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Making Money

Everything that happens in a law firm or accounting firm is driven by compensation. If professionals aren't compensated for doing something, they are unlikely to do it.

That's why business development is such a hit-and-miss proposition. In most firms, people are rewarded for bringing clients to the firm. Trouble is, they are not rewarded in any way for what it takes to get clients there: relationship-building, networking, community service, teaching, speaking, writing, referral source development, you name it. All these activities require time and effort, and they happen in addition to - not instead of - billable work.

To pique professionals' interest in business development, many firms are instituting incentive programs, where individuals or teams can earn points for activities like those mentioned above. Such programs are still relatively new, so we can't predict their long-term effectiveness. In the short term, they raise the level of marketing awareness and often increase enthusiasm for the process. Sometimes, they even result in new clients.

While additional work is the most obvious result of an incentive program, the more subtle one should be to recognize and reward the efforts of those who make an attempt at business development. My colleagues who have conducted these programs tell me that the rewards can be relatively inexpensive; it is the public recognition and affirmation professionals are responding to more than anything material.

Despite the success of such programs, some firms are reluctant to initiate anything that recognizes and rewards effort as opposed to results. I have been wondering why.

Managing partners typically say that the best way to increase revenue is to work harder and/or raise rates. I believe this has become an axiom at most firms because such an approach enables managing partners to study spreadsheets rather than talk to their partners and senior team members. Thus, they can avoid the possibility of uncomfortable conversations when individuals fail to meet expectations.

This looks like conflict avoidance to me. It has been my experience that professionals flee from conflict or awkwardness with their partners on many issues, and business development is one of them.

Managing and marketing partners: if you want to increase the firm's top line, learn about clear and honest communication: have one on one conversations - both easy and tough - with your professionals. Talk with them about business development. Discuss what they need to do to increase the firm's top line and what you will do to support their effort. Get their agreement and their commitment. Reward success, recognize effort, and have consequences for failure to meet agreed-upon commitments.

This is how you begin to create a real business development culture, and ultimately, it is how your firm makes money.

© Melinda Guillemette 2009