Revitalising our Practice
This note is a call to arms. Let me start with some context.
We all know what we’ve been through over the past 2 years and that we don’t like where we are. Suppressed anger is a good way to describe how many of us feel and you all know this is de-energising our practice. Whilst we still have a fantastic underlying business and our clients continue to get better and better service the consequence of our ‘mood’ is a serious partnership issue manifesting itself in many ways – not least in sub-optimal financial return for the business and partners.
We are all concerned about our current situation. We face three massive challenges in which we need a good outcome for all partners:
- As a partner team we need to prepare for Phoenix 2. In so doing we will make a proactive, constructive contribution to the eventual outcome which will need careful positioning by UK MCS partners. We will need enormous trust and mutual support in what could involve a series of difficult choices and we must not allow ourselves to be directed by others.
- We must address our weakening economic position. Apart from the de-energised mood of partners I know we are facing some real competitive issues and market constraints whilst we remain in the PwC family. We are a dominant player in a mature but fragmented market. Our main competitors are now free of conflict to offer deals to our clients which at the moment we can only counter through discounting. Notwithstanding this we need to find a way in the short term to protect our economic profile. This is crucial to protect our incomes and negotiate the value you all deserve from Phoenix 2.
- Our mood is affecting our people. They join us on trust and deserve an environment which is supportive and motivating. We have some serious work to do here. It’s worth remembering that at the time of Phoenix 1 the market told us our greatest asset in striking a valuation for our business is our people.
We need to get ourselves in better shape to secure a good outcome on these big challenges.
We must now grip this issue
So what do we do? Do we continue in our relative state of disenchantment or do we do something about it? We’ve all fallen into the trap of pointing the finger elsewhere. We can produce a litany of things that have not happened or get in the way but let’s remind ourselves we are partners and owners of our business and we must take some shared responsibility for where we are. My judgement is that it’s time we began to take responsibility to shape our future. We need to take some fundamental steps to give ourselves the practice we deserve and be a genuine leader by example in our global network. Reinventing ourselves as a contemporary partnership with an entrepreneurial spirit around clients is the essence of what I have in mind. So I have a very simple proposition:
Based on this directional proposition I have developed a range of ideas with the following group of partners:
- David Dockray, Noel Taylor and Jeremy Pakenham – senior UK partners representative of our markets;
- Vic Luck and other EMEA leaders particularly sharing the ideas with Sietze Dijkstra (Services), and Thomas Balgheim (FS),
- Shareholder Panel – ‘non-exec’ input to reflect the mood and needs of partners;
- NABU leadership team – existing leadership group input to help plan the ingredients for a new style of operation;
- Kieran Poynter/Paul Boorman – to build confidence that a new direction in our model will create superior returns for all PwC partners.
This wider consultation is important so that we can position change as part of a bigger picture for MCS and our firm. The remainder of this note reflects our new operating proposition for UK MCS partners.
A new direction
You are telling me that since the merger we have had too much emphasis on top down micro management of all partners. This style is not working and it’s time to go in another direction. Motivation has the biggest single impact on our climate and performance. A liberated environment will do much more for motivation than intensifying management control.
I believe we can harness the talent and energy of the total partnership by positioning MCS business leaders as enabling superior client service and ‘climate’ builders and trusting partners to get the result we need from the market. In particular, I am seeking to formalise a ‘cycling’ of partners from the market into leadership positions and back again. The refreshing of the leadership team with partners who are closely and recently connected with the market is key. Similarly, so is the return of our most able partner colleagues from management positions to client work. Please do not rush to suggest a plethora of practice management positions within this new model – THOSE DAYS ARE OVER.
We don’t have all the answers but when we leave PwC and connect with our new entity or status we clearly need to be in much better shape and in a better frame of mind – particularly if we want a good financial return for the business we have created together.
We need to think through a number of moves to effect real change in our practice and I want to work this through collaboratively up to our next Partner meeting. However I have already taken three fundamental steps to get us started:
1. Last week a large number of partners were asked to leave our practice. This has been very difficult but it improves our leverage model and creates space for new talent.
