Author: Alina Făniță, CEO, PKF Finconta
In 2008, when the financial crisis rolled over the world economy, professional service companies have felt the intense discomfort of the changes that this tsunami has had. Many of these companies have experienced a 40% drop in revenue.
A report by the Financial Times then identifies a number of issues in the professional service industry and what customers want when they turn to their services. The report ended with a ruthless conclusion: "While 51% of the consultants believe the clients they have value their services, only 2% of their clients think this is true."
So what's to be done? Do we craft the operational reality or operate a strategic change?
The crisis has changed the rules of the game
Most times, when companies have been confronted with crises, to keep their profitability in the short run, they have reduced the budgets allocated for marketing, training or even the salary fund. However, such measures directly affect the company and its performance decreases as large-scale restructuring is done.
After the crisis, the clients got more and more educated in accessing consulting services which has rebalanced the offer and demand, putting pressure on quality and price. The tag price on expertise has fallen as more and more consultants have offered it. If before the crisis a certain laziness of the professional service companies was visible, a lot business fitness is required of them today. Those companies who will be leaders in professional services over 10 or 20 years will be brave enough to realize that they need change to succeed.
Affected by the consequences of the financial crisis, some professional services companies have repositioned themselves for the next 5-10 years, not just for the next reporting period. At the same time, there have been companies in this industry sector that have "just changed the window shutter on the Titanic ". Companies that have done nothing to make the necessary changes need to revise their business model, operational structure, reward system, processes, and employee management.
The good conflict between strategic and operational
Companies are often driven by people with an operational and less strategic mindset. Their satisfaction at work results from focusing on efficiency and repetitive practice of what they already know. That is why at the level of the management of the companies a superstructure with a strategic role is required. Companies are often guided by operational decisions taken by people with exotic titles. However, a title does not mean that the holder is also the leader. For the purpose of this analysis, behaviors are more enlightening.
"Operational" should support the "strategic", not "hide it". The strategic leadership team, often top management, is responsible for developing the strategy, translating vision into objectives and implementing the strategy. This is the team that runs the organization because all the decisions taken must be aligned with strategy and vision. If circumstances change, then vision and strategy need to change before operational changes are made. There is a beneficial tension between the three strategies: operating, customer and product.
The operational management team, often comprising the middle management of the companies, should be responsible for ensuring that operations support and execute the strategy. For example, the Head of the IT department must ensure that all technologies acquired by the company support client-centric strategy and operational excellence. The Human Resources leader should be responsible for implementing KPIs that guide client-centric behaviors, knowledge management, and operational excellence.
The leadership mentality matters
Firmly, professional service companies promote the image of expertise in various fields. They recruit top graduates with various specializations, prepare them to deepen their field of expertise and reward and promote the best experts.
Unfortunately, the skills of such an expert are rerely mixed with those of a visionary leader. Just the expertise is inadequate and requires the complement of strong strategy-related attributes such as the ability to build trust with all stakeholders at the economic level, the ability to guide clients and governmental stakeholders in their decisions, the intellectual capacity to generate new ideas, methodologies, services or the discipline to set goals and address poor performance.
Instead of a conclusion
Here are five solutions for developing the relevant attributes as an expert to become a leader in the professional services industry:
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About PKF Finconta
For more than 24 years, PKF Finconta is one of the 10 leading professional services companies in Romania. Since 2006, we are a member of PKF International Limited. PKF International is a leading international business advisory organization. The company grew consistently over the years, forming a Group of four companies: PKF Finconta, PKF FincontaConsultanta, PKF Finconta HR and Finconta Consulting SPRL, members of national professional organizations CECCAR, CAFR, CCFR, and UNPIR. We provide a wide range of business advisory and related specialist services. We have seven core areas of expertise and within these areas, we tailor our services to your business and your needs: audit, corporate finance