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Client Centric Index reveals changes in business models and differences in regional strategies

8 November, 2013

. Accounting. Consulting engineering. Law. Management consulting. Strategy

Gulland Padfield’s Client Centric Index has been used by management teams from over 100 firms. The Client Centric Index diagnostic has been used in the USA, Europe, Latin America and Asia. It has generated over 36,000 assessments by participants of 12 distinct areas of strategy covering strategy formulation and implementation, operational excellence, governance, client relationship management, service offerings, remuneration, culture and brand.

Regional differences in the strategic agenda

We are also building a clear sense of the regional differences in management priorities around the globe.

CCI Logo LargeIn India law firm leaders are focused on addressing issues of governance, talent retention, scalability and brand – against a macroeconomic background that has grown more complex in the last 6 months. For the Indian firm, today’s agenda arises from the unique heritage of the many players in the subcontinent based at is it is on high profile practitioners and family-run units. The strategic questions for such firms relate to how they transition successfully from a phase of phenomenally fast, organic growth to become scalable, sustainable businesses with ‘brands’ distinct from their distinguished founders.

In North America the leaders of many US-international firms are asking themselves tough questions about how they drive tangible value from 15 years’ of investment in their international networks and non US-based offices. They recognise the perception that UK-led global firms have executed the international ‘piece’ better. The result shows in the latter group’s revenues to be now more globally diverse and better ‘hedged’ as a result.

In Latin America law firm leaders are focused on sustaining their local difference in a market attracting attention from the global legal brands. In the competition between local firms and international ‘newcomers’, LatAm domestic teams are sharpening their plans to hold onto their corporate clients and retain their local talent. The evidence suggests that for the moment, they are doing the former better than the latter.

These regional insights from the Index help law firms with international aspirations get sense of the mindset and provide a ‘routemap’ to integrate firms successfully on merger.

Areas of strategy where management teams are focusing

In remuneration there is an unmistakable dissonance between strategic direction and reward. The litmus test for a firm’s ‘client centricity’ is its remuneration model.  A firm ‘true’ strategic direction is determined by the partnership model it chooses. The data from the Client Centric Index is shockingly clear: There is a dissonance between firms’ remuneration approach and their stated goal of improving performance and profitability through being more client focused. Commentary from partners suggests that many wonder whether they can postpone measures to tackle this element in the business model for much longer.

Nowhere is this more marked than in those law firms serving institutional and corporate clients where fee-earners need to combine deeper knowledge of the client organisation and share contacts. Most remuneration models encourage the opposite.

Firms experiencing most success in managing change their firm, often point to a common factor, the client’s voice as the catalyst. Firms that leverage high quality research into the needs and opportunities in their client base appear better able to make a better case for change and overcome partners’ resistance.

Comparing law with other professions

How do the legal sector’s results compare with data from other branches of the professions which completed the Index? On remuneration models, law firms compare negatively. Whether, how and when to change the partnership model, are questions occupying many management teams across professional service firms in accountancy, real estate, engineering and HR consultancies. But law firms have diagnosed themselves as weak in this area. We’ll see why in more detail below.

On the positive side, internal organisational alignment appears to be significantly better in law firms compared to other professional firms. This is because in law delivery and business development activities are principally targeted on the general counsel and in-house legal team. Accountancy and consultancies serve a wider set of client audiences with a much broader set of service offerings.

In the months ahead, we will be sharing more insights from analysis of the Client Centric Index data.

Author

Our guest contributor is James Edsberg, the Senior Partner of Gulland Padfield. James may be contacted on jedsberg@gullandpadfield.com

To take the Client Centric Index diagnostic, visit www.clientcentricindex.com

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