2. I am also making significant change to the NABU leadership arrangements. New faces in a new configuration will help to shift the energy patterns in our business for all the partners who remain. Details of the new NABU Board and what I’m seeking to achieve are attached. There are two groups of partners in our leadership group – those who will enable client service and those who will run cost objective infrastructure and processes. All of them will be leaders in changing our climate. All partners will have a new client service leader. Change will not come about by structural change alone. We must now follow through with a change programme which will directly address the values and behaviours we all desire.
3. We should also inject some real accountability into our future model. I have asked the shareholder panel to work with you all as shareholders in our business to nominate or elect 4 partners to become non-execs on the new NABU Board. I know they will offer a global and local perspective on our direction.
Building and sustaining momentum
Directional statements are easy but the real test is making and sustaining change. This is the flavour of where we are now heading:
- role of management is to enable partners to secure extraordinary achievements with clients
- management processes will be on a pan MCS basis where this makes sense to deliver a consistent experience for all our people
- performance measurement approach and reward will be far more client centric
- partners will accept individuals and collect responsibility to focus on the client agenda within a framework which supports our quality and experience models.
We will change our operating processes to keep client focus and internal business support separate BUT mutually supportive. All partners should focus on clients – by the end of 2001/2002 the highest paid partners in the business should be 100% client facing and should have achieved that status on the back of superior client focus.
It will take time to design all the change programmes we need and get the end result. We will invest in defining, shaping and delivering a new set of shared behaviours and values which will underpin our business. This work will need to cover such issues as support for client service teams and how we manage/support our resource pools. This will take time and I am looking to us to manage the change in a pragmatic and progressive fashion.
Each of our new leaders will be in position by the end of March and will be charged with the task of diagnosing the extent of current problems, coming up with a new vision, presenting it to partners for agreement and then implementing change. This will be done in the context of the strategic review of our business which is already well under way led by John Dowson.
To give you a flavour of the challenge Liz Brown has completed some preliminary diagnosis on the people agenda and developed a draft vision in collaboration with Clive Newton and Paul Shelton. This is attached. Please take time to read it because it contains some sobering commentary.
Our new client service leaders will engage with the EMEA industry leaders to build ambitious client plans. We will move away from the notion of ‘UK Partner’ or ‘EMEA Partner’. Together they will develop go to market plans to exploit local and global markets.
To help build channels to market I have also put substantia1 effort into re-aligning MCS with the other LoS in the UK so that at the point of the client we can support each other to build PwC revenues.
My own role
We have lost sight of what accountability of leadership means in PwC and as an open gesture of accountability I will give the elected non-execs on our newly formed Board the job of working with Vic Luck and Kieran Poynter to determine my annual compensation recommendation.
Having taken the initiative to get this process of change moving in our practice I see my priorities as follows:
- ensure we get the ideas in our new direction delivered for all partners – particularly constructing our change programme around total client focus;
- protect the interests of partners in the Phoenix 2 discussion/negotiations;
- identify the leaders of tomorrow and coach/support them including identifying and developing a potential successor;
- ensure a step change in openness and transparency of communication for partners.
Sometime within the next 12/18 months I would like to transition to a full time client role. The timing for this will be dictated by our progress on the above priorities and significant transitional events in Phoenix 2. I will not make any sudden move and will work with the new Board to time this in the best interests of the business and partners.
All partners have accountability too
I hope by now you have concluded we all have a part to play in revitalising our practice. I’ve been an MCS partner long enough to know that a downside consequence of liberating partners to be entrepreneurial can lead to the odd partner becoming less than disciplined. In creating a superior practice again a few hygiene matters have to be taken as read:
- team hunting against common objectives,
- pricing and delivery to a common set of economic aspirations,
- best use of time and resources;
- billing on time;
- collecting on time;
- supporting our people;
- supporting each other.
