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Leadership Development for Professional Services Firms

Mark Roy, Touro University Worldwide

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Abstract: When considering the design of a leadership development program for a professional services firm, a key consideration is what type of culture does the firm aspire to create? The qualities that the firm chooses to develop in its leaders will fuel the organizational culture that the partners will cocreate with all firm personnel, and that culture will be reinforced by the firm’s values as reflected in its leadership approach. This article examines the research to recommend best practices for designing such a program.

Keywords:  Leadership development, leadership styles, professional services, law firms

Leadership Development for Professional Services Firms

Many law, financial, and other professional services firms are focused on succession planning and designing leadership development programs that will ground their firms’ leaders in leadership principles. This article lays out a framework that delivers a common language around organizational dynamics and recommends a research-based approach to creating a customized leadership development program that meets the unique needs of a particular firm because the design is grounded in the firm’s values, informed by its strategy, and continuously enhanced by the ecosystem in which it operates.

Background

Harvard Law School professors Scott A. Westfahl and David B. Wilkins observe that, “[T]he lawyers of the future will need to be technically capable; professionally nimble; and able to use broad, interdisciplinary networks to solve problems,” (Westfahl & Wilkins, 2017). They further emphasize the importance of leadership skills because such skills deepen their impact and enable them to be leaders and connectors of ideas, people, and possibilities. When considering the design of a leadership development program for a professional services firm, a key consideration is what type of culture does the firm aspire to create? The qualities that the firm chooses to develop in its leaders will fuel the organizational culture that the partners will cocreate with all firm personnel, and that culture will be reinforced by the firm’s values as reflected in its leadership approach.

In this article, the term organizational culture refers to the firm’s invisible, but perceivable, social order that shapes everything from its people’s behaviors to their biases (e.g., basic assumptions about who does what or how something is done) in enduring ways. In organizational psychology speak, “Cultural norms define what is encouraged, discouraged, accepted, or rejected within a group. When properly aligned with personal values, drives, and needs, culture can unleash tremendous amounts of energy toward a shared purpose and foster an organization’s capacity to thrive” (Groysberg et al., 2018). 

As mentioned above, understanding the culture that a firm’s leadership is nurturing is imperative for its leadership development program to ensure that the organization is promoting leadership behaviors that are aligned with the firm’s values and strategy. Srivastava (2022) identifies seven leadership styles, included below. Each style can be dialed up, down, or combined to land on an effective style of leadership. 

  1. Autocratic leader: This type of leader hoards control, makes every decision, and takes very little input from group members. Autocratic leaders can be effective in situations where quick and decisive decision making is needed but can also lead to decreased motivation and job satisfaction among team members (Lewin et al., 1939).
  2. Bureaucratic leader: On the other extreme from the autocratic leader, the bureaucratic leader relies on rules and procedures to lead by the book. These leaders establish a clear hierarchy and chain of command. This leadership style tends to prioritize efficiency and accuracy over innovation and flexibility (Jung & Avolio, 2000).
  3. Charismatic leader: This type of leader is a people person who inspires others by building interpersonal relationships. Charismatic leadership can lead to improved performance and satisfaction among team members (Conger & Kanungo, 1987).
  4. Servant leader: This leader prioritizes the greater good of their team over their own objectives. The focus for this leader is on creating a supportive and empowering environment (Greenleaf Center for Servant Leadership, n.d.).
  5. Situational leader: This leadership style is rooted in achieving the leader’s goals in the context of a given situation by adapting to the followers’ level of maturity (Hersey & Blanchard, 1982). It doesn’t necessarily reinforce organizational values except, perhaps, expedient results. This style emphasizes the need for leaders to adapt their leadership style to suit the situation and the needs of their team members. 
  6. Transactional leader: Transactional leaders rely on rewards and punishments to motivate team members (Bass & Avolio, 1994). Organizations that value competition among team members could benefit from transactional leadership in such contexts (Hamstra et al., 2014).
  7. Transformational leader: Transformational leaders inspire and motivate their teams to achieve a shared vision and are often seen as role models by their team members. Research suggests that transformational leadership can lead to improved performance, satisfaction, and commitment among team members (Bass & Avolio, 1990).

