark side.
Alignment will change the discussion — even around the most challenging issues — and get you miles closer in maximum productivity at every level of the firm.
The First Step — Identify Guiding Principles
There are at least 5 areas in every firm where the identification of guiding principles provides the basis for progress, issue-solving and institutional alignment. For purposes of our conversation, these areas are:
- The Practice
- The Platform
- The Compensation System
- Leadership, Governance and Succession
- The Work / Life Equation
These areas form the interrelated construct of a firm. Decision-making in each impacts both daily operation and the pursuit of the firm’s vision. Without established guiding principles, it can be difficult to manage day-to-day issues and opportunities, never mind navigate the challenges that inevitably accompany leading in a competitive and volatile market.
Consider a typical case — the firm aspiring to move into a new market.
When a firm elects to expand its geographic reach by combining with an organization with a distinctly different focus, the expansion is not only likely to redefine the nature of each firm’s platform; it impacts the nature of the practice — with practical implications on technology, finance, human resources, marketing, administrative, office services and risk management…to touch only the obvious areas. Integration is costly, complex and often falls short of expectations.
This is not an argument against mergers.
It is a suggestion that the articulation of basic values and shared aspirations in the five areas noted above provides a kind of manifesto — a set of Guiding Principles that are born of the vision partners have for the firm. With agreed upon principles, leadership is in a position to vet opportunities, analyze challenges, facilitate better conversations and streamline the process.
Given a set of spelled out Guiding Principles, opportunities can be purposefully measured — from where and how to grow, to the ideal client profile; from what constitutes an appropriate investment in office space, to how much and where to focus marketing resources, to a client-driven technology capability.
Add any critical question you are wrestling with — how to realize diversity, equity and inclusion; the emerging role of AI; acquisition and retention of talent; productivity; revenue growth; or stability in the midst of uncertainty.
Spotlight The Right Questions
When it comes to decisions that matter, success is often about asking the right questions. The presence of Guiding Principles makes this infinitely more clear-cut. For example, in our growth example above, Guiding Principles might lead to a series of questions like:
Is the expansion consistent with the footprint we envisioned in our strategic plan? Do current key clients benefit from this expansion? Does the expansion demand new technology? Will the infrastructure requirements tempt a compromise in what we’ve set forth as a guiding principle? Do the cultures mesh, or collide? How long will integration take?
How To Define Guiding Principles
There are a number of ways to approach crafting a set of Principles. Here is a suggested jumpstart. Identify five to seven critical questions/topics in each of the five functional areas of your firm.
For example, we suggest 7 issues to be considered with respect to the nature of your firm’s platform. (See Fig 1, below)
- Size — What size do you aspire to be — specific goals, parameters, and timetables, as well as investment parameters should be specified;
- Footprint — Does the partnership seek to build a local, regional, national, international firm…and is there a strategic driver;
- Leverage — Define the leverage formula the partnership views as ideal;
- Cost per Professional — specify the ideal, and the acceptable range each lawyer will be asked to contribute to the creation and maintenance of the desired infrastructure — cost to operate should never be a surprise;
- Inclusion Profile — specify diversity and inclusion goals, and to the degree this is a challenge, a time table for realizing the goal;
- Career Path — define parameters and timeline for varying career paths;
- Professional Staff — define the specific role of the non-subject matter Professional Staff, including the role each team plays in pursuit of the Vision — IT, finance, HR, and Marketing should have a clear understanding of how their roles connect to the firm’s vision.
Some of these may not apply to your situation. There may be others. There is no right or wrong answer here. The objective is to identify the few basics your partnership feels strongly about and agrees are central to who you aspire to be as a firm — a set of principles agains which critical decisions will be tested. As noted, each of the five functional areas has a similar set of issues and questions that will yield a complete set of Guiding Principles. And yours may evolve over time.
Guiding Principles Reveal Vision And Drive Strategy
In some firms conversations around alignment and vision are met with an obligatory wink-and-nod. Sure…everyone says we should have one. It will make nice filler for the website; but we all know what the real vision is — a larger profit-pie this year.
Four things typically characterize partnerships with this view:
- Little-to-no organic growth (ironic, given the degree to which organic growth increases the profit-pie);
- Fractured culture — where few believe the firm stands for anything more than a pay check;
- Alignment has given way to silos, fiefdoms and fractures’
- Little appetite for change, and zero incentive to innovate.
By contrast, there are multiple benefits to the alignment brought about by a set of Guiding Principles. Most can be summed up in two categories (and not necessarily in this order):
- operational efficiency and increased productivity;
- a culture where aspirations are shared and pursued with intentional and strategic execution.
In his paper — The Aligned Organization for McKinsey & Company Thierry Nautin characterizes it this way:
when people understand and are excited about the direction their company is taking, the company’s earnings margin is twice as likely to be above the median. And it showed that high-achieving organizations are also better than others at turning their visions into viable strategies that guide operational planning— something many business leaders may believe they already do well, but which often proves difficult in practice.
Earlier we mentioned that Guiding Principles form a kind of manifesto for the pursuit of a firm’s vision. As such, they provide an outline for how to address the issues and challenges that are causing sleepless nights…and reconstitute your boldest visions for a practice.