Office politics, collective leadership and AI disruption

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Professional services firms, often accountancies, lawyers, consultancies. Laura Empson is probably one of the best people to help us explore that. She's a professor at Bayes Business School. She previously actually worked in professional services herself, and she's focused on understanding the way that these unique organisations work. Many professional services firms are highly paid collections of partners who effectively collectively own the firm, and it means that their organisations are very different to the version of work that we're most used to seeing elsewhere. Rather than being sort of low agency and unable to control the leadership of their firms, these people are high agency and are actually able to elect their leaders. I wanted to understand the impact that this had on the running of the organisations. Does the ability to elect leaders mean that politics takes place in public, or does the overt nature of political decision making mean that there's no need for the sort of back channel and gossip? We talk politics in these firms. We talk collective leadership, identity, the importance of shaping identity, and also how to achieve elite performance culture in a collective organisation, whether there has to be a trade-off between comfort and success to achieve breakout results. We also discuss the growing impact of AI as a disruptive force on professional services firms, whether it's upending pressure from younger workers to make these cultures less toxic. Here's my discussion with Laura Empson. Male voice: Laura, thank you so much for joining me. I wonder if, to kick off, you could just introduce who you are and what you do. Female voice: I'm Laura Empson. I'm a professor in the management of professional service firms at Bayes, at the University of London, and I'm also professor of leadership and organisation at Copenhagen Business School. And to carry on with my CV, I'm a research fellow at Harvard Law School. Another really big part of my life is the business I run, which advises and speaks to professional organisations. And in my spare time, I'm also a podcaster. Male voice: And I guess you've got a hinterland that maybe a lot of other academics don't have, that you had a prior career. So before you went into this, you actually did some of the stuff you talk about. Do you want to just give us that context? Female voice: Yeah, sure. So I started my PhD when I was 30, but before that, I worked first of all as an investment banker in the City of London during the 1980s, and then as a strategy consultant, specialising particularly in advising professional service and financial services firms. Male voice: I guess that's given you a perspective, as I've sort of read your work, you're very interested in these sort of not unique, but particular organisations, high-status organisations, professional organisations that might be in the legal or the accountancy or the consulting sector. The reason why I get value from what you talk about is that some of the themes that you see playing out there, I think are applicable elsewhere, even though they're actually unique in other ways. Do you just want to talk about what drew you to doing research in that area and the nature of your work there? Female voice: Sure. Briefly, what drew me in was my repeated experiences of very badly run mergers in the organisations that I worked in. And while I was kind of prepared to forgive that, sort of with the investment bankers, because they're not supposed to know very much about managing organisations, when the owners and the leaders of the strategy consulting firm I was working for, which was, you know, advising leading organisations all around the world, when they started messing up, I thought, no, this is— This is bad, and I'm angry. But most of all, when I have an emotion that I find difficult to deal with, I seek to try and understand it. So I did what I realize in retrospect was a classic academic response. I got in touch with our chief librarian, our chief knowledge officer, and said, Can you do a literature search for research on mergers between professional organizations? And he came back and said, There's nothing. There's nothing been published on this. And it was one of those light bulb moments. Literally, I was very peculiar. I was just sitting at my desk. I just had this startling moment of thinking, Oh my God, I've got to go and do a PhD to study it. I was at a stage in my life where I knew I was burnt out and I was disillusioned with my second career and looking for something else. And I had no idea what, but I thought, Well, I'll go to London Business School and do a PhD there while I work out what I really want to do with my life. And somewhere along the way, I was seduced by academia. I was offered a job at Oxford, but I was never wholly fulfilled by that. I find I've always maintained this dual identity, so I need to get out of that space because it's almost like I can't breathe sometimes, and explore the real world. Fill us in the gaps then. So these professional organizations are often unique in the sense, as I understand it, that they're something close to democracies, or there's a process of election, and it makes it slightly different where maybe the issue that we might witness more broadly as a trend in the wider workforce is a lack of agency. These are high-agency individuals, or certainly in terms of the big outcomes of the firms, they feel that they've got a voice. How does that characterize them? How does that shape