Are you Over-Managed?

Have you possibly crossed the line to bureaucracy gone mad?

In my travels, I come across marked differences in the ‘investment’ firms make in back office support. And while acknowledging the profession’s constant benchmarking, I have always marvelled at these differences.

As is usual, a trade-off is involved. Generally, money spent on back office people reduces distributable profit. That said, an appropriate level helps a firm stay under control, while freeing up professional staff for legal work and client development.

So we face the classic Goldilocks quandary – what level is just right?

Here’s some smaller firm examples in order of profitability: (secretaries and admin assistants tied to a particular practice groups are excluded)

  • A leading regional firm turning over around $10m with an Office Manager, clerical offsider and receptionist– IT is outsourced; marketing is mainly handled organically in teams; and HR is very uncomplicated
  • A specialist firm turning over $3m with 3 job sharing support staff and a junior (they also attend to all the producer support)
  • A boutique business firm turning over around $6m with one Office Manager, a Marketing Co-ordinator and a receptionist – IT and debt collection are outsourced
  • A specialist firm turning over $4m with 10 dedicated back office roles  including a CEO, Office Manager, HR Manager and so on… with very little outsourced.
  • How do these firms differ? The first firm is extremely profitable. The last one is barely so – in spite of a strong brand image.

In my experience, the persistently distinguishing factors are quality of leadership and clarity of purpose.

When a firm is lead clearly, strongly and consistently, then so many other things just naturally fall into line.

People understand the behaviours which are always acceptable and never acceptable. There are fewer questions to ask and fewer special cases needing resolution. When the rules and values are clear, then people management becomes much simpler… as does dealing with clients, billing, collecting, and most things to do with performance.

The second condition involves firms overinvesting in managing rather than in leading. That is, they somehow think there is a structural solution to everything and over time their firms look more like self-strangling bureaucracies than vibrant market-focused workplaces.

Just as Peter Ellender said in the February edition, the substantive difference is culture.

Positive culture is the analogue of quality leadership and clarity of purpose. And one of the huge bonuses that comes with this is a capacity to force down overall costs significantly. And lower costs mean higher profits.

So next time you think you need to beef up your back office, query whether you really do – or – ask if you could get the desired outcome simply through greater clarity of purpose and more consistent leadership.

 

Published: Queensland Law Society – Proctor, March 2016

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