Creating a competitive advantage

There is an apocryphal conversation between a forward-thinking managing partner and a more myopic colleague. The subject of people development has been raised. 'What about if we train our people and they leave?' asks the partner. 'What happens if we don't and they stay?' replies the managing partner.

In my previous article on this subject (SJ 160/19), we saw that learning and development is key to motivation and retention. This has always been the case, but firms are also grappling with societal shifts which bring this issue into sharper relief.

The emergence of millennials into the workplace is seen by some as a disruptive force which will have a negative impact on firms. The more visionary management teams see it rather as an opportunity to reshape their employee proposition, reposition their brand, and ensure their firm is fit for the future.

Michael Porter, the strategy guru, emphasises the importance of separating strategy from operational efficiency. Operational efficiency, he contends, is focused on running the same race better or faster. Strategy, on the other hand, is centred on running a different race. The former is necessary but not sufficient; the latter creates the sustainable competitive advantage that every organisation should seek.The opportunity presented to firms by the societal shifts we are witnessing is clear - to position their firms to run the different race that the 21st century will require. What this means in practice is that firms need to focus on equipping their people - both lawyers and non-lawyers - with the skills they will need to compete in the future.

There also needs to be a clear recognition that the employer/employee psychological contract has shifted to one that is less 'job for life' and more transactional in nature. One might summarise the nature of this change with the following question: 'Over the time I am with your firm, what opportunities for development will you provide to me, in return for which I will provide high-value services to you and the firm's clients?' The opportunity for personal achievement, together with recognition for it, are the two most important motivators. It follows that a 'partnership' approach to the employer/employee relationship will support the creation of a motivated and more loyal workforce.

So, aside from the traditional continuing professional development to build the technical skills needed by a competent professional - the 'necessary but not sufficient' component - where else should firms focus their people development resources? Importantly, with limited resources, where should investment be focused and prioritised?There are a number of facets to consider when designing a strategy to improve the skills and capabilities of people throughout their career with your firm. The starting point is to build core competencies before moving on to higher-order development over a career life cycle. For the purposes of planning, it is helpful to consider separately three components of knowledge and development, namely skills that:

• Underpin the ability to perform the core role;

• Enhance performance as a member of the wider firm; and

• Improve client service and development.

In the first category one might include hard skills, such as the use of technology, as well as management techniques ranging from project management to financial control. Here the focus is on augmenting the core professional skills, the ability to get the law right, which clients will assume are in place, with those capabilities that enhance productivity or the process of client service delivery. This category is about 'running the same race better or faster'.

The second area will focus on issues of values, culture, team working, communication, people management, and performance improvement. It seeks to put in place the skills needed to improve the wider capabilities of the firm in a more coordinated manner. We consider aspects of the firm's strategic recipe that create points of difference and can lead to competitive advantage.

Finally, there must be a focus on soft skills that are critically important to the effective development and management of client relationships. These include negotiation, client listening, and consultative business development capabilities. The objective is to foster the capacity to 'stand in the shoes of the client and see the world through their eyes'. This allows the full potential of the relationship to be unlocked, moving the firm strongly into strategic opportunities to 'run a different race' and so create sustainable competitive advantage.

Of course, there are overlaps between these broad categories, with skills learned in one context being transferrable to others, but this structured approach is a useful framework as part of a more comprehensive strategic plan. While operational effectiveness is important, it is only through developing its people to run a different race that any firm will create a distinctive and sustainable competitive advantage.

Andrew Hedley is director of Hedley Consulting @HedleyConsults www.hedleyconsulting.com