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Meet the Masterminds: Thomas DeLong on Leading Professional Service Firms

Thomas DeLong is coauthor of When Professionals Have to Lead: A New Model for High Performance, and a Professor at the Harvard Business School. He’s a leading thinker on organizational behavior and strategic human resources management. And he designed the first course at the Harvard Business School on understanding and leading professional service firms.

DeLong believes that current marketplace dynamics demand new ideas for firm leaders. We asked him to share some of the results of his research and to tell us about a leadership framework that can help firm leaders balance the sometimes conflicting demands of managing professional service organizations.

McLaughlin: Based on your research about professional service firm leadership, what do you think is working well and what’s not?

DeLong: I think what works well is when firm leaders take a more inclusive approach to making business decision. That is often difficult for leaders who are used to setting their firm’s direction themselves with minimal input from others.

We see firms run into trouble when the managing partner doesn’t take the time to get other partners onboard regarding strategic decisions. That’s quite risky because those other partners may sabotage the firm’s direction simply because they feel left out.

Effective leaders are also very clear on what the firm does and doesn’t do, and they’re not ambiguous. They know what direction to take their firms. Managing partners get into big trouble when they lack strategic clarity—or they give themselves too much wiggle room—because that creates anxiety for their followers.

When it comes to execution, the good firm leaders hold people accountable. That may sound simple. But to hold people accountable, you must have honest conversations, set reasonable goals, and then follow up in a straightforward way about meeting those goals. Many firms have room for improvement on this basic imperative.

McLaughlin: You talk in the book about the “integrated leadership” model. What is that and how does it differ from previous leadership models?

DeLong: Well, in the past, when many theorists were thinking about leadership as a construct, they didn’t focus on particular types of organizations. They created a generic model and assumed that it would work as well at a consulting or law firm as at GE or General Mills. We have found that professional service firms are so unique and different that we need a new way of thinking about what it takes to lead them successfully.

We see firms run into trouble when the managing partner doesn’t take the time to get other partners onboard regarding strategic decisions.

We developed the integrated leadership model specifically for professional service firms. Firm leaders often feel that they have to balance two separate—and sometimes conflicting—roles: producer and manager. It’s critical that firm leaders stop thinking in those terms. Instead, they need to integrate their leadership behavior in four interrelated areas: Setting direction; building commitment; ensuring execution; and setting a personal example.

McLaughlin: When it comes to overall strategy, what’s the most common shortcoming that you see for professional service firms?

DeLong: Too often, firm leaders set a good strategy, but they blink when they don’t hit their target numbers. Then they will do any kind of work rather than what they should be doing. We saw that happen for one of the archetypes of the professional service firm—McKinsey & Company.

McKinsey built this great reputation, and they were very clear that they were going to focus on experience and become true advisers. In the early 2000s, leaders at McKinsey took their eye off the ball. In response to declining utilization rates, they decided to pursue more of what we would call commoditized work. They have since righted the ship.

When we question firm leaders closely about strategic issues, they often begin to hedge. They say well, depending on what the markets are doing, we may shift, for example, how we differentiate ourselves.

McLaughlin: Don’t many consulting firms pride themselves on being reactive to external changes? Is it a mistake to abandon a strategy in response to the market?

DeLong: Naturally, all firms must be responsive to market shifts. But I think that changing your strategy can undermine the commitment of your people. You may promise your professionals that they will be doing a certain kind of client work. If they end up doing something else, that violates their expectations.

Once reality and expectations get out of alignment, you can end up with a retention problem. That’s because disillusioned professionals can begin to slip into the role of what we call contractual employees.

McLaughlin: And then they become just like all other employees?

DeLong: Exactly. What’s fascinating is that there is a very high correlation between a professional’s level of commitment and high performance. And there’s also a high correlation between commitment and retention. You want your professionals to feel an almost irrational connection to the firm that includes the head, heart, and stomach.

You want your professionals to feel an almost irrational connection to the firm that includes the head, heart, and stomach.

People who don’t feel that way, but instead feel more of a contractual relationship with the firm, show no correlation with high performance. There is a correlation, though, between contractual employees and retention, and organizations do need to worry about that.

Some professionals are hanging out in organizations and they aren’t particularly motivated; they aren’t sure if they want to stay, but may not have a better alternative. Those folks aren’t producing the way that you want them to.

One of the challenges that firm leaders face is what to do with such underachievers. How much time should we spend to try to get them reengaged? Should we shun or try to shame them? Or should we just let them go?

Some underperformers are what we call saints: very nice people who live the values but they’re just not productive enough. When compensation committees get together they say things like well, let’s just let them stay another year; that won’t hurt.

But we find that the stalwart, the solid-citizen professionals—those we often take for granted—really resent those individuals who are mailing it in.

McLaughlin: What are the attributes of professional service firm culture that you think set one firm apart from another?

DeLong: The first thing that I look at is the nature of the relationship between the partners. Do they talk about the other partners in a supportive way and treat them with respect? Or are they mean spirited?

Obviously, a firm must be good at the four cornerstone systems—recruiting, compensation, promotion, and succession planning. That last one, by the way, is important from top to bottom in the organization, not just for replacing the managing partner. Performance evaluations and some creative elements also impact culture in a meaningful way.

Your professionals must believe that all of those systems are fair and that the people doing the judging are fair. Otherwise, you create real cynicism.

Another critical factor has to do with what Chris Argyris talks about regarding culture: How close is the espoused theory to reality? What do we say about how we do things in our firm? And then, what actually happens?

The disparity between what we say and what we do causes tension, anxiety, anger, or frustration. This is especially true for the professionals we expect to work sixty or seventy hours a week.

One other dimension that managing partners need to recognize is the cultural impact of judging the performance of junior people too soon. Some firms are starting to evaluate within the first two months whether a person is a star performer or a hiring mistake.

Judging so quickly has implications for the individual and the organization which don’t serve either. That creates internal contention among the associates and sets up in-clubs and out-clubs. Good leaders do their best to avoid creating that kind of environment.

McLaughlin: Some firm leaders struggle with how to make a partner group productive. Any tips for how a leader can help partners reach their potential?

DeLong: First, be as transparent as possible. The number one variable for effective leadership is whether or not you are believable. You don’t have to be charismatic. You need to transcend the message so that the other partners say this is a person that I trust.

Be dead honest and make expectations crystal clear. Also, as I said before, include as many people as possible in setting strategy. When it comes to decisions about the direction of the firm, the good managing partners are consensus-driven. But they’re quite dictatorial about how to get there.

Another question is whether or not you make exceptions for high performers who don’t live the values of the firm. An effective leader does not look the other way just because somebody is bringing in lots of money. There’s an awful lot of that. And ultimately, that sends a loud and clear message to others in the organization. When they begin to model that behavior, you have a real problem.

McLaughlin: You’ve talked about commoditization. Any advice for how firm leaders can counter that threat on a consistent basis?

DeLong: Well, if you decide to do commoditized business and to perfect your process, I think you can be highly successful. Or if you decide to focus on creating valuable intellectual capital that warrants higher margins, you can also be very successful. The key is to decide what business you want to be in and stay there. And make sure you hire people who are happy doing that work.

McLaughlin: Last question: If you could give a professional service firm leader just one piece of advice, what would it be?

DeLong: Surround yourself with professionals who are better than you are and who speak the truth to you. Many firm leaders say I have smart people and they figure out what I want to hear very quickly. After a while, it all sounds the same. So my advice is to hire and promote the people who are secure enough to be candid with you.

McLaughlin: Thanks for the insights and your time.

You can find out more about Thomas DeLong at this link, or you can write to him at tdelong@hbs.edu.