Workplace transformation needs entrepreneurism, diversity of skills and collaboration to succeed
In order to provoke some thought when we launched the workplace transformation & next generation employee topic, I shared some perspectives I have heard previously at some of the Alternative events and which I have previously written about across a number of articles. Perhaps the biggest challenge to my mind is the changing perspective on aspirations of the next generation moving into the workforce and the way in which this will impact the historic professional services models. One of the recent panel sessions that struck me the most was at the recent Tech & Innovation Professional Services leaders summit as I wrote about in my previous article. As I said following the event, what was genuinely interesting was hearing from the next generation of innovators, the trainees and associates across the different firms. It was here that I saw the genuine challenge to the partnership structure in how to retain talent to drive innovation. This generation that has so much to offer, the so-called “digital natives”, pretty much all said that partnership wasn’t necessarily something they aspired to. For me, this was the big takeaway; that this generation, that will drive so much of the innovation, has a different value set and will perhaps cause more positive disruption for professional services operating models than any particular technology.
It is the change in perspectives underpinned by differing value sets which has the potential to create such change at a time when we have four generations in the workplace for the first time. This can be seen as a challenge for professional services firms in how they adapt the traditional pyramid-based structure, but it is also the case that the same changes in demographics are occurring in their clients. This creates real opportunity for firms that are willing to effectively empower the new generation in working more closely with clients at an earlier stage and exploring how technology can be used to transform the client service and deliver better outcomes. As talked about during last month’s focus on the “client of the future”, clients’ needs are transitioning to a technology-enabled, data-driven, productised, outcomes-based, collaborative model. The next generation of employee or “digital natives” will be the same demographic of people as the client actively driving this change forwards. Breaking down the often formal hierarchies that still exist for many firms has the potential to drive better engagement for employees and clients simultaneously.
In a jointly authored article from Herbert Smith Freehills’ NextGen lawyers, they say that, “On the one hand, we want to soak up the expertise and practices of lawyers who have spent years working on some of the most significant litigation and transactions in the market. And on the other hand, as digital natives, we are wildly passionate about bringing legal services into the twenty-first century. It’s not just about technology… but also leveraging our curiosity and questioning those traditional ways of working and ways of learning for trainees.” The article also gives a great listing of the top ten values that mean the most to them, with the top one being that they want bosses who are excellent leaders, not just excellent lawyers.
However, this transformation for many firms in the values that are important will not be an easy one given the partnership model is largely based on the core principle of people aspiring to make partner, and achieving this through technical excellence in the law along with their ability to win work. In the panel session I referenced earlier, across law and accounting firms, three of the four panellists said they did not aspire to partnership, and the one that did was only because of a belief that the firm was now serious about adoption of technology in innovative ways for clients. As an aside all four later felt at some point they might want to start their own business. Perhaps this shift towards entrepreneurship being seen as more interesting than the traditional professional services career progression is a key element for firms to explore further the way in which they evolve their cultures and incentivisation models.
“The millennial generation is more open to entrepreneurialism, perhaps because it is so much more visible now through social media. For millennials working in professional services they are also likely to be acting for entrepreneurs their own age, which must have an impact on them,” says Robert Camp, Director of Strategic Innovation at Stephens Scown LLP in his article. Robert explores the challenge of how to create a more entrepreneurial culture and gives a great example of a joint venture they created with a tech company onto which one of their talented associates has now been given a place on the board. Subsequently to reading the article I heard from this associate on a panel session at the Alternative Legal Management Summit and it was clear how much this had shaped his positive perspective of the firm.
This point is echoed in an article from Charlotte Allery and Liz Cheaney of Coffin Mew LLP in their article where they say, “It is a case of terms over title; the benefits and workplace ethos are more important than the job title they achieve or whether they make partner. Whilst pay remains significant, the non-financial benefits, the empowerment and responsibility they are given over the way they work, and how they are treated in the office is equally important. See the office of Innocent Smoothies, with a rock-climbing wall and ping-pong tables to take time away from work and de-stress, and the likes of Virgin and Netflix who empower their workforce with the ability to take unlimited annual leave.”