them differently? Does that mean that they've got more overt politics, whereas normally in the rest of the world we see politics as something slightly covert or discreet? Does it make for more campaigning, more open lobbying? How does it shape them in a different way? Okay, so, Bruce, you've probably asked me about six questions there, so I could run the whole podcast. Let me start with the first one, if I remember it. Well, no, you've got an assumption, bestor, in your question, which is that they are... They are sort of effectively democratically run organisations, and there is this high expectation of autonomy. And I would say, certainly historically, that's absolutely correct, and these firms are often owner-managed. And in smaller organisations, that is generally true, unless you have one particularly powerful dominant founder. In the really, really large organisations, what you've got is a vestigial memory and an expectation of autonomy and democracy. And whilst they may still elect their leaders, they have delegated so much authority to them that once they're in position, the partners, who are notionally also the leaders of the organisation, may pull back and feel disempowered. So what ties it all together and what makes them distinctive is they embody this kind of inherent tension between the desires of individuals, often highly intelligent, highly educated, highly successful, extremely, sometimes extremely wealthy individuals, to live their life and to do their work their own way, and their belief that in order to serve their clients best, they need enormous freedom and autonomy to do that, and this need also for control, some kind of element of collective understanding of what degree of control these individuals are willing to submit to. So there is this tension at play at all times in these organisations. Now, the reasons they're both unusual and also very typical of the organisational world more broadly is we all go into our organisational lives with the desire to work and live our lives our own way, and an innate tendency to bump up against bureaucracy and control and to resent it. But most of us in our day-to-day work actually don't have the agency or the legitimacy to resist it. These people still, by and large, believe that they have that right and that expectation. That is where the tension for me and the fascination lies. So they are an extreme example of the tension that sits in all organisational... I've seen Alex Haslam talk about social identity theory and how leaders, and one of the things that often proves to be a challenge, the very act of wanting to be a leader separates you from having identity with the group. And I think you witnessed some of that, didn't you? You witnessed the fact that when people... Have these aspirations to transcend, it often is one of the things that makes them, that disqualifies them in the minds of their colleagues. And I'm interested in that, the idea that the thing that makes us want to elevate actually separates us from being one of us. So at a basic level, if we take the most sort of simple traditional format, people tend to join these organizations straight from university, and they move up. Most of them don't survive very long, but those that do move up together in cohorts. So there's a really strong cohort effect. By the time they are owners of the firms, they may have known each other for, you know, 10, 20 years, back to, you know, their first day or even at university, because a lot of them go to the same universities. In that sense, they're very much peers. And then the question is, well, I don't want to run this department. I don't really want anyone else to run me. So who do I choose to be in charge? Do you really want someone being the boss of you who's really eager to be the boss of you? And why do they want to do it? And that is always the question. Why do they want to be the boss of me? And can I trust them to use their newfound power in a way that advances my agenda and my interests? And that's the kind of unspoken, sometimes overt dynamic that goes on in these organizations. If you sense that someone is power hungry and can't be trusted with that power, you've probably worked that out already, and you really don't want to elect them. However, if there is someone else who is saying, obviously I'd much rather remain focused on my clients, but I am quite concerned about certain issues that are in this firm, and I can see fantastic opportunities for doing things differently. And, you know, you've known me a long time and can trust me, and I think you've got some brilliant ideas which I'm eager to implement and make possible. You'll vote for them. So that's how the power and politics work. The people who Explicitly set themselves up as ambitious for leadership are inherently suspect. But people who set themselves up as ambitious for the firm and eager to do something about it, take the burden off your shoulders. Automatically, people are more inclined to trust. Doesn't necessarily mean they've made the right judgment about that person, but they start off trusting them, and then until they may at some stage be disabused. Can you talk a little bit? The areas I really want to explore, and explore sort of culture inside all these organizations, but also the characteristics of leadership inside these organizations, because quite often this is something—it's a collective leadership rather than necessarily an individual leadership. I want to know what that looks like, really, and just how it evolves, how difficult decisions are made. So can you talk a little bit about collective