The 5-Phase Flexibility Maturity Model for Professional Services
‘Agile’ is today’s buzzword. Pressured by the market’s increasing dynamism, companies have apparently made agile the new norm for organisational planning. But how does this affect law firms and legal departments? These organisations primarily use human capital and years’ worth of accumulated knowledge. Vested in employment relations that you cannot simply switch on or off at a moment’s notice. What’s more, the above organisations traditionally derive a large part of their identity and ‘company pride’ from the notion that their work can only be done by their very own permanent employees.
Agility = flexibility + speed
Due to their nature, professional service organisations can only increase their agility by becoming more flexible in the way their work is sourced and by learning how to quickly gear up and down. This requires more than just using their ‘own people’, and hiring the occasional temp worker for a few months will not cut it either.
Currently, several frontrunners in international consultancy and advocacy, including PwC, Berwin Leighton Paisner and Allen & Overy, are showing that an alternative approach to sourcing contributes to their success and market position. In the Netherlands, the firm of De Brauw Blackstone Westbroek sets a good example. These success stories have sparked a change in the way professional service firms think about staffing.
Putting ‘Flex’ on the agenda
As a result, ‘flexibilisation’ can be found on the agendas of numerous management teams and board meetings. The manager and staff organisation are thus faced with increasing pressure to quickly come up with a tested, risk-free model that enables the organisation to more quickly and efficiently respond to changes and developments in the demand for staffing-based capacity and knowledge. But where does one start? What is the best approach? Published best practices are still unavailable and the first initiatives therefore often proceed the hard way, ‘boiling the ocean’.
The steps to be taken
The Professional Services Flexibility Maturity Model offers a framework to evaluate how flexible you are as a professional service organisation. Moreover, it helps you determine follow-up steps that you could take to increase the agility of the knowledge and human capital that you can have at your disposal.
In terms of design, the Professional Services Flexibility Maturity Model is based on the well-known Capability Maturity Matrix Model, which is used to evaluate processes. Substantively, the model was developed in consultation with Dutch boards of large international law firms and with legal managers of large businesses based in the Netherlands. Furthermore, an analysis has been made of the developments in the creative and IT industries, which provide a good indication of what awaits us in professional services.
“Oh dear, she’s starting her maternity leave already? How are we supposed to finish our work on time? I’ll call an agency straight away. And let’s hope they have someone available to start first thing tomorrow!”
The first phase is comprised of organisations that do not yet have a process for hiring flexible staff. Each time a professional is needed on a flexible basis, they are improvising. This creates a large dependence on the suppliers of contingent staff.
Filling the FTEs is crucial and it governs how flexible staffing is perceived. The actual, underlying demand for productivity is less defined and plays a secondary role. The demand for contingent staffing is not identified until later on. It has not been budgeted for and with temp staffing decisions getting postponed a lot of hiring is done under pressure.
In this situation, using flexible staff is seen as a necessary evil. To benchmark the costs, people look at the gross salary of regular employees. External professionals are seen as ‘expensive personnel’. They are mostly deployed for capacity purposes, which fits the FTE approach.
“OK people, let’s talk planning. What are we expecting work-wise in the coming period? How is that open job position coming along? When is Simone due to have her baby? (…) OK, that’s clear. So we’ve got at least 1.8 FTEs to fill. I’ll call some people who’ve been here before, please also contact HR and have them delegate it to the agencies.”
The second phase is marked by the realisation that deploying flexible staff is unavoidable. Organisations get used to it, and the first foundation of a central approach emerges due to repeated hiring experience. The use of flexible professionals is still limited and hiring decisions still focus mostly on ‘costs’.
The starting point remains that all the work should be able to be done with employees under (semi) permanent employment contracts. Deployment of flexible staff is limited to peak moments caused by seasonal work and (sick) leave.
Managers begin to create their own database of flexible self-employed professionals who have performed satisfactorily and who will be approached first whenever there is a sudden increase in demand. A small portfolio of professionals arises that the organisation calls upon.
The organisation gets used to the fact that external professionals are hired every now and then. It becomes less of a novel thing. The threshold becomes lower and the total hiring costs increase. Occasionally, there are some negative experiences.
In an attempt to take control of transaction costs and the quality of supply, the procurement department will introduce the phenomenon of ‘preferred supplier’. HR is allocated a larger role when it comes to hiring and will act as a link between the ‘hiring manager’ and the external suppliers of flexible personnel.
“Gosh, it’s still busy. What should we do? Hire new people? (…) No, let’s get someone from our flex pool to handle that project. I’ll ask HR to give everyone a call.”