We will only hassle those partners who wilfully ignore these fundamental obligations on all partners.
Also please think about the change leadership role you can play in getting us moving:
- focus all your time on client service;
- inspire and support our people;
- exude belief that we can change the climate;
- be smart with our money and time;
- behave like global partners;
- challenge any behaviours inconsistent with our new direction.
Consultation and partner input
We need your input to secure real change in our practice.
I’ve arranged a partner meeting for March 13th in which we should begin to share the economics and opportunities for our business as well as agreeing our collective agenda for change. Please make every effort to be there so that we can develop and agree our plan of action. At that meeting we will present our analysis and proposals on clients, financials and Phoenix 2.
In the meantime I would like every partner to write to me letting me know whether or not this note captures the spirit of what is needed in our practice. If you have time I would also welcome your specific views on what needs fixing, suggestions about the things you want to see changed for you to feel liberated and entrepreneurial again and how you would measure our progress. We will also use the upcoming partner breakfast sessions to develop propositions and seek more input.
Please also reflect on the paper prepared by Liz Brown and let her have your thoughts – do you recognise the analysis? Do you support her vision for people? Could you sponsor her proposed vision?
Together we can change BUT it needs us all to pull together as a team to do this. We collectively got ourselves where we are and we collectively can very quickly create a new climate. I can hear you shouting “but what about things outside our control?” I agree that we need other urgent changes in our global MCS practice, including clear signals on Phoenix 2 but this should not prevent us from starting our own change programme.
There is an important meeting coming up in Tampa to clarify our future direction which will then be tested on a group of around 100 partners drawn from our global network. I will take the ideas from our new direction into those meetings at which Vic will also give strong EMEA sponsorship for the ideas in this communication.
I said earlier in this note that we do not yet have all the answers but the direction and the signals should be clear.
I would encourage you to share the flavour of this briefing note with your staff. More communications to partners and our staff will follow as we evolve our ideas together.
NABU Leadership – Board and Operations
The new leadership will deliver a climate for partners which is open, supportive and liberating.
Client Service Leadership
We will have four Client Service Leaders:
- Financial Services ~ Pat Newberry
- *Energice (formerly EU and ICE) – David Hadfield
- CIP – Alan Hammill
- Services – Andy Embury
Their jobs will be to inspire and motivate partners around the client agenda. They will lead by example and spend 30% of their time on clients. In each of our chosen sectors they will implement the MCS client segmentation model and help partners configure the best economic return from our assignments. They will create the climate for partners to feel empowered and for our people to be committed to PwC
* By merging EU & ICE into one client service group we are hoping we can achieve synergies around client solutions and at the same time reduce our overheads. David Hadfield’ Noel Taylor and Jeremy Pakenham will work with the Energice partners to explore this in more detail.
Cross practice roles
- Chief Operating Officer – Phil Crawford
- People and Knowledge – Liz Brown
- Client Solutions – to be appointed
- Emerging and Integrating Technologies – Andrew Davies
Their jobs will be to provide superior service enabling support for our business in each of these four critical areas. This will mean a significant shift in the way we operate and run the day-to-day business with the operations and people agenda being the responsibility of the COO and P&K leader. Their work will be the engine room needed to reinforce our new direction and climate, the approach will be one that balances the need for consistency and local ownership.
We will put our resources where we believe we’ll get superior returns from our clients.
Non Executive Board Members
We will have four non-exec members appointed by MCS partners.
The non-execs will focus on accountability (strategy, financials, major transactions) and also work with Vic Luck/Kieran Poynter to recommend the compensation for the NABU Managing Partner.
NABU Practice Leader NABU Managing Partner – Lynton Barker
The NABU MCS Board will be made up as follows:
- Managing Partner (Board Chairman)
- Chief Operating Officer Client Service Leaders x4
- People and Knowledge Leader
- MCS Non-execs x4
The Board will meet as required.
As we transition to our new status away from PwC we will no doubt move more to a public company style of operation with a non-exec Chairman of the Board.