This same theme comes through as part of a comprehensive piece from Rae Digby Morgan of Wilson Fletcher in her article, where she argues of the partnership model, “That model doesn’t fuel change, and unless it’s dismantled in favour of new models that don’t feed the hierarchical and financial nature of the practice, it’s hard to see how law will catch up. There are different routes to partnership germinating in a few firms of note, but it’s still far from embraced by the industry, and ultimately the fundamental problems remain.” Of many other interesting points she makes is a discussion around how Wilson Fletcher benefits from a genuine four day week and poses the challenge of why firms have not yet used this as cultural differentiation.
Other aspects for consideration as firms seek to transform to better meet client needs will be driven by the outcomes clients are seeking. As talked about in earlier articles, the drive towards productisation and the increased use of data will have a key bearing on this topic. This change in focus towards greater use of technology will bring with it a meaningful shift in the skills needed in the workplace. At the recent Tech & Innovation Professional Services leaders summit we asked around 100 leaders across professional services what they saw as the most important skills and competencies that will be needed over the next five years. Some interesting statistics from that survey were as follows (people scored from 1-5 and I have taken 4 and 5 combined as “important” in the percentages listed below);
- 98% felt that the ability to adapt to constant change will be important;
- 81% felt that wider business advisory skills will be important;
- 77% felt that business and project management skills will be important;
- 71% felt that product strategy and development skills will be important;
- 71% felt that data science skills will be important;
This change in skills is referenced by Ben Smith, Partner at Ecovis, in his comprehensive article on the changes they are seeing, “Our people need different skills to adapt to this – from coding capability to broader business advisory and strategic thinking skills – and we now run a broader spectrum of training than ever before. A great example of this is the development of our Data Analytics team, which we’ve invested in over the past three years and is now viewed as a key part of our longer-term strategic vision as a firm. Similarly, we were one of the first accountancy practices to embrace cloud accounting and are currently providing focussed investment in technologies ranging from Audit Analytics to RPA.”
Part of the impact of this change is that core practice skills are no longer considered enough, as is referenced by Steve Briginshaw, COO of Clarity, in his article, “Being good with preparing accounts and data entry are not the key components of a successful accountant anymore. Nor are they what your clients are looking for from their accountant. Business owners, particularly SMEs are searching for a tech savvy, client centric trusted advisor over a compliance focussed relationship.”
Added to this challenge is the commoditisation of core skill sets which are being transformed through technology. The way in which automation is entering the workplace in the property sector and therefore transforming the skills needed is a key theme drawn out by Robert Stark, Senior Executive Director of Strategy & Operations at Mapp, in his thought provoking article where he outlines, “From a technical perspective, we believe that there are two key areas of focus for human skills: relational and data driven. That is, we need people who are good communicators, relationship managers and who understand customer and client experience in order to deliver that. Second, we require people who are good with data and the technological and technical demands and requirements. The two are of course not mutually exclusive, but it is rare to find high levels of competence in both areas”.
A core challenge is getting the employees with the right skills to come and work for you. Part of attracting employees will be the workplace, not just the culture but the very environment that they work in. This will particularly be the case where new disciplines are needed such as data science and product management, as professional services firms will be competing with a wider and arguably more dynamic pool of organisations. Given some of the insight I mentioned above where the new generation of employee sees entrepreneurship as exciting, how will services firms attract talented product managers for example rather than have them see tech businesses as more attractive? Perhaps it is possible for firms to achieve this shift. At the recent Alternative Events Accounting conference for example it was fascinating to hear from Cooper Parry, a mid-tier accounting firm, around the way in which they have driven the fundamental shift in the culture of the firm, and I have to say the office space looked more like a start-up than an accounting firm. Any firm that is trialling sleep pods, has a drive-in movie theatre, a running track, and things like email curfews (between 7pm and 7am) and limitless holidays is going to attract a younger, more tech-focused workforce! You can read more about how accounting firms are transitioning in the earlier article.
