This volatile economy brings out the meanest of management strategies in order to maintain profitability. Cutting expenses and staff here and there, de-equitizing partners, and scaling back starting salaries are some of the typical bromides.

There are two problems to this approach: (1) it is not fun - in fact, the costs of turnover in such negatively charged work places undercuts profitability gains from expense cutting; and (2) cutting expenses does nothing to alter and ameliorate the behavior of partners or the structure of the firm for the long term. Once the crisis is past, the deck chairs go back to their original positions and the players relax into customary poses.

While expense management is absolutely necessary in all sorts of economic seasons, the professional services industry has failed to embrace many of the cost efficient revenue production strategies that their commercial peers have used to boost revenues while controlling costs, thereby supporting gross profitability.

In an industry sector of smart folks, why has the adoption of select revenue production strategies not happened? A few offerings might be that revenue production smacks (some would say "smells") of sales; professionals just do not do that. Or, the long lived chimera that "professionals" get fees (revenues) by doing good work, not by marketing, thereby maintaining the specious and antithetical relationship between the two - professionalism and marketing.

Four strategies that can help with this dilemma are based on cost efficient revenue production. Plainly stated the operating principle that makes revenue production management work is this: Cost reduction has a floor, below which the work product quality or the organization itself is sacrificed. Revenue production, on the other hand, has no ceiling. One might validly argue that revenue growth drives up costs and that a firm may grow too quickly and in doing so, lose its essence or even its existence. But, the more balanced view, I believe, is that carefully orchestrated revenue growth can and should enhance revenues while containing costs. Here are four strategies and examples:

1. Managing Partners: think of your firm as a baseball team.
In the game of revenue production in professional firms, the heavy hitters, who are usually too few in number, do not get up to bat as often as they should. In small to mid-sized firms the hitters do not have enough time to step up to the plate because they are too busy. The top batter may even be the managing partner. With too few hitters, moreover, this leverage risks the firm's well being, should the homerun specialist become injured, disaffected, or retired.

Management Strategy: If you want your best rainmakers to produce more, you must deal with the finiteness of time. Three options, among others, are to reduce the mechanical tasks your producers do; what do they have on their plate that can be shifted to another less busy professional? Second, increase the high quality 'at bats' in total number and/or upgrade the selections. For example, if your best rainmaker has been successful as a speaker to local or regional groups, it may now be time to make the venue a national or international one; or, have her or him evolve from speaker to expert commentator in the media.

One firm, Zetlin & De Chiara, LLP in Manhattan, benefitted when founders Michael Zetlin and Michael De Chiara hired a managing partner, Patricia Harris. Ms. Harris also has an MBA, and she handles operations and finance while the partners make rain. Their firm does litigation and transactional work for the construction, design and real estate industries nationwide. As Ms. Harris stated, "The partners asked me to run the business so that they can focus on the practice - catering to our clients and showing up wherever they need us and delivering a high end, high quality product. With our thoughtful division of labor, the lawyers can focus on producing excellent work."

What else should managing partners cede to competent business managers? Kenneth A. Bailey, a CPA and the executive director of the law firm of Bressler,Amery & Ross in Florham Park, N.J., said, "Human resources, facilities, technology and most financials can be safely delegated. But, many managing partners need to be coached into delegating if that has not been part of their working experience, as it is in the business world."

2. Deploy the Bench: younger partners and senior associates can do many of the marketing tasks the rainmakers have been doing.
To develop talent, you have to get the bench onto the field in a real game. This is not risky business if you have trained and coached them, and it frees the usual heavy hitters to go on to new, more sophisticated marketing efforts.

Recently, one firm had senior associates give their annual seminar for business owners, covering intellectual property, UCC issues, negotiating commercial real estate leases, getting financing from a bank and employment law. They rehearsed a lot (which senior people did not do, citing time constraints), reached out by phone to friends and contacts to encourage attendance, and ended up with standing room only and raves from a very sophisticated audience.

Management Strategy: Associates and laterals desire training and a position on the business development team, but unless you make room for them, and coach (not train) them, they will not usually be invited to play. Make using the next generation in critical marketing tasks an articulated and agreed upon goal among the partnership. Inclusion retains key players, reducing turnover costs, and an experienced next generation is the most important facet of your business succession plan.

Significantly, having more offensive players allows you to deleverage the contributions of your small coterie of rainmakers. More hitters, more revenues, and less feeling like a hostage for managing partners.

3. Make 'house calls' on your best clients and prospects.
Commercial professionals have used the client visit, or house call, as an integral part of their key client programs to build revenues and profits very efficiently by enlarging the share of the client's potential business. Increasing client or account shares is a very reliable means of improving your firm's financial health. When you add revenues from existing clients the price tag is six times less expensive than acquiring a new client. As a result, small gains in account/client share can directly affect the financial performance of a firm on both the revenue line and the gross profit line. Moreover, substantial improvements are quickly acquired so there are salutary effects to cash flow as well.

Management Strategy: When you make house calls, you see how the client makes money and where you can add value; you get to meet other players who may run departments that can generate new matters, or pay your invoices (always meet them).

Joseph Basralian, managing partner of Winne, Banta, Rizzi, Hetherington & Basralian, PC, a law firm in Hackensack, N.J., likened house calls to tending one's garden. "If you don't tend your own garden, nothing grows. The more house calls, the more business you get." Mr. Basralian visits with "sometimes" clients, those who are not paying their bills, and good clients who, "may think we take them for granted. Every time we visit a client, we soon thereafter get new work."

Mark Ellis, a CPA and chief financial officer of Michael C. Fina, a New York retailer and supplier of employee recognition programs for major corporations, reported that executives at his firm actually use an evaluation form when they visit customers, which happens regularly. There are two big benefits derived from customer visits: "We get to see and fix problems that are usually small, but annoying to the client, and our executives report back positive results, which is great for employee morale. That's important, give the recognition focus of our business."

4. Run the first part of each partners' meeting as a sales meeting; invite associates to attend that part.
Many professionals have never participated in a sales meeting in their work lives. If you have not, the meeting agenda covers some issues that are equally important in every professional service firm: new clients, new matters from existing clients, defecting clients, marketing activities, and business development planning. Rainmakers receive kudos, non-producers receive the collective public scrutiny of their colleagues, and the manager (read, managing partner) gets to build a financial forecast.

Management Strategy: "Partnership" imputes teamwork that is often absent from real working relationships in professional service firms. Compensation schemes, history, and/or philosophy may mitigate against team actions such as public accountability for the firm's growth. Moreover, the younger players rarely are witness to, or participants in, this most critical management meeting - the partners' meeting.

Managing partners should consider devoting the first 45 minutes of a partners' meeting to a recitation of the marketing efforts, results, and plans for the last 30 days and upcoming month. By pooling the collective intelligence of your team and focusing it on marketing, per se, you can derive a revenue forecast, cross fertilize contacts, and include non-partners in appropriate upcoming activities. The public setting raises expectations for all involved, and in doing so, can make the managing partner's job easier and more civil. As one managing partner said, "I've counseled, coached, browbeat and harangued my partners. Using the sales agenda approach frees me from feeling like a hostage." Enough said.

Instituting this type of "sales meeting" agenda in a professional group is politically difficult, but not impossible. Create a common form to collect data (new clients, new matters, marketing actions planned, and help needed) from each partner before a meeting and then roll up the data and distribute it beforehand to save time at the meeting and to inform the team.

The economy may be uncertain. Your financial future does not need to be. Try one or more of these strategies, and you will not be subject to the slings and arrows of an uncertain fate.

© Copyright 2002, The Success Group

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