TechnologyAccounting SoftwarePractice management – Small is beautiful

Practice management - Small is beautiful

It’s always struck me as surprising that adaptability should be one of the key competitive advantages of a small firm. After all, in a rational world you’d expect a large firm with more resources to be able to experiment more and thus refine its performance more quickly than a firm which is, as one small-firm director put it to me, “only five phone calls away from bankruptcy”.

However, the reverse is true. And why that’s so is fairly clear. It’s to do with shorter communication links between staff and leaders, and clearer glass between people’s daily activity and its commercial consequences.

When a business is sufficiently small that everyone in it can see a direct link between what they do to get X done right or quickly, and the business earning enough money to pay them, people typically respond well – without being harried or threatened with the sack. Motivation and morale rise and stay high. And managers need only encourage people along a path they’re already set on pursuing anyway.

Big firms tend to find change a lot harder, particularly in the parts that are most sheltered from external reality.

It follows that one of the fastest ways to improve performance (and thus, eventually, job satisfaction) is to remove the shelter. The most radical approach is to strip it away completely, and send the target group out to fend for itself as a stand-alone business unit or an outsourced support function. From the parent firm’s point of view, there’s likely to be a certain loss of control and less consistency. But a naked function will be small and unprotected enough to be forced to adapt to its markets or die. And, though tough, adapting is the only route to job security.

Less radical approaches can work, too, especially if they’re used in combination. Secondments to front-line departments … plus experience of cross-functional project teams … introducing sharper appraisal mechanisms which explicitly reward customer-focused change initiatives … drafting in a departmental boss from a different function … promoting staff who show themselves to be effective champions of change … and parting company with die-hards.

There remain three other keys to turning around a lacklustre department: a willingness by the leader to tell staff the truth in full; her or his confidence in their ability to handle change; and her or his personal courage.

But the greatest of these is courage.

Tony Scott, an independent consultant, specialises in business communication issues.

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