Pitfalls when restructuring by discipline - Top 20 accountancy firm – 9 July 2007
Q2: “We are a multi location multi discipline firm and have traditionally run the business by business unit (location) with a strong bond at the top between the business unit managing partners. Each location is a well bonded team having worked together for a long time but they do vary in size considerably the largest being 200+ people and the smallest 30. Each unit is supported by central services covering HR, Finance, IT and Marketing.
I am starting the process of exploring whether the business should be restructured by discipline and would appreciate any feedback from those that have been through the process and the lessons learnt. What I am uncertain about is the potential damage that could result from changing the way the business unit is run and the impact on the authority of the business unit managing partner and whether this is offset by a more focused approach to running the business by discipline. Are there pitfalls, if so what are they and how do I avoid them. Who has authority over the staff location or discipline? If this is a topic that a number of us have an interest in, I would be more than happy to host a dinner to discuss. Any and all assistance would be much appreciated.â€
RESPONSES
9 July 2007 – Executive Director, Top 30 US law firm
As a firm we have a similar structure to that outlined in the question, but in addition we have strong practice groups that work across offices firm wide. They often have their own HR, Marketing and IT people, who are in addition to "local" people in those roles. We also have local staff responsible centrally but in fact report to the local Director of Administration for daily affairs. While this may sound cumbersome, it does much to my surprise, work. I am talking in relation to my own office which is in the UK and "central" departments are in San Francisco or New York. I do however know that the US offices do have some issues with some of their staff responsible centrally, where it does not work so well. I should be very interested to discuss this further.
9 July 2007 – HR Director, Actuarial firm
I have experience of a number of structures, including the impact of over-focussing on one particular unit - discipline, location etc. The secret is to have a primary focus which provides a 'home' for people and assists business development, without obstructing other business development options. Managing this is about managing the values and culture of the organisation, so altering it is a significant change programme. One of my clients moved from a location focus to a discipline-practice base 3-4 years ago, and now manages the locations through a 'head of office' role with defined responsibilities for welfare and social issues related to the office. The pitfall is to think this is a simple matter, instead of treating it as a significant change programme. It needn't be complicated, but must be managed properly. I would be happy to attend a dinner to contribute to further discussion if helpful. I can also be available to offer further advice on how such a change might be approached.
9 July 2007 – Finance Director, Top 20 Property Consultancy
Not keen on writing anything as commercially and politically very sensitive!! Am happy to discuss.
9 July 2007 – US-based Strategy Consultant
I think that running a multi-location professional service firm by location is intuitively the best solution because it makes sense structurally and logistically. Each locality tends to service discreet markets and even if there is client overlap the different offices would usually be serving different parts of that same client. It is also far easier to lead and manage real teams / groups than virtual ones when it comes to performance management and other "hands-on" issues. That said: the reasons why many firms consider moving to cross-office disciplinary or practice teams is also compelling. They include: creating more depth; sharing knowledge and so increasing the firm's overall intellectual capital; creating and sustaining dominance in particular disciplines by creating the capability to deploy talent from outside a location, in that market.
The good news is that advances with the internet are creating opportunities for a whole range of virtual structures to be superimposed on conventional management structures. Whereas the internet was primarily a knowledge communication and storage tool for the first two decades or so of its existence, so-call "Web 2.0" tools emerging today are primarily collaborative in nature. This is making it possible to create (and dismantle) discipline teams / practice teams / multidisciplinary project teams / client teams etc almost at will, across the boundaries of conventional management structures, without disrupting those structures.
This notion is almost entirely new. Previously, people sought to achieve the same effect the same effect with so-called matrix organizations where various functional and structural lines were criss-crossed, creating unwieldy and almost unmanageable structures. With few exceptions, most of these experiments were later dismantled. The primary drawback of matrix organizations is that they confused and diluted management control, in business models that relied on managerial control. Emerging business models, especially in sophisticated professional service firms, rely far more on collaboration and "freedom within defined boundaries" than control, which lends itself even more to the web-enabled virtual matrixes that I describe above.
I'm happy to discuss this concept in greater detail with the person who posted the query, if he/she cares to contact me.
12 July 2007 – Professional Practice Partner, Top 10 Accountancy firm
Every professional service firm operating out of more than one location, and with more than one service line, needs to address this question.
In my experience, there isn’t a single right answer as to whether the business should be structured around disciplines/service lines or around locations. However, the need for clarity is absolute.
Firms with this blend of locations and service lines require a form of matrix management. The important thing is that everybody in the firm is clear as to which is the dominant axis within the matrix – either location or service line. Confusion can cause huge internal tensions which in turn impede the achievement of the business objectives.
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