The way that space is created will be important, as Nigel Stott, Head of IT at Hudgell Solicitors says in his article, “Collaboration and regular feedback is also important for them – the spaces businesses create for this new generation of staff should be open to encourage collaboration. The simple things, like superfast Wi-Fi that we take for granted at home needs to be available throughout our workplace.” Nigel also though sounds a cautionary note if businesses do not adapt fast enough, “When it comes to technology businesses will be challenged by Generation Z. This generation won’t wait for technology to be mandated by the business. They will take the lead and utilise the cloud services and apps that work to achieve the best outcomes for them. Businesses will need to mitigate these risks by providing detailed education on data security whilst balancing this with the freedom for their workforce to choose their own tools.”
This same drive for changes in the way in which the technology is used is highlighted in the accountancy sector by Daniel Teacher, Managing Director of T-Tech, in his article where he discusses the demands he sees around agile flexible working, fast-working technology and communication. Daniel emphasises the communication aspect given that “growing up with being able to speak to anyone instantly through technology has given young people an exceptional degree of connectivity”. Like others though Daniel also makes the point that this generation is particularly socially conscious and that the desire for face-to-face communication should not be underestimated.
The physical space challenge is actively being addressed in the property sector as outlined by Alex Edds, Director of Innovation at JLL in his article. Alex discusses the changing work patterns and what this means for the space we use and as he says of the challenge, “How to accommodate for a diverse workforce with varying working styles and needs? According to ManpowerGroup the average workforce in 2020 will comprise 35% millennials, 35% Generation X, 24% Generation Z and only 6% Baby Boomers. Deloitte also found that there will be a 37% increase in contract work, 33% increase in use of freelancers and a 28% rise in the use of ‘gig workers’. If you think about the needs and wants of all these different groups, added with the variety of job roles that will make up an organisation, it becomes clear that workplaces need to look and feel very different, and be far more flexible to change on a regular basis.”
So finally, some thoughts on what this all means for workplace transformation and the practical steps you should consider taking;
- Entrepreneurism and autonomy as the new incentivisation – it is clear throughout many articles across the professions that value sets are adapting and it is essential for firms to really consider what motivates people. This is nothing new, but what is perhaps new is a change in individual empowerment and the technological ability to make changes happen. There is a danger that this is considered as a “next generation” challenge rather than a holistic workforce challenge (I am 46 and have recently set up my own product strategy advisory business for example!). It is essential that firms have discussed within the partnerships their plans to move towards a less hierarchical, more autonomous and more entrepreneurial culture to attract and retain talent, whatever that may look like for them. It is a generalisation to say that the partnership model lacks incentivisation as for many it still does, but consideration is needed for incentivisation for those not motivated in this way.
- Diversity of roles and skills will be central to success – it is also clear that many new roles and skills are increasingly needed in the modern professional services organisation. As evidenced in our recent poll for example, 71% believe that data science skills will be essential. Some firms are starting to embrace this as Ben Smith from Ecovis outlines in his article. The greater use of data will be essential for survival as I outlined in my recent article and also recently published book There are many other roles and skills firms will need to adopt as they move more towards delivering better client outcomes and Robert Stark frames this well in terms of the core human skills being around either data driven or relational skills. This relational, or human delivery aspect will likely come more to the fore around successful service delivery, and indeed was a core theme from a thought-provoking session from the futurist William Higham at the recent Managing Partner summit. Firms need to have clear plans around the roles and skills that they see themselves needing for future client services and have thought through how they will attract and retain talent in these essential new areas.
- Digital nomads but with a collaborative space – the expectations of technology in terms of accessibility, connectivity, portability, and speed come through as an active challenge for firms. Firms need to have clear plans to ensure they are providing the tools to help people do their jobs better, and be able to do the job from any location. People have far less patience for inadequacy and are more ready to voice their frustration, as a recent event panel did around time recording, and not just the fact of in some cases having multiple systems but of even having to manually record it at all given there is now technology that can automate this. It is true that we now have so called digital natives entering the workforce but this challenge is felt by anyone that uses consumer technology that is now in many cases so easy to use. They expect the same inside their organisations. However, it is clear that people value and need effective face-to-face collaboration spaces and that firms need to rapidly modernise to deliver the types of environments people need. Firms therefore need to rapidly assess both the technology strategy and their space planning and do so in a joined-up way, and perhaps with more urgency than senior partners might sometimes think.