The one firm firm what makes it successful

We have made some progress toward this concept, however managing partners is like herding cats! The concept sounds great….. As one of my Managing Partner friends put it…. To me, the one-firm concept means: Everyone buys into a common vision. Partners agree to be accountable for their conduct and performance. Clients are clients of the firm, not the individual. Clients freely and willingly transferred between partners for the good of the client and the firm. Retirement buyouts are not linked with book of business.

Work is pushed down to the lowest possible level. What do YOU think? What the one-firm firm and warlord models have in common is high levels of energy. Firms in the middle may pay a price if they fail to fully engage either method of eliciting energy high levels of internal collaboration or high levels of entrepreneurial individualism.

Capturing the benefits of high institutional energy is not easy. Looking at the range of their services and locations, the five one-firm firms are now almost unrecognizable compared to what they were in Goldman now emphasizes proprietary trading — a change from its predominantly advisory roots; Hewitt and Accenture have moved into business process outsourcing; and both McKinsey and Latham have expanded their service offerings and global coverage.

As mentioned, Accenture, Hewitt, and Goldman have become public companies. According to most press reports, McKinsey experimented with some significant changes as the impact of technology on consulting was felt.

An early countercultural attempt to acquire and integrate an IT firm was generally considered to be a failure. In the late s, the technology bubble led the firm to expand at a faster pace, rapidly increasing the rate of hiring new juniors. It opened offices in many more locations around the world and reportedly cut back on training.

As did other professional firms in that era, McKinsey stretched its compensation system to pay more to stars in order to keep them. Then, when the bubble burst, the relative economics dropped and the firm had to let a lot of people go. According to most reports, the new managing partner who took over in has reoriented the firm on a more values-driven, one-firm firm approach. Goldman Sachs has also been through significant policy and cultural changes, particularly during the late s, leading up to the decision to go public.

Most observers would concede that Goldman is still, by far, the most collaborative, team-based banking firm. But this may now be a relative rather than an absolute description. Latham has also stretched the boundaries of the one-firm firm approach. As we discuss below, it has relied, like most of the one-firm firms, on an increasing use of laterals. It has also introduced a greater individual component into its reward scheme.

And it has acquired some sizable groups over the course of its expansion. For example, it added a firm of more than 90 lawyers in France in Hewitt has also experienced dramatic changes. A few years ago it acquired a large firm which it had some difficulty integrating. It has gone public and has shifted from mainly an advisory firm to primarily a human resources business processing outsourcer.

Accenture has also migrated to the profoundly different business of outsourcing, along with the concomitant less stringent hiring practices. In spite of all these changes, something essential remains in most if not all of these firms. They are still, observably, institutions designed much more committed than most of their competitors to emphasizing teamwork and collaboration rather than individual entrepreneurialism. This is most clearly revealed in their special human resource practices, designed to enforce high standards of both teamwork and dynamism.

What these firms teach us is that the essence of the one-firm firm strategy and what gives it its economic power is not a superior ability to select markets and services, but a greater ability to achieve high standards through the consistent application and enforcement of espoused operating rules, philosophies, values and ideologies.

A key component in a successful one-firm firm is the governance structure. Members of the firm must feel that they have approved the leaders and that the leaders are accountable to them. This is normally accomplished by having the members or most of them elect the head of the firm, who would then serve for a term, typically renewable by election. In most cases, the leader is supported by a small, elected term-limited management committee made up representatively of practicing professionals.

This accountability is usually balanced by a structure that insulates the leadership from the wrath of colleagues, following tough decisions that may involve short-term unpleasantness for long-term gain.

In one-firm firms, driven as they are by a commonly held ideology, once all viewpoints are aired and management makes its decision, the partners generally line up behind the decision. The existence of shared values underpins sustained management effectiveness. To maintain this environment takes active management effort and usually careful thought in the appointment of group leaders. Running on autopilot is not an option. So I needed them to not be pulling the firm in different directions.

One practice I had was to remind all those who reported to me that part of their role was to have my CEO perspective in managing their group. They were not to just be an advocate for their group or their people. The payoff from this consensus, values-based management practice can be huge. It permits the firm to excel at getting things done as a firm.

In warlord firms, partners typically continue to undermine decisions they dislike, since they feel that they have not delegated the power to management to make those decisions.

They do, and indeed more safely and effectively than in warlord firms, where political risk and retribution are real issues. The good news, we believe, is that many if not most powerful professionals yearn to be part of a cohesive team often in spite of their chest-thumping behavior. This yearning is something that can be leveraged. However, it is very difficult to sustain the one-firm firm, consensus-based governance system as the firm grows beyond the point where all members know each other.

As clients and competitors change and as firms grow and expand, management must work harder to hold the firm together by, among other things, engendering a sense of reciprocal obligation both between the firm and individual members and among the members. Inevitably, the top person becomes more CEO-like. This has happened at each of the named firms. In a sense, the trust given to the firm-wide often global CEO is a residual habit left over from times when the individual could be known to all and could interact with all.

Perhaps paradoxically, choosing a CEO or managing partner based on character, values, and principles becomes even more important if the CEO is to enjoy the same latitude to manage as in the past.

And, of course, he or she must continue to deliver. Shared values go only so far. A core characteristic of the one-firm firm, in as well as , is the careful hiring, training, and indoctrination of new talent. Professionals hired directly from school invariably have the strongest emotional ties to each other and to the firm, and they are the ones who find it hardest to abandon ship. Focusing on young hires has the added virtue of creating a nimble, energetic army of people who are generally more willing to embrace the core teamwork culture and core values than are older lateral hires.

Many warlord firms have reduced or eliminated entry-level recruiting, purportedly because of the short-term cost of hiring and training such people. They prefer to hire laterally from other firms, to avoid the costs of investing in junior people. We believe these firms are sending two uncongenial messages: the people we hire are fungible, and there is nothing special about us.

As a result, they are not developing sufficient loyalty and glue to survive the coming down periods, much less to take them to the upper reaches of their respective industry or profession.

The security of this trust in the long run is part of the code of conduct that every partner accepts when joining the company. There has, however, been one violation of the code of conduct: In , Anil Kumar, a former McKinsey partner, admitted leaking information learnt from McKinsey clients while working for the firm Hill McKinsey views entrepreneurial challenges as an independent outsider and always from the perspective of the top management.

Solution and implementation strategies are individually coordinated with the client's different needs, goals and company cultures — always in close cooperation with the client's top-level management. Joining McKinsey as a consultant should provide individual development and be great career path if the consultant performs well.

McKinsey has an integrated working atmosphere, free from any hierarchy. The company provides mentors, who assist the individual in his personal development, span his individual network and help him benefit from his colleagues' expertise.

All consultants are expected to uphold the obligation to dissent, meaning that constructive criticism is explicitly encouraged and should be expressed. McKinsey 's global business activity is a daunting management challenge. At the same time, every local office and every consultant should share the same global company values. Despite being embedded into the cultural characteristics of every region, the individual McKinsey offices form one common firm that shares its principles and values worldwide.

This means the company is strongly decentralised. Every region acts independently as far as possible and makes independent decisions.

In this way, the company can take regional markets and their characteristics into consideration.