The professional services sectors are undergoing market liberalisation driven to a large extent by regulation and a challenging economic climate. A prime example of this is in the legal sector where, as a result of the Legal Services Act 2007, organisations not traditionally considered to be legal services providers can now offer legal services by gaining a licence from the Solicitors Regulation Authority to convert to an Alternative Business Structure (ABS).
Just recently, global communications giant BT announced that it has been granted an ABS licence to offer legal services. So far, more than 100 organisations have been granted licences to operate as ABSs. Furthermore, professional services firms can also form multi-disciplinary partnerships where practices can consist of solicitors, accountants, independent financial advisers, estate agents, surveyors, and any other professional services providers – all working together under one roof.
This is breaking down the traditional business model of professional services organisations and forcing them to think and function much more like corporate enterprises – a significant departure from the way in which many have functioned thus far.
With ever increasing competition, professional services organisations need to become more entrepreneurial and commercial in their outlook. The most effective way to achieve this is by embracing a business management methodology. This is a much more holistic approach that encompasses multiple dimensions such as client, matter, financial and HR management, resource planning, global accounting, procurement, reporting and business intelligence – all critical functions that any mainstream enterprise needs in place to function effectively and efficiently.
In the current economic climate, pricing services accurately is crucial for both the client and the firm – professional services organisations must deliver their services competitively without compromising on quality or profitability. Pricing must therefore be precisely based on duration of activity, efficiency of performance and level of skills required to deliver the service, while ensuring a reasonable level of profitability.
Effective business management becomes particularly important when professional services firms attempt to secure external funding – in these situations their ability to demonstrate profitability to potential investors or would be partners is critical. To this end, having a true business intelligence capability in order to correctly assess business performance, map it back to business goals and report to management, is fundamental.
Attracting and retaining the best talent across the business spectrum is another crucial element in the success of any profitable commercial enterprise. Strategic human resource management (SHRM) – an area that professional services organisations have not until recently focussed much attention on – is now essential to ensuring that high levels of staff motivation are attained, which in turn is reflected in the quality of customer service delivered. SHRM provides a strategic framework to support long-term business goals and outcomes.
The focus is on people issues and macro-concerns about structure, quality, culture, values, commitment and matching resources to future business needs. Firms need to gain the ability to centralise control of the HR function while decentralising day-to-day processes in order to facilitate smooth functioning of the discipline, thereby acquiring the agility necessary to quickly react to changing market conditions.
Streamlined recruitment processes, structured employee appraisals, skills and career development and competency analysis for the entire organisation need to be undertaken on an on-going basis to satisfy the constantly changing needs of employees and the organisation itself.
All of these commercial goals are facilitated by the adoption of a business management-based solution (BMS). Deploying such a system enables a professional services organisation to follow best practice as a matter of routine, ensuring efficiency and consistency of approach across the firms departments. In addition, a BMS offers firms the ability to achieve tremendous levels of flexibility and agility allowing them to respond to rapidly changing market conditions – all of which contribute towards the achievement of business goals and aspirations.