Five years after he retired from consulting, David Maister continues to be regarded as the world’s leading authority on the operations of professional services firms. He left aspiring professional services firm managers with at least three landmark books: The Trusted Advisor; Managing the Professional Service Firm; and True Professionalism.
At a time when professional services firms are under more pressure than ever before, it’s worth revisiting what Maister argued firms need to do and reminding ourselves of his core principle for professional advice – effective professionals find ways to help their clients, rather than just give their clients the right advice. It’s a task that requires professionals to suppress their egos, use their emotional intelligence to build relationships and apply their expertise to offer clients options and recommendations.
Pioneering principles
Maister pioneered the territory of professional services. While most management consultants focused on corporate giants, Maister defined the key principles for running accounting firms, financial services providers, law firms, ad agencies, engineering firms and the like.
Maister’s early training was all numbers. Born in England (and later becoming a US citizen), he earned a degree in maths, economics and statistics, then a master’s in operations research from the London School of Economics, and finally a doctorate in logistics and transportation from the Harvard Business School.
Thus armed, he went out and created a global services consulting practice, charging $20,000 a day back when that was big money. He also wrote the management classics that continue to sell today.
The trusted adviser
Maister says that the best firms are run by managers who know how to earn their clients’ trust. Not an easy thing to do these days, he told this author, because many firms have overlooked one thing – in the corporate world, the best businesses are run by managers who stick to their principles.
The best managers, he says, are the ones who create firms that the clients trust, and trust is profitable. The more your clients trust you, the more they will generate business, bringing you in on more complex and strategic issues and referring you to their friends and business acquaintances. They are also more likely to pay their bills without question.
Indeed, as he writes in The Trusted Advisor, there’s an economics of trust. “We have found in our work with professional service firms that the cost of developing new-client business is four to seven times higher than the cost of developing the same amount of business from an existing client,” writes the measurement aware Maister. “High-retention relationships are high-trust relationships. A trust-based strategy is a profitable strategy.”
Maister’s formula for maximising trust stresses credibility and reliability and the ability to be oriented to clients’ needs.
It also stresses a term little heard in business discussions – intimacy, meaning the ability to have honest conversations about difficult agendas.
Find the energisers
In their pursuit of cash, says Maister, professional services firms end up promoting the wrong people as managers. Domain expertise is easy to hire, he says.
The only competitive advantage is having managers who can energise those around them. Rainmakers and superstars are usually not best suited for that role; indeed, they frequently turn out to be disastrous people managers.
Delegation is key
In Managing the Professional Service Firm, Maister nailed systemic under-delegation as a recipe for firms’ under-achievement.
Maister’s research showed that 40 to 50 per cent of a typical firm’s productive capacity is consumed with a higher-priced person performing a lower-value task. This affects profitability, because it costs the firm more to do the task than if it used trained juniors. It also undermines the skill-building of people and destroys morale.
Managing the Professional Service Firm sets out a system for managers to monitor areas like client feedback, training, marketing, coaching, scheduling and people management. Maister compares this system to a diet.
“If firms are to achieve excellence in client service quality, a system must be designed – an inescapable mandatory diet,” he writes. “Not one that the firm leaves to each individual’s best intentions. That’s like saying ‘Make your New Year resolution and we’ll get you on the scales on December 31. See you then’. That’s not going to work. What is required is a monitoring system.”
A moral dimension
It’s a paradox of Maister’s career that a numbers man became the great advocate for employing passion and generating excitement in professional services firms.
Kerry King, IPA member and Advisor Institute founder, is one who believes Maister has much to teach the accounting profession. “It’s not just about selling packaged services,” says King. “The community needs more than that from the profession.”
