The book of the month: “Managing the Professional Service Firm” by David H. Maister

News categories: the New Economy economics, strategic enterprise management, human capital management, management of intellectual capital

“The professional service firm is the

best model for tomorrow's organization

in any industry. When it comes to

understanding these firms,

David Maister has no peers."

Tom Peters

In our knowledge based and increasingly service oriented economy of today, some characteristics that have been so far unique to professional service firms, will become more common to other industries. This includes for example the need to balance the constraints between human capital management (the most important resource of the firm), customer and business development, and profitability management, in order to be able to pursue a specific growth and market positioning strategy. So also for companies, that are not engaged in traditional professional services, but share some of their attributes, such as the increasing dependency on expert individuals and knowledge workers, it is of value to learn from this industry. In the book from David H. Maister the principles that rule professional service businesses are described in detail.

While “Managing the Professional Service Firm” is on the market for now 8 years (reprint in 1997), it is still one of the best books, if not the best, about the art to manage a service business. Written by a former Harvard Professor who served as a consultant to professional service firms worldwide for many years, the book is of value not just for someone who is interested in managing and organizing a professional service firm, but for anyone, who wants to know more about how to manage a business based on the expertise of its people.

Two aspects of professional work create the special management challenges of the professional service firm. First, professional services involve a high degree of customisation in their work. Management principles and approaches from the industrial or mass-consumer sectors, as they are based on the standardization, supervision, and marketing of repetitive tasks and products, are not only inapplicable in the professional sector but may be dangerously wrong. Second, professional services are highly personalized, involving the skills of individuals. What a professional service firm sells is frequently less the service of the firm per se then the service of specific individuals.

Both of these characteristics demand that the firm attract and retain highly skilled individuals. A primary consequence of this is that the professional service firm must compete actively in two markets simultaneously: The ”output” market for its services, and the “input” market for this productive resources, the professional work force. It is the need to balance the often conflicting demands and constraints imposed by these two markets that creates the special challenge of managing the professional service firm.

This book has grown from David H. Maister’s consulting experience over ten years in working with professional service firms, across a broad array of professions, in more than twenty countries. In particular, he has worked closely with accountants, actuaries, architects, consultants, executive recruiters, lawyers, public relations counsellors, advertising agencies, engineering firms, money managers, investment banks, real estate firms, and others. David Maister explores issues ranging from marketing and business development to multinational strategies, human resources policies to profit improvement, strategic planning to effective leadership.

While these issues can be complex, Maister simplifies them by recognizing that "every professional service firm in the world, regardless of size, specific profession, or country of operation, has the same mission statement: outstanding service to clients, satisfying careers for its people, and financial success for its owners”. He explains for example why professional service firms have to balance their workforce (juniors up to partners) and why it is so vitally important to mix people on the right combination of projects (brains, grey hair and procedure projects) as this builds up the firm's human capital, and provides the means and profitability to continue to grow steadily. The book helps to resolve many problems in professional service firms, but, which is much more important, first it helps to identify and articulate these problems.

Very well written, this book presents the concepts that help one understand the structures of modern professional service firms. It is full of pramatic and inspirational insights of the common issues faced by professional services firms, from someone who understands their nature and causes and experienced in dealing with them. It provides an in-depth analysis of common management and strategic issues and suggests practicable and easy-to-understand solutions to deal with them.

About the author:

David H. Maister is widely acknowledged as the world's leading authority on the management of professional service firms. For two decades he has advised firms in a broad spectrum of professions leading authority on the management of professional service firms. He consults throughout the world for many prominent firms in a broad spectrum of professions. He can be reached over his website www.davidmaister.com

Managing The Professional Service Firm
by David H. Maister
Paperback - 384 pages Reprint edition (June 1997)
Free Press; ISBN: 0684834316

More about about New Economy Economics and Management Best Practice in general, and about other related topics will be continued here in my newsletters and will be presented in my forthcoming book. To subscribe for my free-of-charge e-mail push newsletter click here.

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