Through the darkness: Leadership in an age of austerity

The parallels between national politics and the leadership of professional service firms are more evident than ever before. Managing partners rely on partners in various constituencies, just like their political counterparts, to elect them for a four or five-year term of office. If successful, ?they know that they have been chosen largely because their constituents have faith in their commitment to their interests, even if coalitions established in the management team are necessary to ?hold tribal groups together.

Since the financial crisis of 2009, ?the policies of austerity have been the ?only game in town in the politics of the ?UK and across the eurozone. Politicians have slashed public spending and restructured tax regimes against a background of growing unease and discontent from the voting public. In some countries, including England, it has been necessary for political leaders to persuade politicians from other parties to support them in making austerity cuts.

Many managing partners have found themselves in the same position. They ?have had to take tough decisions to reduce costs, maintain profit margins and actively manage the equity. Their challenge is to retain partner support and cohesion during a period of little or no revenue growth, and to inspire all parts of the firm to pull together to seize opportunities with energy and focus.

As has been evidenced most recently in France, there is sometimes a price to pay for implementing tough measures. There is only so long that voters will accept a regime of austerity if they can’t see where the longer-term growth is going to come from. Once belief and hope in the plan to achieve the vision are lost, the authority to lead rapidly evaporates.

In many law firms at present, there is increasing disquiet amongst partners about the consequences of management decisions. Partners understand the financials and accept that some restructuring of the equity may be necessary to put a firm in the best possible financial health.

But, some partners complain about management being out of touch with frontline partners and question whether their leaders really know what it feels ?like at the client coalface. These factors, put together, can lead to an alienation ?of law firm leaders from their fellow partners, creating a sense that ‘we’re ?not all in this together’.

So, how do leaders in professional service firms tread that fine line between taking the right decisions in the long term interests of the firm, while continuing to enjoy the support of at least the body of the partnership and sustaining the partnership culture? And what does it ?take to be an effective, respected leader ?in a time of austerity?

Leadership skills

The key skills required to lead a firm do not differ significantly depending on the economic context. Throughout the economic cycle, managing partners ?need to have a strategic vision that ?they share and shape with their fellow partners. They need to have excellent listening and influencing skills, and they need to be able to engage with a wide range of stakeholders.

In difficult times, however, leaders need to have not only all of these skills in abundance, but also a set of personal qualities and characteristics that distinguish them as great leaders. Only time will tell which leaders of law firms will be the ones remembered as the best role models coming out of this recession.

Lessons can however be drawn from the characteristics of the very best historical leaders on what it takes to succeed as a leader during a prolonged period of austerity and low growth. Various historical figures stand out for their strength and success in leading others through adversity; these conditions provide a useful equivalent to austerity in today’s commercial and political sense.

Ernest Shackleton is much quoted as a case study in leadership and there can be no denying that, in his case, personal leadership was tested and exercised in the most extreme adversity. The polar expedition he led from 1914 to 1916, when disaster struck again and again, ?is a compelling story of leadership.

Shackleton led his men through the most arduous of physical environments, below zero temperatures, diminishing food supplies and little chance of rescue. He had to keep his men’s spirits up, to keep hope alive and to stop them from turning on each other in their frustration.

To achieve this, he showed great strength, flexibility and intelligence in his tactics. He had a deep sense of loyalty and obligation to his fellow crewmembers, who understood this and who, in turn, offered him their commitment. He kept their focus on the future and stayed optimistic, even though he had to change and adapt the goals of the expedition regularly in response to changing circumstances.

Shackleton led by personal example, accepting the same conditions as his men with great stoicism and showing deep compassion for those struggling most with the situation they found themselves in. He retained his sense of humour, using it effectively to deal with tension, and continuously reinforced the need for unity amongst his men.

Set against extreme temperatures, starvation and complete isolation, the difficulties of a long-term economic downturn pale by comparison. But we ?can draw useful insights from the story ?that relate directly to successful leadership in a professional service firm through a period of austerity.

Shackleton’s example suggests that the characteristics that are essential for leaders during difficult times are honesty, humility and the ability to inspire hope. Managing partners need to be able ?to share with their fellow partners the issues that they are grappling with and ?to debate with them the range of responses and possible solutions. ?They need to be grounded in reality, ?but optimistic in their outlook.

Partners want to be given the opportunity to explore the issues ?facing their firm and weigh up the options for themselves. They need to feel that their views will be heard and respected, even if they run counter to the views of the leadership, and that there will be genuine consultation before major decisions are taken. If they don’t feel this is happening, the danger is that disaffection sets in and partners start to disconnect with the direction and culture of the firm.

