6
Collaboration for
Ringmasters
T
his chapter is aimed at the person I call the ringmaster. This
term sounds both more dignified and more promising as a
way of describing the leader of a professional service firm
than the “cat herder” we hear so much about.
1
The ringmaster runs the show and keeps the tigers up on their
stools. The tigers present both opportunities and risks, which help
keep the ringmaster’s job challenging and interesting. There would
be no show without the tigers, so the ringmaster has to make sure
that they are happy enough to perform—and at the same time,
hungry enough to pay attention.
In other words, compensation is key—and the analogy certainly
holds in the realm of professional services. If collaboration is a goal,
as I’ve argued it should be, then the firm’s compensation system has
to advance that goal. But as any experienced leader knows, moti-
vating the stars—and everyone else who’s critical to keeping the
show going—takes far more than money.
Let’s begin with a central premise of several earlier chapters:
that serving clients with integrated, cross-practice offerings
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156SMART COLLABORATION
typically leads to a stable of “stickier” and more lucrative clients.
Yet when we look around, some partners are obviously doing far
more of this collaboration than others. This disparity begs an obvi-
ous question: Is one partner’s willingness to bear the costs and
risks of collaborating related to her firm’s supportive compensation
system? Conversely, is another professional’s temptation to hoard
work driven by an unsupportive compensation system? Is there a
straight-line link between levels of collaboration within a given
firm and its compensation system?
The answer to this last question is not quite.
Granted, a firm’s compensation system plays a large part in
shaping partners’ behavior, and probably explains why some
firms are, on average, more collaborative than others.
2
But this
doesn’t account for the difference in collaboration between part-
ners in the same firm, where they’re all (presumably) operating
under the same compensation system. And the confusing truth
is that every firm has a wide range of collaborative profiles, in
terms of both the rainmakers who do and don’t refer work to
others, and the partners who are or aren’t on the receiving end
of those referrals.
Consider figure 6-1. It illustrates the experience of one typical
firm, in which a third of the people referred work to other partners
fewer than ten times during the course of my study (over several
Number of projects referred to/received from
other partners within a three-year time frame
50–79 80+30–49
20–2911–19<10
Proportion of partners
10
5
0
35
30
25
20
15
Sent
Received
FIGURE 6-1
Extent and distribution of partners’ work referrals
Chapter_06.indd 156 05/10/16 11:52 pm
Collaboration for Ringmasters157
years), while a quarter of the other partners in the same firm
referred work more than eighty times to their colleagues in that
same period. When we dig deeper into the numbers, we see that
a large proportion of the partners in the “under ten” group origi-
nated many projects, but simply worked on them solo, rather than
getting other partners involved.
There’s a parallel dispersion for people on the receiving end of
those referrals: some partners very frequently get work referrals,
whereas others receive them less than once per year. But why? If
compensation were the sole or even primary driver of behavior—
the way the tigers are kept up on their stools—wouldn’t we see
more homogeneous behavior from partners who all have the same
incentives?
Another kind of evidence pointing toward the weak link
between collaboration and compensation comes from so-called
lockstep firms, in which a partner’s salary depends 100 percent on
her organizational tenure. Logically, such a system should explic-
itly promote collaboration. Because partners’ compensation is a
direct outcome of the firm’s overall profit, each person should be
motivated to broaden his or her business as much as possible, and
should share work with whichever expert in the firm is most likely
to profitably grow a client account.
But the reality is very different. In one lockstep firm I’ve worked
with—let’s call it Delta Associates—the partners’ behavior defied
the economist’s concept of humans as consistently rational and
narrowly self-interested agents who optimally pursue their own
ends (homo economicus).