leadership in these firms? Sure, sure. And I'm fascinated by collective leadership. It's a concept that has really only been developing within the academic literature as a way of theorizing leadership in, you know, the recent one or two decades. When I started studying these firms, it was just not a concept that was out there at all, although the phenomenon was out there. So one of the reasons it took me a while to really start explicitly studying leadership, I'd studied a lot of other things beforehand, you know, a lot of governance and culture and identity and various other things like that. But I kept bumping up against leadership. The problem was there was nothing in the academic literature which helped me understand what I was seeing. It just wasn't relevant because it was based on, you know, very conventional positional or people-based views of leadership, i.e. studying the leader as a person or studying the leader as a position, which is really sort of manager in effect. And those are conventional ways of thinking about leadership. But what collective leadership does is adopt a much more relational perspective, and it looks upon leadership not as something that you do to me or I do to you, but something that happens between us through a collective process of negotiation, of granting and claiming leadership identity to each other, sometimes over the course just of one meeting. Sometimes more explicitly through an election. And some people will say all leadership is like that, and/or some academics will say all leadership is inherently like that, and to pretend it's not is just, you know, wrong. All this other research is just wrong. I come at it from a very different perspective, which is to say in the organisations that I study, collective leadership is almost predetermined. It is required by the fact that you have often many people either explicitly owning the firm or being immensely powerful in the firm, perhaps because of their client base or the amount of revenue they generate. But you have a lot of highly influential people in the firm who don't especially want to be led, but they may not especially want to be leaders. And the solution to that, which is embedded in the governance structure, is collective. I study collective leadership almost as a predetermined thing, whilst also recognising that many other organisations with different kinds of governance structures aspire to leading much more collectively. So you ask, what does it look like? Well, in really straightforward terms, it can look like a big fat mess. It's a whole bunch of people, often with very strong opinions, often lacking information to justify those opinions, debating with each other, resisting initiatives, forming coalitions, undermining other people's attempts to form coalitions. And it can be very frustrating within those organisations. And people think decision-making is very slow, and we always take the line of least resistance. And that's on a bad day. It can take the form of formal votes. I've seen organisations where you have up to 200 owner-managers within the organisation who get together and have multi-day meetings about every six months, where they vote on really fundamental stuff and really trivial stuff as well. Not many decisions can be made in between. But when they do make a decision, it's by the overwhelming majority, and therefore it's implemented very easily because everyone has bought into it because they spent three days at a conference arguing about it. Is there anything that aligns with the notion of wartime leaders and peacetime leaders, in the sense that I can presume when the circumstances are good, a collegiate system of learning how to reap... Reap the gains and indulge ourselves by spending a bit more money might be beneficial. Wartime, when things are maybe a bit more straightened and the competitive circumstances are different, you maybe don't want the distractions of that, and benign dictatorships, which is the sort of typical CEO, might be preferable. I just wonder if there's any sort of any application of those economic circumstances that plays a role. Very much so. And in fact, I've got an article coming out with some colleagues that addresses this explicit issue of— and I have a strong ongoing debate within this article with a colleague about whether collective leadership is overridden in a crisis, whether this traditional hierarchical views of leadership come in and dominate. And my research definitely shows that is often the case, and that all this idea of collective leadership is just swept out the door the minute there's a crisis, and they look just like any other organisation. They look to a heroic leader who says, Don't worry, leave it with me. I've got it sorted, you know, and they say, Just fix it, please, fast. And my colleague Suzanne Gagnon argues against that based on her research, where she's talking about a particular organisation she's studied in response to the COVID pandemic. And what she's saying is, in a real crisis, it has to be made. One brain is never going to fix this. You can only address really fundamental crises collectively, which is where this concept of collective leadership is particularly useful now beyond the kind of specific sectors that I'm talking about. The argument that, given the scale of the complex— Given the scale of the complexity that leaders are dealing with now, to attempt to lead conventionally is a hiding to nothing. And what I've certainly found in the organisations I've worked with and the leaders I've advised is, you know, people, individuals really being broken by