Are you running a consulting business and wondering about the possibility of making a shift to a self-managed business?
Have you already taken this turn but encounter obstacles inherent to your operational reality?
In this article, we will explore the main challenges that consulting service firms encounter in making such a profound transformation in their management style.
We will give recommendations and possible solutions inspired by our own experience in the field.
Three Angles to Consider
First of all, note that your challenges will not be the same depending on the audience and the timing of your transformation.
In the ecosystem of a consulting firm, there are always the following three groups of players:
- Group A - Support & Administration
The are the people with an administrative or internal support role like HR, Finance, Marketing or IT for example.
- Group B - Advisors / Consultants
These are permanent employees who carry out mandates for their clients.
- Group C - Clients
The advisors in the consulting firm work for these customers.
We can represent this ecosystem as follows:
In a consulting firm, you can choose to implement self-management in 3 distinct ways:
1 – To group A only, or
2.a – To groups A and B at the same time, or
2.b – To groups A and B asynchronously.
It’s never a question of converting our clients to the self-managed business model.
However, what must be understood is that by including the consultants group in the model, the complexity increases simply because they are in contact with the clients group.
Indeed, clients carry constraints over which we have no control.
This complexity is even greater if the consultants carry out their mandates directly with the client.
Based on the audience chosen for the transition, let's take a look at the issues you might face, and our recommendations for overcoming them.
1 – Support & Administration Only (Group A)
Let's start with the scenario where you would choose to implement self-management only for the internal Support & Administration roles.
If you implement self-management only at the level of internal support functions, the only costly resource will be the working time of the employees involved. But having no billable customer role, there will be no additional monetary opportunity cost.
If there are a hundred of you in the company and the administrative and internal management staff represent about twenty people, we are talking about 1/5 of the company to be moved towards self-management. Unsurprisingly, it is easier to support 20 people in the change rather than 100.
If excluded from the initiative, consultants may feel left out of the core of business management and office life. This could create frustration and by ripple effect, a degradation of the sense of belonging and a form of disengagement.
Under-utilization of the model
By excluding consultants (group B) from the self-management mechanics, we restrict the model’s field of action and therefore its potential benefits.
For example, self-management is great for maximizing the use of resources when people are in between mandates, but we'll get to that later.
If your choice is to limit the application of self-management to people in the Support & Administration group (group A), it is essential to transparently explain the reasons for this choice to Advisors (group B).
Otherwise, they might misunderstand your motivations and feel excluded.
Minimum training for all
Although they will not actively participate in the model, your consultants are part of your organization and should understand the new jargon and new internal mechanics.
High-level training on the main concepts of the chosen self-management approach is essential for consultants to decode the new reality of administrative and support roles.
In addition to this small high-level training at the time of launching the initiative, it is important to keep open lines of communication with the consultants as structural changes take place in the organization.
When new circles or roles are created or a new policy is put in place, they need to be in the know so they don't lose track of what’s happening. An internal newsletter can easily fulfil this function.
2 – The Entire Organization (Groups A & B)
Let’s now look at the challenges that can arise from a transition to self-management for an entire consulting firm, regardless of the pace of implementation chosen for each group.
Big Benefit: Sense of belonging and corporate culture
By including both internal support roles and consultants in the mechanics of a self-managed business, no one feels left out.
Everyone is moving in the same direction. The corporate culture is changing for everyone, with new self-management jargon, new meeting structure etc.
Cost of implementation
Going back to the previous example, the cost of implementing self-management will be higher if you decide to onboard the 100 employees and not just the 20 administration & support employees.
Keep in mind that the difference is not so much the number of employees to be trained as the opportunity cost of non-billable client hours.
Two worlds, two realities
When they get involved in internal projects in addition to their client projects, consultants are constantly changing hat.
With the client, they work according to the client's methodology, with the title assigned to them, in a classic hierarchy mode. But when they work on internal projects, they do not have a title and occupy one or more roles.
This means they must change their mindset and adapt constantly to have the right attitude at all times.
For this reason, it sometimes takes longer for consultants to assimilate the concepts of self-management: a large part of their brain must continue to operate in the classic hierarchy mode since they are at the service of their clients.
This point is all the more pronounced if the consultants carry out mandates directly with the client and are part of a project team.
Billable Hours vs In-House Projects
In our experience, this is the most critical issue. If your advisers work with their clients on fixed-term full-time contracts, how do you reconcile this with active participation in the organization's internal projects?
Is it realistic to think that a consultant who bills 100% of her working time with the client will be able to invest internally at the same time?
If you promise all employees that self-management is an opportunity to have an impact on the organization, but the assignment time to target clients remains at 100%, you may run into a lot of frustrations...
A substantial implementation budget
Allow for a substantial implementation budget, calculating the opportunity cost of training billable advisors.
Jonas Vonlanthen, Partner at Liip in Switzerland, knows this issue well.