In addition to organizational culture, values, and leadership styles, team composition is another consideration when designing a leadership development program. There are two roles that members fill on every team: functional and psychological. The functional role is job or task related, whereas the psychological role is where people naturally gravitate based on their personality. Hogan Assessments Systems, Inc. (2013) identify the following five psychological roles on a team:

  1. Results: This role attracts people who seek leadership, direct the team, and drive others toward business goals; however, under stress they may be overly competitive with their peers or subordinates and not inclined to seek input.
  2. Relationships: Relationships people are perceptive, thoughtful, and cooperative team members who listen to others and foster trust and respect from peers and staff; however, they can be overly focused on getting along with others rather than producing results.
  3. Process: Team members filling the process role hold high standards for both their own and others’ performance; however, at their extreme, they may be seen as rigid and inflexible and may miss the big picture.
  4. Innovation: These team members bring a variety of ideas and solutions to the table; however, they may have difficulty with practicality because they tend to prefer ideas over implementation.
  5. Pragmatism: People in this role are not easily swayed by emotions and are comfortable confronting conflict; however, they may be seen as ignoring people’s feelings, as well as the big picture.

The Process

Step 1: Discovery Through Assessments, Interviews, and a Team Workshop

To build a leadership development program tailored to the distinct needs of a particular firm, the firm’s leadership team first needs to understand how one another’s behaviors are perceived and to identify their individual and collective values. Personality assessments are excellent tools to achieve these objectives while also creating a common language around the psychometric components of organizational behavior and illuminating the team’s collective blind spots. The individual assessments also provide insights that can be used as inputs for personal leadership development plans, whereas, depending on the assessment used, a team assessment offers insights for the team’s collective development plan. Insights from the team assessment can also be helpful when considering candidates as the firm continues to build out its leadership team and talent pipeline because the leadership team would have a deeper awareness of gaps in the psychological roles of their team.

A parallel discovery track dives deeper into how best to codify the firm’s values if they are not already stated and how they fit with the firm’s mission, vision, and strategy. This is typically accomplished through interviews with the executive committee, office managing partners, managing directors, the firm’s senior business professionals, representatives from the associates’ or principals’ committee, and a handful of referral sources, vendors, clients, or other business partners who know the firm well and what makes it “tick.” 

Step 2. Analyze the Data to Form and Test a Hypothesis

After interviewing key stakeholders, the data are analyzed. Because the source data are captured through interviews, the qualitative data are analyzed first by grouping responses together that use the same or similar words in response to this question: Describe the essence of the firm in one word. Next, reviewers comb through personal narratives for affective data that help reviewers understand how their experience working at or with the firm makes them feel. Finally, the reviewers look for any commonalities in the data among the various stakeholder groups. Next, the consultant drafts a report identifying the key themes that emerged, often punctuated with anonymous pull quotes to succinctly reinforce a theme from a specific stakeholder group. The leadership team then meets with the consultant to discuss the themes to determine if they are generally valid and determine if there are any outliers or surprises that the data revealed.

Step 3. Codify (or Revalidate) the Firm’s Values and Reinforce Them in Its Culture

With the firm’s values (re)validated, they are then codified in a values statement that reflects the firm’s culture, voice, and differentiated positioning. In an organizational change initiative, such as embedding a firm’s values in its organizational culture, it’s important to call on a team’s complementary skills to pull the change forward from idea to implementation to continuous improvement. An ideal team, including one to help embed a firm’s values in its culture, includes these four types of members:

  1. Problem solvers: People on the team who solve problems, get answers, and focus on facts. In one study, teams with members who had analytical thinking skills were more effective at problem-solving tasks and were better able to adapt to changing circumstances (Gino et al., 2017).
  2. Innovators: Research has shown that individuals with a high level of creativity, or the ability to generate novel and useful ideas, are important for effective team performance, particularly in tasks that require problem solving and innovation (Shalley et al., 2004).
  3. Systematizers: People who create systems, hold high standards, and are focused on getting things done—the right way. Research has shown that individuals with strong organizational skills, or the ability to manage complex tasks and create efficient systems, are important for effective team performance, particularly in tasks that require planning and coordination (Gully et al., 2002).
  4. Connectors: Those who are people focused, taking care of team members and stakeholders alike, with a desire to get everyone involved. Research has shown that teams with members who have strong emotional intelligence and interpersonal skills are more effective at building relationships with stakeholders and creating a positive team culture (Goleman et al., 2002). 