the weight of trying to carry the burden of rescuing their organisation in a crisis situation. And sort of when I say to them, you know, if it feels lonely at the top, you're probably not doing it right, and you need to activate the leadership potential of those people all around you, and find, if they're not all around you, find the people who are, because you cannot do this on your own in your organisation. You're basically infantilising your organisation, and you're allowing them to shirk their responsibilities as leaders and potential leaders by trying to do it all alone. So superficially, yeah, you're absolutely right, and that is what I have found in my research. But I think there is a deeper level to go to say, yeah, but when you're trying to do something really big, in a hurry even, do not just default to thinking, I and my immediate team have to fix this. It depends a bit on what exactly the issue is. It has an interesting application, doesn't it, for the wider world of work. So you're looking at very specific organisations with highly qualified individuals who consider themselves to have earned their place at the table. But that absence, that semi-autocratic approach, is actually the norm across the rest of most industry. You know, a C-suite or a chief exec making decisions seemingly in a vacuum at times, or to the frustration of the wider organisation, that's by far more common as an operating model. So it's an interesting comparison where these professional individuals that you're dealing with that feel like they've earned a place are actually very frustrated when they're denied something that actually is rarely gifted to their colleagues in other sectors. It's interesting sort of when it's taken away from them, how estranged from control they seem. Yeah. Remember, it's, they often want the power without the responsibility. You know, if you want autonomy, you have to recognise that someone has to be responsible for the collective success of this firm. And therefore, you can't just have autonomy to be left alone and expect to remain in gainful employment in this organisation. You need to recognise that you have to make, you have to contribute to the collective, not just in terms of generating business and generating fee income, which will make you very powerful, but you actually have a responsibility for ensuring the health and longevity and wellbeing of the organisation, and ultimately, collectively, the clients and the people who work within it. And that's sometimes quite challenging for people to get because they already are working as hard as they possibly can, sometimes generating millions of pounds for the organisation. And they say, What, you mean I have to attend committee meetings as well? And then the question is, Well, yeah, but we've got to fix those committee meetings to make sure they're worth attending. And that's really where my advisory work comes in. The one thing I'm really interested about these big professional organisations is these, quite often, there's such a focus on the individual, the individual contributor, the individual having a voice, that you've sort of hinted at a bit there, that there's sometimes the absence of a collective mindset when it comes to creating a sense of we-ness. They might have a close, cohesive relationship with the people who work directly for them, but they don't always seem generous with trying to create something bigger that goes beyond their team. Am I right in seeing that? There's almost sort of, there's not necessarily, or there's an inconsistent sense of team-mindedness or company-mindedness at times because they're such qualified individual contributors in their own right. Am I right in witnessing that? It does vary quite a bit by organisation, but what I've found is, through my research and also more generally in my advisory work, is that there's a creeping process of disillusionment. There will be times and eras in organisations and in professionals' lives where they can feel the most incredibly powerful sense of the power of the collective and thrill at being part of that and identifying incredibly strongly with the organisation and work not just to advance their own career, but absolutely to advance the organisation and take great pride in that. And then, I mean, the most obvious challenge to that is a merger, or maybe the acquisition of other countries, other offices, which starts to change the dynamic. Then around or so of major layoffs. I mean, technically, you can't sack a partner or an owner of the firm, but you can give them a bunch of money to go away. And people start thinking much more pragmatically about it and think, well, actually, this organisation really doesn't owe any loyalty to me. So just how hard am I prepared to work for the sake of the organisation? This isn't unique to this kind of organisation, professional service firms. This is an issue in any organisation. The question I'm often asked is, well, given we're in this place and there's been this significant damage to our sense of collective, how do we rebuild it? And it's really never something you can just do, you know, because I can come along and give an inspirational speech and talk about my research and everyone, we can all spend a day together and everyone will come away feeling inspired. But unless it's enacted and lived out, really systematically on a day-to-day basis thereafter, in an odd sort of way, it will have just been another step in the progressive disillusionment. Can we talk a little bit about culture? I'm sort of intrigued with culture, and I guess, looking at these