The executive members of the Board and our other leaders (E&IT, Client Solutions) will form the ongoing operational leadership for our business.
Existing Leadership Team Members – New Roles
Dick Boyatzi has been planning to return to the USA including the possibility of the Summer of 2001 so this gives plenty of time for Dick and Pat Newberry to transition our new plans within the FS community.
Clive Johnson will focus the bulk of his time on Lloyds TSB (80%) but will also help Phil Crawford on the F D. aspects of our business.
John Dowson is going to work full time on Cable and Wireless. This is part of our commitment to shift client focus and for partners in stewardship roles to return to the market after a period of leadership service
Chris Williams will work full time with myself, Vic Luck and the UK MCS board on Phoenix 2. After a transaction Chris wants to return to client work full time.
We all owe a debt of gratitude to these partners for their work since the merger – and for selflessly supporting our new arragements for the overall well being of our practice.
NABU – Offerring a New Vision for Our People
There is no doubt that for us to be a competitive world class employer, our People agenda needs to be one about transformational change, where PwC is a terrific place to work where people are proud of themselves, the firm and us.
This is dramatically different from where we are today. As part of the ongoing work on the NABU People Agenda, and in support of the work on the People Strategy, we have done some work in the last 3 weeks to collect views from 80 staff and 30 partners on the key issues that relate to them at this time.
The work raises issues which are critical to our future success; it challenges our whole operating philosophy and our current People agenda, which currently, (and the way we generally operate) is almost wholly transactional and about doing the processes better and in a more joined up way. This is not enough as our problems are more systemic.
To turn this situation around has no ‘quick fix’ – we need to fundamentally change the way we operate and the working environment we create. We need to focus our attention on what the underlying issues really are – the ones which are about culture, values, operating style – all the behavioural ‘glue’ which really makes organisations sing and be fabulous places to work ~ or not. The current repositioning of the Leadership group is thc opportunity to seize the initiative to start to make this THE item on our ‘People’ agenda.
All the ‘listening’ from 100 or so people is telling us that there are 3 key issues – leadership (and this means all partners), career development and work life balance. Some of the headlines on what are people are telling us about these key issues are:
- a crying need for cogent strategic direction – where are we going
- that we need to and don’t ‘join the dots’ on the way we operate – eg a small example – the way we resource is one key things staff see so much evidence of local partner behaviour of patronage, warehousing etc etc. There are hundreds more
- our communications is haphazard, poor and inconsistent – and we don’t understand what people care about (eg the last 3 all staff voicecoms have been about money – this is not why they come to work)
- that we still retain 2 distinct cultures – and frighteningly not only do we still have the P and C cultures alive kicking and often not co-operating but (and this shocked me) we are inculcating our true PwC joiners with one or the other depending on the local partner group they join
- since merger, we have never invested in developing and sharing a sense of ‘how we want things to be round here’ – our values and beliefs – driving behaviours – so everyone makes it up with, the fragmentation results that you would expect. (again loads of examples on this – eg 30% of our leavers cite career development as the reason they leave – the 80 staff have helped us unpick this – it’s really about partner behaviour, consistency of process, clarity of direction, partner patronage – lots and lots and lots of behaviour things which actually are about us not having minvested time and cnergy in developing a ‘third way’ – or PwC way
- we aren’t consistent in managing work/life balance – the way this is handled depends far too much on individuals – partners and assignment managers – what do we stand for on this – what sort of business do we want to be
- it’s no wonder 13% of our people leave us in the first year………
Looking forward, it’s critical that we invest time and leadership energy on these issues. Clearly the impact on retention and recruitment is overwhelming . We need to be able to lead not only on strategy, but on ‘how we want it to be round here’ – and for this to be bought into and embedded in our whole way of operating. As a starter, we must signal to our partners that we recognise that there are key issues, and that the Leadership team is going to invest, with the partner group, in developing and embedding a new ‘way of doing things around here’ – in essence a new culture. Then we have to follow through.
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