With this phase, the deployment of external staff is now process-driven via the HR department. By now, hiring managers know that flexible professionals can be used outside of ‘peak times and sick-leave’ situations. A need thus arises to hire external professionals for knowledge and ad hoc issues and no longer expressly for temporary FTE capacity purposes. This means that the hiring demand fits less and less within the process-based, FTE-driven approach of the HR department.
The organisation’s portfolio, the database of reliable ‘gig-workers’ at the disposal of each hiring manager, gets merged and a better-suited term is now a ‘flex pool’. The use of staffing agencies declines. Preferred suppliers are now only activated if the hiring demand exceeds what is available to be sourced from the pool. If the hiring volume increases, an external party joins up for risk-management and the streamlining of administrative and financial processes.
Organisations begin to pro-actively map out what kind of flexible professionals they need and when. Hiring managers begin to use external professionals for the development of the department and the office. In the first instance, new positions and propositions are increasingly filled by trusted external professionals.
The connection of the organisation with its external professionals changes from being transaction-driven to relation-driven. The company begins to invest in fostering and maintaining relations with ‘gig workers’, even when they are not being used. Enterprise social media applications are introduced for this purpose. Supply and demand sides of external capacity also meet on these closed online platforms. In this phase, decision-making revolves around D.I.Y or partnering with others.
“You sure got those contracts amended fast! Yeah, piece of cake. I posted it in the community this weekend and a couple of our known flex workers responded immediately. One of them was actually experienced with exactly these kinds of deals and he offered a very competitive fixed fee per contract.”
The fourth phase mostly deals with the further rationalisation of the hiring process to achieve agility in all facets. A backbone is created that enables the organisation to respond more efficiently to various hiring needs and it enhances control and the reporting of information. Administrative and compliance processes are standardised in such a way that they are fitting at any level and for each type of flexible deployment. ‘Waste’ is removed from all processes and replaced with automation as much as possible.
A well-weighted decision is made to reduce the ‘fixed formation’ in scale and in amount of expertise. What is left is a composition of employees that achieves optimal utilisation at all times. All of the capacity and knowledge that is not part of the organisations core competences is sourced on-demand from a group of flexible professionals with whom the organisation fosters long-term relations. It is no longer required to over-exploit regular employees during peak times. Employees can instead receive a more focused deployment to areas where they have room to grow or excel.
By now, a personal network of trusted flexible professionals is working on demand for the organisation. The online platform has developed into an internal marketplace where knowledge and capacity is sourced on a flexible basis. The supply and demand of professionals is met without the involvement of HR. The support and managing of flexible sourcing, as well as the relationships with the external professionals in the network, has evolved into a discipline in its own right.
Deployment is no longer based on fixed formations or job descriptions, but instead on required productivity. The deployment of external professionals will also primarily be paid for based on agreements about productivity. The organisation knows in advance how each deployment adds value and in each assignment performance is reviewed. A constant improvement process is in place. The use of capacity and knowledge supplied by professionals on a on demand basis has become a part of the organisation’s value proposition.
The use of external professionals has changed from a cost item to a catalyst of profitability.
“Richard, you’re managing this project. Take Anna with you for added support. I’d leave the real estate part to Susanne from our network. That way the client can save some costs. The IP part in the Due Diligence is crucial. We could use someone from our permanent team, but we’ve got a specialised person in our network so let’s use him instead. It’s best to use our permanent people for project management, negotiations and drawing up the acquisition papers. After all, these kinds of transactions are our core business.”
By now, the strategic choice of the last phase has led to a fully institutionalised approach of flexible knowledge and skill. Apart from the contractual basis, there is no longer a distinction between permanent and flexible employees. People are always deployed with their best-suited talents in mind and they are no longer required to do work that is beneath their level of expertise or training.
Those who are required for the delivery of the organisations strategic core-competences are under permanent and exclusive contract. This also applies to those who are in training for these kinds of positions in the future. All other professionals are engaged and paid for on a more or less flexible basis, but they remain connected to the organisation even outside of their deployments.
This enables the organisation to always swiftly set up the ideal combination for each project and all work assignments. The choice to deploy professionals for certain tasks is determined fully by their suitability and expertise concerning the project at hand. The organisation maintains a full responsibility for the work conducted and overall performance, but client interest is now leading when it comes to sourcing decisions. It drives the composition of all teams. Without compromise, the best professionals are chosen regardless of their relation to the organisation.
With permanent employee costs being relatively low, it becomes easier to influence the organisation’s profitability. Changing market circumstances can now be met without requiring large-scale re-organisations and there is a swift response to market opportunities and customer needs.
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This article was first published in the 2016 September issue of LegalBusinessWorld e-Magazine