3
In fact, instead of sharing work across
geographies and practices to optimize the client experience—and
therefore profits—many partners hoarded work locally. My analy-
ses of the firm’s top global clients showed that some account leaders
involved only partners and associates from their own office, even
when those professionals weren’t best suited for the work. These
differences couldn’t be explained by language, cultural barriers,
or even a client-centric desire to minimize travel expenses. In some
instances, the lead partner had the opportunity to involve a world-
class expert from an office not only in the same country, but within
driving distance—and didn’t. The result was predictable: because
Chapter_06.indd 157 05/10/16 11:52 pm
158SMART COLLABORATION
of their local containment, these accounts grew more slowly than
comparable accounts that weren’t similarly confined.
Why such irrational behavior? The answers provide an inter-
esting illustration of the law of unintended consequences. This
lockstep firm tracked profit-and-loss figures at the office level, and
published the figures quite prominently on their intranet. So even
though the partners who hoarded work locally cost the firm poten-
tial revenues—and by extension, reduced their own share of the
profits—they squirreled away work in order to pump up their local
colleagues’ utilization rates and office-level figures. In other words,
they preferred the bragging rights about working in a highly effi-
cient office over higher compensation from collaboration. The
compensation system was ideal, in theory. In reality, though, it was
badly undermined by metrics that promoted selfish behavior.
If people in the same firm, working under the same remuneration
system, choose to behave differently—sometimes even against their
own short- and long-term financial interests—then clearly, money
isn’t everything when it comes to influencing collaborative behav-
iors. Indeed, most psychologists (and increasingly, economists)
argue that performance metrics, whether or not they’re linked to
compensation, drive behavior. “Human beings adjust behavior
based on the metrics they’re held against,” flatly states Dan Ariely,
a behavioral economist at Duke University. “Anything you mea-
sure will impel a person to optimize his score on that metric. What
you measure is what you’ll get. Period.”
4
In other words, even metrics that are carefully designed can
become counterproductive, because they can direct people’s actions
in ways that leaders don’t intend. Ariely recalls how a specific set of
performance metrics during his days as a professor at MIT focused
him more on boosting his teaching ratings than on the overarching
objective that his managers envisioned:
I was measured on my ability to handle my yearly teaching
load using a complex equation of teaching points. The rating,
devised to track performance on a variety of dimensions,
quickly became an end in itself. Even though I enjoyed
teaching, I found myself spending less time with students
Chapter_06.indd 158 05/10/16 11:52 pm
Collaboration for Ringmasters159
because I could earn more points doing other things. I
began to scrutinize opportunities according to how many
points were at stake. In optimizing this measure, I was not
striving to gain more wealth or happiness. Nor did I believe
that earning the most points would result in more effective
learning. It was merely the standard of measurement given to
me, so I tried to do well against it.
So was it wrong for Delta Associates to track and measure per-
formance by means of an office-based P&L? I’d argue not, because
for the purposes of managing the firm, leaders do need this infor-
mation. But, I’d further argue, not all partners need this informa-
tion. In fact, some will function better without it.
Of course, some professionals will balk, chafe, and scoff at this
idea. I hear these objections every time I make the case for selective
disclosure in the context of a professional service firm. “Hey,” they
say, offended. “As a partner, I’m an owner of this firm! I deserve
to know.”
Maybe; maybe not. In the following pages, I explore ways that
you—as a leader of the firm—can walk the fine line between
transparency and information overkill, so that partners are ade-
quately informed but not burdened by data that will mislead or
misdirect them.
Let me preview those ideas briefly. To foster collaboration among
your partners, you need to focus on your firm’s performance man-
agement system, more than your compensation plan, as a critical
lever to change and guide behaviors. If you want to tie some por-
tion of partners’ financial rewards to collaboration—that is, to the
way they achieve their objectives, rather than just the outcomes
themselves—then you need a credible, nonburdensome method
of measuring their behaviors and holding them accountable. You
need a system that can’t be gamed, and also has some teeth.
No system will affect all partners’ behaviors the same way. The
smart, independent people who populate those firms—and who
range, as we’ve seen, from solo specialists to seasoned collabora-
tors to contributors—tend to want to do their own thing, and in
fact are encouraged in that direction by the smart leaders of smart
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