None of this of course is easy in the large complex law firms of today. There are significant risks in slowing down decision taking, and of unhelpful leaks to the press, which play on the minds of leaders.

However, Shackleton’s example shows us how the cohesion and unity of the group is critical. In his case, it is unlikely that everyone would have come back alive without it. A law firm relies on partnership cohesion and a strong, shared culture that motivates partners to stand united in difficult times and seize opportunities, however hard won, for the good of ?the firm.

Successful leaders also need to demonstrate humility and a suppressed ego with their fellow partners. Managing partners who think they have all the answers will find it hard to persuade ?others of their point of view, however ?right they may be.

Leaders need to stay close to their fellow partners, talking openly about ?what support they need from each other. Too many leaders retreat to the executive floor, analysing data and agonising ?over decisions, rather than listening to partners and encouraging them in their day-to-day challenges.

Henry V walked incognito amongst ?his men before the battle of Agincourt; ?he wanted to know how his men were feeling and what they were thinking. He needed to be able to judge how best he could serve them and how he could inspire them before going into a difficult and dangerous battle.

Of course, law firm leaders should not walk the corridors in disguise. But managing partners need to find a way to ensure that partners continue to talk openly with them, that they don’t hold ?back what they really think, and that they don’t hide their worries because of a fear of the consequences.

Law firm leaders need to listen actively and continuously to their fellow partners. They need to spend time talking about what’s on their minds and what support they need from the firm to achieve their goals. In difficult times, partners don’t ?want to be told more, they want to be listened to more.

The best managing partners discreetly, but actively, support those who are under pressure or who need encouragement following a setback. Surprisingly, these often include the most successful partners as well as the less experienced.

Managing partners build trust by ?being seen to understand and respect each individual partner. They avoid the mistrust and fear that emerges when partners believe (rightly or wrongly) that their leaders are only interested in ?partners’ financials.

Partners want a leader who is not afraid to care; they need to have had a chance to understand the issues and to ?air their views. If they see honesty and humility in their leaders, they are likely to remain committed to the firm, even when difficult decisions have to be taken.

Serving, not directing

True leadership in professional services is all about serving the partnership. In difficult times, that means creating the conditions for partners to be confident and entrepreneurial. Hectoring partners into doing better, telling them what to do, or criticising them for not doing well enough is likely to be counterproductive.

Partners need to see that the leadership team understands their day-to-day issues and that it will do whatever it can to help every single ?one of them to succeed.

The hierarchy of the partnership ?in effect needs to be inverted, with the managing partner at the bottom of the pyramid supporting partners on the front line with resources, encouragement and ?a keen personal interest in each of them ?as individuals.

Managing partners need to be ready to accept new ideas and to accept that not all of them will be successful. By recognising and rewarding partners who put their heads above the parapet, try something new or go the extra mile, even if their efforts don’t lead immediately to new work or new clients, managing partners will encourage others to try new things ?for themselves.

Partners need to feel that, provided they do the right things and have the interests of the firm at heart, they ?have nothing to fear. And managing partners need to demonstrate their trust ?in their fellow partners that they will do ?the right thing.

The best law firm leaders steer ?their firms with a light touch and with ?a sense of hope and inspiration, even ?in the most difficult of times. They celebrate successes, however small, ?and enable partners to flourish at what they are best at. They genuinely get satisfaction from the accomplishments ?of others and instinctively give generous and genuine praise.

Real leaders, wrote the novelist David Foster Wallace, are people who “help us overcome the limitations of our own individual laziness and selfishness and weakness and fear and get us to do ?better, harder things than we can get ourselves to do on our own.”

Shackleton exemplified this kind of leadership – how many law firm leaders can that be said about?

Good followers

Provided a leader is doing his best to ?put the firm’s interests first and to create the right conditions for success, all partners have a responsibility to be ?good followers.

Most partners would rather leave the unpopular role of leading a firm – and the heavy responsibilities that come with it in difficult times – to others. But, at the same time, they are often quick to criticise and be resistant to change.

It is all too easy to rail from the sidelines about the inadequacies of the leadership team. But, in a partnership, all partners have a responsibility to speak openly about their views and to support the leadership with constructive suggestions and practice or individual action plans.

In difficult times, it can be lonelier at the top than many realise. Even the greatest of leaders need to feel that it’s ?all worthwhile and that they have support from the majority of their fellow partners, even if they don’t get every decision right. After all, there will come a time when partners can exercise their rights by voting for change or continuity in the firm’s next leadership election.