Friday, May 03, 2013

Excellence in professional firms

What is it that makes some professional firms stand out? The Economist reviews a book that has come out on the subject and highlights some of the points in the book. Firms covered include McKinsey, Goldman Sachs, Capital Asset Management, Mayo Clinic and Cravath, Swaine & Moore (a law firm).

Some of the factors identified ring true but are not terribly helpful as guides to action:
These (factors common to these firms) include leaders who devote their lives to serving their firm rather than enriching themselves (though that tended to follow naturally), a good sense of what motivates staff to get up early and work late and the ability to get individualistic professionals to function unusually well in teams.

Which is fine but what makes the leaders so devoted and how exactly do the firms get teams to be effective? Echo answers.

One point is striking. The firms are fanatical about recruiting the right person and spend enormous time in getting the recruitment process right with people all the way to partners getting involved:
Each McKinsey applicant can be interviewed eight times before being offered a job; at Goldman, twice that is not unheard of. At Capital a serious candidate is likely to be seen by 20 people, some more than once. Recruitment, these firms believe, is the start of a lifelong relationship. At the same time, Goldman and McKinsey also have a policy of helping their staff to find suitable work elsewhere, all in the expectation that they will eventually become loyal customers.
The point, however, is not just ensuring that recruits fit the firm's culture but having a certain culture in the first place and defining it explicitly. It all comes down to having the "right culture". And key elements in the culture are pride in the firm and ensuring that nothing short of excellence in performance (in terms of meeting the customer's requirements) will do.

Such a culture is invariably the work of a few dedicated founders and leaders. Their contribution lies not just in creating the culture but in disseminating it and ensuring that it is passed on- by getting the right recruits in .

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