Professionals who collaborate with their colleagues on cross-disciplinary work generate more revenue, inspire greater client loyalty and give their firms competitive edge, says Heidi Gardner in Harvard Business Review.
When specialists work together “across the boundaries of their expertise” to address their clients’ most complex issues, the benefits are enormous, writes Gardner.
But many firms obstruct and discourage collaboration via commission-based bonus schemes and competitive organisational cultures.
Gardner has conducted long-term research (over ten years) into collaborative practices at six global professional services firms. Her article outlines the organisational benefits of collaboration and offers practical ways leaders can foster a collaborative culture.
BENEFITS TO THE FIRM
1) Increased revenue. Gardner describes the financial benefits of collaboration as “unambiguous”. Her research, she explains, shows that “the more disciplines that are involved in a client engagement, the greater the annual average revenue the client generates”.
She believes this is because single-speciality work may be awarded to the lowest bidder, while cross-speciality work, with its increased complexity, can be charged at a higher rate. Her research at one law firm showed revenue per client rising with each additional speciality involved.
2) Competitive edge. Particularly in relation to cross-border collaboration, delivering “seamless service across national boundaries” is a major differentiator, says Gardner.
3) Greater client loyalty. Collaboration can create what Gardner calls “switching barriers”. While an individual specialist can be replaced, a multidisciplinary team with experience of working on complex projects is much harder to find elsewhere. Collaboration encourages loyalty by making it harder for clients to find what your firm offers elsewhere.
This kind of working also ‘institutionalises’ clients. When more than one partner works for each client, it’s the firm and not just one partner who ‘owns’ the client, so there is less risk of departing partners taking clients with them, writes the author.
4) Protection against rogue behaviour. When colleagues can see each other’s work there is some insurance against occasional (but potentially fatal) transgressions.
ORGANISATIONAL BARRIERS TO COLLABORATION
1) Overly competitive culture. “Up-or-out promotion systems encourage rivalry among junior associates, and the competitive values become so ingrained that the winners find it counterintuitive to collaborate when they become partners,” says Gardner.
2) Compensation models. Firms awarding bonuses as a percentage of revenue earned discourage collaboration because professionals, understandably, are reluctant to dilute their commission.
The effects “bleed into the culture”, explains Gardner. These types of firms celebrate and reward rainmakers at the expense of “service partners” whose major contribution is delivering on others’ projects.
“In this environment, partners who try their hand at collaborating can be hit hard,” says the author, citing one professional who missed out on his annual million-dollar target one year through sharing client credit with junior colleagues. He never collaborated again.
HOW TO ENCOURAGE COLLABORATION
1) Model collaboration. Gardner advises leaders to start with themselves, “modelling the right behaviour by contributing to others’ client work and sharing credit with those who participate in their own”.
2) Build trusting relationships. Help your professionals “learn enough about others’ expertise to identify cross-domain opportunities”.
Gardner suggests arranging “short presentations from experts in high-potential areas” and producing “intranet-based tools for communicating client opportunities, finding experts, and asking or answering questions”, or newsletters celebrating collaborative success.
Next, help partners build relationships with one another, advises Gardner. One technique is to ask partners to identify a colleague who could help them win a new client and then set up meetings between the new teams so they can “flesh out their client development approaches”.
3) Avoid toxic new hires. Gardner warns against hiring “high-performing but selfish partners”. Instead, look for candidates with a history of collaborative working. At interview, ask them for concrete examples of contributing to teammates’ client work.
“Candidates who brag about their ability to transfer clients to your firm should send up a red flag,” she says, advising: “Ask yourself, if clients are so attached to these candidates individually, does that mean that no other professionals at the firm were involved in serving the clients?”
4) Don’t commend lone wolves. Rather than celebrating big sales by lone wolves, Gardner recommends discussion with the partner to find better ways of achieving the same outcome.
5) Reward collaboration outcomes. Hold partners accountable for “identifying multipractice opportunities and making sure they are successfully developed”, advises the author. But when it comes to reward, it’s easy to ‘game’ referral and multipractice metrics, she warns.
“It’s far better to reward the outcomes of effective collaboration, such as rising levels of client satisfaction and client retention, growth in revenue and profits from existing accounts, or the acquisition of new clients in target areas,” writes Gardner.
And make sure you also capture contributions to “non-billable efforts such as mentoring, sharing knowledge, and giving advice”, she counsels. Your firm should regard this kind of work as “investment in remaining competitive”.
6) Develop collaborative skills. Assist professionals to develop a range of “critical collaboration skills”, advises the author. Learning how to collaborate effectively can be difficult and time-consuming, she warns.
So it’s important that firms communicate “a strategy that explicitly emphasises collaboration so that partners understand that their investment in learning to combine forces is part of a broader initiative that the firm will support”.
To assist the learning process, one firm created “a ‘cross-selling SWAT team’ that others could draw on for advice”. The team accompanied partners to client meetings and helped them unearth new client opportunities.
7) Secondment programmes. Encouraging partners to spend time in an overseas office can foster important links between home and host teams, leading to referrals for more lucrative and complex international work.
Companies that embrace and develop multi-practice collaboration are best positioned to enjoy increased growth through good and bad economic climates, asserts Gardner.
She concludes: “These firms understand that if they can serve the most complex needs of their clients, they will earn their loyalty and the lion’s share of the most valuable revenue streams, and leave their competitors to scramble after the increasingly lower-value, commodity work.”