Step 4. Identify the Qualities That Make a Good Leader at the Firm  

Knowing the firm’s values, mission, and vision sets the firm up for sustained differentiation in the market for clients and for talent. Ensuring that they are set in motion to propel a virtuous cycle requires adding strategy to the mix.

At this point, it’s important to know the leadership team’s current gaps so that the team can be alert to potential blind spots. When the team is at loggerheads, team members would be equipped to consider their colleagues’ personality characteristics to better understand what may be causing the impasse. Or, if the team were to make an ill-informed decision, during a postmortem they could take another look at the existing blind spots given the current composition of their team and reflect on whether having another leader on the team with those missing attributes could help them avoid making similar decisions in the future. This information enables the leadership team to keep an eye out for potential talent internally that can be nurtured for leadership responsibilities and fill some of those gaps or to look externally for candidates who may meet those needs to shape the leadership team that will help shape the firm for the long run. 

With the firm’s dominant organizational culture identified and its values codified, the leadership team will have a clear understanding of which leadership style/s is/are best suited to help the firm achieve its strategic objectives.

Step 5. Create a Curriculum for Future Leadership Workshops and Continuous Development

The latest research finds that leadership development is a collaborative, social process that is most successful when performed in the real-life context of a leader’s organization. Such leadership development training needs to be applied, that is, addressing real-world problems on the job to reinforce learning, and the focus on development needs to be on mindsets rather than skill sets. Mindset-focused leadership development programs focus on critical thinking, problem solving, and sense making within the context of the organization’s values (Turner et al., 2018). 

Accordingly, the consultant collaborates with the firm’s leadership team to design a workshop that brings the firm’s values to life in an authentic way, provides training on the skills related to the leadership style best suited for the firm’s culture and strategy, and focuses on developing the firm’s leaders’ mindsets. 

The Result

By building a leadership development program tailored to the unique cultural context of a specific firm, the firm will form leaders who can develop solutions to any challenge through the lens of their firm’s values and lead people in a way that is authentic to the firm’s distinctive organizational context. In the context of a law firm, this process forms leaders with the skills required of lawyers of the future, as defined by Westfahl and Wilkins (2017). Moreover, because the firm’s values are unique to a particular firm and the dominant leadership style or styles are consciously selected to reflect and reinforce those values in alignment with the firm’s strategic objectives, its leadership program becomes valuable, rare, imperfectly imitable, and nonsubstitutable, which supports durable competitive advantage (Teece, 2018). In addition, Li et al. (2016) found in their research both that leaders who lead with humility increase employees’ intention to stay with their employer and that that intention is magnified when the leader exhibits high expertise in their field. The authors specifically recommend that, “professional knowledge and skill could be considered as selection criteria in [the] promotion system, and further developed through [a] leadership training and development program.”

This values-based leadership development program thus helps achieve durable competitive advantage while increasing retention of personnel. In professional services firms, personnel are the scarce resources who competitors try to lure for their benefit and partnerships try to retain to sustain and grow their firm’s business with clients of key personnel. Therefore, creating a leadership program that is grounded in the firm’s values creates a virtuous cycle: Leaders are rooted in, and their leadership style reflects their firm’s values, which reinforces the organization’s values, thus shaping the behaviors and attitudes of the junior professionals, some of whom will receive leadership training that reinforces the same, hence the durable nature of the competitive advantage this approach to leadership development offers professional services firms. Moreover, if the firm adopts a dominant leadership style that emphasizes humility, it will gain additional competitive advantage using that leadership style as a lever to influence retention of its personnel, thus reducing the risk of losing key talent to competitors.