organisations, you witness some of this firsthand. When... What are the characteristics of good culture when they get it right in these firms? Is there anything about the model that assists in building good culture, this sense of giving people a voice, or is actually, is that merely just a complicating factor? I think we need to interrogate what you mean by good culture, because that can mean lots of different things. So what do you mean when you say good culture? And I'll try and answer the question more precisely. Yeah, I mean, generally I would say a collective sense of togetherness that, by its presence, enacts greater motivation, greater engagement. A highly effective culture for me is characterised by a sense that we're all in it together, a sense that, you know, people have got our backs, that people feel a sense of membership, and all of those things in aggregate serve to generate better results. Okay. The reason I was just pushing back on you a little bit is it is perfectly possible to have half of that and not the other half. So you can have an incredible sense of belonging, pride in the firm, a sense of togetherness, and watch yourself slipping slowly down the league tables due to complacency, whilst far hungrier, more aggressive, and frankly more unpleasant organisations eat your lunch. And those organisations may have miserable cultures. There's no point having the deep sense of collectiveness unless that also translates into competitiveness. It can translate into complacency, and that is a challenge often with organisations that have been highly successful in the past and that have just slightly gone off the boil. Was your question what generates it? Where does it come from, or how do you sustain it? Just if there's any lessons of the organisations that got this right. And so I guess I do want to see those things in combination, where standards are raised, where results are improved. You know, I want to see the sporting metaphor, not only the team that are happy on the bus but are winning the games, or, you know, or the movie metaphor that, you know, they're not only enjoying each other's company, but they're making award-winning work. You know, like, how can these things be in accord with each other, really? Well, it's never just one thing. It's going to be a complex web of things over time. In really simple terms, you've got to believe that it is a club worth being a member of, and you've got to believe that you're lucky to be a part of it. But within that comes an innate insecurity and vulnerability, because it has to also be a club that expels underperforming members, and otherwise it just becomes a bunch of folks hanging out. The challenge is, how do you get that balance right to maintain that pressure to form individually without it descending into paranoia and internal competitiveness? Well, you do want your people to be competing with each other in terms of when you see a colleague doing incredibly well, your question to yourself should be, And how do I do as well as that? or How do I do better? You want that to maintain the performance, but it should never translate into, How do I succeed at the expense of my colleague? And that's where you descend into bad politics. I was with a bunch of partners the other day who were trying to address certain issues in their organisation, and they'd spoken to a lot of their competitors, and they said, We hear from these other people, they feel all the time like they've got a target on their back, and we don't want to feel like that. And I said to them, Well, I think that's part of your problem, that ultimately, you know, why you have been and you still are one of the very best firms in your sector, presumably you want to remain proud to be part of the organisation you're in. So inherently, there's a price to be paid for that, which is this sense of vulnerability if you fail to meet the goals and to have the goals set high and to aspire constantly to get them. So I think when that's purely framed in financial terms, it can motivate some people, but not everyone by any means, and it becomes harder and harder the richer you get to remain purely motivated by money. When it becomes I want to be successful because I want to be part of this winning team. Then it becomes a kind of collective endeavor. I think it's a pattern of actions, and if I reduce it, if I make it too simple, it's going to be really banal. It seems to be an important part of the kind of leaders that you elect, or the kind of leaders that are selected, and their ability to not simply shoulder the burden of leadership, but to push it back onto the people within the organization to understand that they are leading collectively to achieve this collective goal. So what the leader can be very, the leaders can be very good at is articulating and giving voice to this collective goal. That's incredibly important. And then finding a way of getting people to genuinely believe in the feasibility of this collective goal and encouraging them to think that it is a reasonable thing for them personally to aspire to. So that is what's happening at the leadership level. But the actual manifestation of this has to become the collective responsibility for everyone in the firm, but particularly the most senior people in the firm. So there is this dance all the time between these people within the organization, whether they're the owners or the major fee earners, to understand that we are absolutely all in this together, and we will sink down the rankings together. We will be poached together. We will have to sell out to a private equity