“The last Holacracy training we did at Liip was for 50 people over 4 days, 60% of whom were normally billing hours. We are therefore talking about 120 fewer man-days on client projects, plus training costs. It’s true it’s a big investment. On the other hand, we quickly saw in the following months that people understood the mechanics and that everything was going faster. In addition, without the high salaries of middle management, a self-managed structure costs less than a traditional hierarchical structure."
To help consultants switch between in-house self-organization and traditional hierarchical structures with their clients, it is important to offer them coaching.
The goal is to help them assimilate the concepts of self-management more quickly and to spot when they fall back into old patterns that no longer have their place within the organization.
Project management at the client's premises differs from internal project management.
You should also help advisors match their schedules to their client's reality.
There is no hard and fast rule of how much time is acceptable for internal projects. Anything is acceptable as long as you are managing expectations.
If you want to make it possible for every consultant to get involved in the self-managed organization and internal projects, one possibility is to make only 80% or 90% of each consultant's time available to clients. This requires a sacrifice in sales which, for some companies, can pay off.
If, for financial and risk management reasons, it is not possible to promise all consultants that they will have time for internal projects, then do not promise them the moon.
For example, good management of expectations would be saying: the priority is always billable time. When you are not 100% busy with clients (part-time or inter-mandate), then you are invited to occupy internal roles, which you must give up as soon as your billable time no longer allows you to energize them.
This way, you take advantage of the flexibility that the self-management model brings to reallocate resources quickly, without putting your profitability at risk.
Not only should this mechanic be clarified as soon as possible, but it should also appear as a clear strategy and policy in the organization’s self-management model.
Now let's look at the impact of the timing of the transition.
2.a – Onboarding the entire organization at the same time
By getting everyone on board from the start, you can build up a lot of collective excitement at the start. This increases the sense of belonging and everyone starts learning new concepts at the same time.
Economies of scale
If you call on an external trainer or coach to support you in the transition to self-management, you will only have to pay the support costs once for the whole group.
Very expensive upfront
The launch is likely to be quite a sizeable budget, as the cost of training will add to the opportunity cost of lost billable income from consultants. Finances can be affected in the short term.
Risk of putting all your eggs in the same basket
Should the transition turn out to be more complex than expected, the negative repercussions of failure could impact the entire company.
Proof of concept
If you want to embark the whole company on this great adventure at the same time, do not hesitate to do an internal proof of concept before you start.
Every business is unique and every culture is unique. The goal here is to validate the viability of the model in the context of your business reality before you go all in.
Slow down now to go faster later
Keep in mind that the slowdown in activity will be temporary and necessary.
Once you start applying and mastering the concepts of self-management, you’ll be able to pick up speed again.
Finally, you could choose to onboard the employees of the Support & Administration group (group A) first and then the Consultants (group B) at a later stage.
2.b – Onboarding groups A and B asynchronously
Financial impact spread over time
You will absorb the financial impact of the implementation over several months instead of paying it all upfront when you launch.
By starting the implementation with a first group, you give yourself the opportunity to test the approach on a smaller number of people and gain maturity on the model before extending it to the rest of the business.
You remain agile and have a little more freedom of movement.
Big Drawback: a Two-Tier Management System
Let's say you decide to onboard the Support & Administration group today and the Consultants group in 3 months time. When the consultants are just starting to train, the other employees will already have acquired good reflexes and a certain autonomy.
This can create imbalances in meetings that mix both groups, causing fatigue for people on the Support & Administration side, or stress for the consultants.
Even if it’s just for a few months, having a two-tier business can create a wedge and generate disengagement among employees.
If you choose a two-step implementation process, it is important to set a date in advance for the inclusion of the second group, so that the members of that group can project themselves into the new reality, without feeling sidelined.
Throughout the first phase of implementation, don't skimp on internal communication. Give group B some visibility on what is happening for group A, which is already operating in self-management.
This will also allow you to reinforce the desire of group B to discover this way of working.
Finally, implementing self-management in two stages allows you to identify people in the first group who will become ambassadors for the success of the implementation in the second group.
This is a strategy that pays off from a change management perspective and the approach Liip took.
“Before we got started, we wanted to test the model for 6 months. We trained 10% of the employees, choosing influential people who have been in the company for quite a long time. We chose the strong-headed, those who always have something to say - including people who were not in favor of the initiative. The goal was for these people to experience self-management processes for 6 months and spread their knowledge around them in the company. At the end of the test period, we took stock of the situation, and since the vast majority were in favor of continuing the initiative, we invested in training more people. – Jonas Vonlanthen, Partner, Liip.
Each of the three proposed implementation strategies can work. Each presents its own challenges and complexities, but no obstacle is insurmountable.
Here is a summary table of the points discussed in the article:
Before launching headlong into self-management, each consulting firm should consider which strategy should be favored depending on the underlying motivations for its transformation - the Why.
If your primary goal is to empower employees, to build a sense of belonging and improve employee retention, you should consider getting everyone on board.
If your goal is to free managers from admin tasks and speed up internal decision-making, you might choose to include only the internal group of Admin & Support roles.
Whatever strategy you choose, these five keys will help you make it a success:
- Manage expectations
- Provide training and coaching
- Get outside help to support your teams