References

Bass, B. M., & Avolio, B. J. (1990). Transformational leadership development: Manual for the multifactor leadership questionnaire. Consulting Psychologists Press.

Bass, B. M., & Avolio, B. J. (1994). Improving organizational effectiveness through transformational leadership. Sage Publications.

Conger, J. A., & Kanungo, R. N. (1987). Toward a behavioral theory of charismatic leadership in organizational settings. Academy of Management Review, 12(4), 637–647. https://www.jstor.org/stable/258069

Gino, F., Ariely, D., & Moore, D. A. (2017). The irrational side of problem solving. Harvard Business Review, 95(3), 88–95.

Goleman, D., Boyatzis, R. E., & McKee, A. (2002). The new leaders: Transforming the art of leadership into the science of results. Little, Brown.

Greenleaf Center for Servant Leadership. (n.d.). What is servant leadership? https://www.greenleaf.org/what-is-servant-leadership/

Groysberg, B., Lee, J., Price, J., & Cheng, J. Y.-J. (2018, January). The leader’s guide to corporate culture. Harvard Business Review. https://store.hbr.org/product/the-leader-s-guide-to-corporate-culture/S18010?fromSku=R1801B-PDF-ENG&ab=store_idp_cabpanel_-_the_leader_s_guide_to_corporate_culture_s18010

Gully, S. M., Incalcaterra, K. A., Joshi, A., & Beaubien, J. M. (2002). A meta-analysis of team-efficacy, potency, and performance: Interdependence and level of analysis as moderators of observed relationships. Journal of Applied Psychology, 87(5), 819–832.

Hamstra, M. R. W., Van Yperen, N.W., Wisse, B., & Sassenberg, K. (2014). Transformational and transactional leadership and followers' achievement goals. Journal of Business and Psychology, 29(3), 413–425. https://doi.org/10.1007/s10869-013-9322-9

Hersey, P., & Blanchard, K. H. (1982). Management of organizational behavior: Utilizing human resources. Prentice-Hall.

Hogan Assessment Systems, Inc. (2013, October). The truth about teams. https://www.hoganassessments.com/wp-content/uploads/2013/10/Truth_About_Teams.pdf

Jung, D. I., & Avolio, B. J. (2000). Opening the black box: An experimental investigation of the mediating effects of trust and value congruence on transformational and transactional leadership. Journal of Organizational Behavior, 21(8), 949–964.

Lewin, K., Lippitt, R., & White, R. K. (1939). Patterns of aggressive behavior in experimentally created social climates. Journal of Social Psychology, 10(2), 271–301. https://doi.org/10.1080/00224545.1939.9713366

Li, J., Qiao, Z. L., & Zhang, Z. Z. (2016). The effect of humble leader behavior, leader expertise, and organizational identification on employee turnover intention. Journal of Applied Business Research, 32(4), 1145–1156. https://doi.org/10.19030/jabr.v32i4.9727

Shalley, C. E., Zhou, J., & Oldham, G. R. (2004). The effects of personal and contextual characteristics on creativity: Where should we go from here? Journal of Management, 30(6), 933–958.

Srivastava, Y. (2022, June 9). Democratic leadership style: How to make it work as a team. BetterUp. https://www.betterup.com/blog/democratic-leadership-style-pros-cons-examples-and-how-to-make-it-work

Teece, D. J. (2018). Dynamic capabilities as (workable) management systems theory. Journal of Management and Organization, 24(3), 359–368. 

Turner, J. R., Baker, R., Schroeder, J., Johnson, K. R., & Chung, C. (2018). Leadership development techniques: Mapping leadership development techniques with leadership capacities using a typology of development. European Journal of Training and Development, 42(9), 538–557. https://doi.org/10.1108/EJTD-03-2018-0022

Westfahl, S. A., & Wilkins, D. B. (2017). The leadership imperative: A collaborative approach to professional development in the global age of more for less. Stanford Law Review, 69(6), 1667–1729. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3013150

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