firm because we've run into a brick wall and don't know what to do together. But it doesn't just happen. It has to be deliberately and consciously done and managed by the people at the top. Can I ask a little bit about, sort of coming to the end, but can I ask a little bit about the impact of generational change? One of the things that we often observe is that younger generations, in as much as we all thought, in as much as we all thought when we joined the workforce that this is bananas. Why is it run like this? But we were kind of hazed by the systems and processes in place. And if we're to believe anything right now, younger workers are more willing to speak up when they witness things that seem dysfunctional or not serving a purpose. And professional organizations are a very peculiar configuration in the world of work. Is that dissonance being more actively felt in professional firms, that younger workers are saying, Why do I have to do this for 15, 20 years, 30 years to earn a seat at the top table? Are they speaking up more about the challenges of these firms? I'd give you a slightly different answer if you'd asked me that question five years ago. Five years ago, I'd have said, Absolutely yes, you're completely right. And at some level, there's a real break in the intergenerational contract in these organisations, and I'll explain that in a little bit more detail in a moment. What's changed now is the impact of AI, which means that it's harder and harder now to get a job in many of these organisations, and that automatically diminishes the power of the more junior people, which was never great, but for a while it seemed to be increasing. I'll just try and unpack that for you briefly. The basic structure of these organisations is the people at the top make money from the labour of the people at the bottom. They need, traditionally, large numbers of very junior, inexperienced people to be performing the work that they are winning and designing, and it's called leverage, and it's fundamental to the economic organisational concept within these organisations. In earlier times, in my generation, we bought into that because we saw the prizes were enormous, and we were excited by this idea of becoming successful as it was defined in those terms. And that's the legacy of the yuppie era. That started changing when the contract with most senior people was broken, when people started losing their jobs, when the nature of the work became more and more relentlessly tough and the rewards became more limited, and junior people would look to their bosses and think, You've wasted your life. You're rich, but you've done terrible things, and your organisation is no longer loyal to you, and your family don't even know your name. I don't want that. For a while. The next generation seemed to want more and have greater expectations from their lives more generally. In simplified terms, work-life balance and organizations that served a broader purpose rather than just economic gain. That's still there, but what's overlaid it is these organizations don't need so many junior people anymore. So you've got more and more people scrabbling for fewer and fewer jobs, and they will still be going into these occupations because they are phenomenally well paid, and they have massive, in this country, in the UK, massive student loans to pay off. But they don't go in with the same kind of dreams of success that maybe our generation did. Hey, I'm running out to drop off a stack of letters and packages. Need anything shipped while I'm gone? Save the gas. Stamps.com lets you print postage and schedule pickups right from your desk. Sync your contacts into the address book, get detailed accounting insights, and get notified the moment your certified mail is delivered. All from my desk? All from your desk. Join the 4 million businesses using Stamps.com right now with code PODCAST and get your free welcome gift. Stamps.com, code PODCAST. Terms and conditions apply. This podcast is brought to you by Thomson Reuters. The best don't just do their work; they change what's possible. Cases won, audits completed, jobs saved. Behind every one of those moments is a professional who needed to get it right and did. Thomson Reuters builds the technology that sharpens insights, speeds up decision-making, and powers the outcomes that matter. So when professionals act, the impact is felt by everyone. Be a changemaker. Visit tr.com forward slash changemakers. Still waiting in line? Again? That's time you'll never get back. Save time and money with Stamps.com. Over 4 million businesses have skipped the line with Stamps.com. Join them to save up to 90% off carrier rates from your computer or phone right now. Print postage for certified mail, registered mail, and packages in seconds. Then schedule a pickup right from your home or office. For a limited time, go to Stamps.com and use code PODCAST for a free welcome gift. Taxes and fees apply. Thank you to Laura. Laura's also got her own podcast. If you're interested in the culture and professional services firms, or just really sort of the running, the leadership of these organizations, it's a fantastic listen. The podcast is called Leading Professionals, and I've given a link to it in the show notes. Thank you once again to Laura Empson. I've been Bruce Daisley. If you like any of this, you can follow along on the newsletter, and you'll find that at eatsleepworkrepeat.com. Thank you for your time today. I'll see you next time. Business is booming. Is your fulfillment ready for peak season? 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