Office politics, collective leadership and AI disruption

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1:04This is Eat Sleep Work Repeat. It's a podcast about workplace culture. Hello, I'm Bruce Daisley. Few people have asked me to do episodes about office politics, office interactions, the sort of playing out of power inside offices. And I've got another episode after this one coming up. But I wanted first to explore that through the lens of professional services firms, 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.

1:46Many 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 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 there is no need for the sort of back channel and gossip?

2:27We 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 discussed 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 Emson.

3:01Laura, thank you so much for joining me. I wonder if to kick off, you could just introduce who you are and what you do. I'm Laura Emson. I'm a professor in the management of professional service firms at BASE 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 is advises and speaking to professional organisations. And in my spare time, I'm also a podcaster. And I guess you've got a hinterland that maybe a lot of other academics don't have, that you had a prior career.

3:37So before you went into this, You actually did some of the stuff you talk about. Do you want to just give us that context? 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 firms and financial services firms. I guess that's given you a perspective. As I've sort of read your work, you're very interested in the sort of, not unique, but particular organizations, high status organizations, professional organizations that might be in the legal or the accountancy or the consulting sector.

4:16The 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. You just want to talk about what drew you to doing research in that area and the nature of your work there. For sure. Briefly, what drew me in was my repeated experiences of very badly run mergers in the organizations 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 organizations, when the owners and the leaders of the strategy consulting firm I was working for, which was, you know, advising leading organizations all around the world, when they started messing up, I thought, no, this is bad and I'm angry.

5:07But 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 realized 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 research 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, it 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.

5:39I 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. Phil, in the gap sense, so these professional organisations are often unique in the sense, as I understand it, that they're something close to democracies or there's a process of election.

6:21And 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 would how does it shape them in a different way okay so bruce you've probably asked me about six questions there so that could i could run the whole of the podcast let me start with the first one if i remember it well no you've got an assumption best all in your question which is that they are they are sort of effectively democratically run organizations and there is this high expectation of um autonomy and i would say um certainly historically, that's absolutely correct.

7:22And these firms are often owner-managed. And in smaller organizations, that is generally true, unless you have one particularly powerful dominant founder. In the really, really large organizations, 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 their organization 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.

8:13And 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 organizations. Now, the reasons that they're both unusual and also very typical of the organizational world more broadly is we all go into our organizational 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.

8:49But 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 organisations. 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.

9:34And 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 10, 20 years back to their first day. or even at university, because a lot of them go to the same universities.

10:06In 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 and sometimes over 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.

10:50However, 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. The 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.

11:29Doesn't necessarily mean they've made the right judgment about that person, but they start off trusting them until they may at some stage be disabused. Can you talk a little bit, the areas I really want to explore and explore 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?

12:03Sure, 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 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, but a lot of governance and culture and identity and various other things like that. But I kept bumping up against leadership.

12:34The 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 a 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.

13:16And some people will say all leadership is like that, and some academics will say all leadership is inherently like that, and to pretend it's not is just, you know, wrong. And all this other research is just wrong. I come up to it from a very different perspective, which is to say in the organizations 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.

13:49And 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 their opinions, debating with each other, resisting initiatives, forming coalitions, undermining other people's attempts to form coalitions.

14:24And it can be very frustrating within those organizations. 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 I spent three days at a conference arguing about it.

15:00Is 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 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 a benign dictatorship, which is the sort of typical CEO, might be preferable. I just wonder if there's any application of those economic circumstances that plays a role.

15:38Yeah, 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 an 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 has definitely shows that is often the case and that all this idea of collective leadership is just swept out the door the minute this crisis and they look just like any other organization they look to a heroic leader who says don't worry god leave it with me i'm i've got it sorted you know and they say just fix it please fast um and my colleague uh suzanne gagnon argues against that based on her research where she's talking about um a particular organization she studied response to the covid pandemic and And what she's saying is in a real crisis, it has to be made.

16:34One 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 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 organizations I've worked with and the leaders I've advised is people, individuals really being broken by the weight of trying to carry the burden of rescuing their organization in a crisis situation.

17:19And when I say to them, 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, your organization. You're basically infantilizing your organization and you're allowing them to shirk their responsibilities as leaders and potential leaders by trying to do it all right. 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.

17:58Do 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 organizations 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. A C-suite or a chief exec making decisions seemingly in a vacuum at times or to the frustration of the wider organization, that's far more common as an operating model.

18:42So 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 when it's taken away from them how estranged from control they seem. Yeah. Remember, they often want the power without the responsibility. If you want autonomy, you have to recognize 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 organization.

19:26You need to recognize that 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 well-being of the organization 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 organization and they say what you mean you mean i have to attend committee meetings as well you know 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 organizations is these quite often there's such a focus on the individual the individual contributor the individual having a voice at the you've sort of hinted a bit there that there's sometimes the absence of a collective mindset when it comes to creating a sense of weenus 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.

20:42Am 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 organizations 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 identify incredibly strongly with the organization and work not just to advance their own career, but absolutely to advance the organization and take great pride in that.

21:35And 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 a round 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 organization really doesn't know any loyalty to me. so just how hard am I prepared to work for the sake of the organization this isn't unique to this kind of organization and professional service labs this is an issue in any organization the question I'm often asked is well given we're in this place and this there's been a 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 will we can all spend a day together and everyone will come away feeling inspired.

22:33But 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 you're looking at these organisations, you witnessed some of this firsthand. 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 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.

23:16So 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 characterized by a sense that we're all in it together, a sense that people have got our backs, that people feel a sense of membership and all of those things in aggregate serve to generate better results.

23:51Laura Empson: 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 organizations eat your lunch. And those organizations 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's that is a challenge often with organizations that have been highly successful in the past and that have just slightly gone off the board was your question what generates it where does it come from or how do you sustain it or just just if there's any lessons of the organizations 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.

24:53I want to see the sporting metaphor, not only the team that are happy on the bus, but are winning the games. Or the movie metaphor that they're not only enjoying each other's company, but they're making award-winning work. 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.

25:38And 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? 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 organization and they'd spoken to a lot of their competitors and they said we hear from these other people they don't want to feel like they feel all the time like they've got a target on their back and we don't want to feel like that.

26:32And 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 organization 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 it's, 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.

27:08When 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.

27:16Laura Empson: 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.

27:57Laura Empson: 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 organisation, 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.

28:30Laura Empson: 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 come 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.

29:10Professional 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?

29:33Laura Empson: 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 organizations. 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 organizations. 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.

30:06Laura Empson: 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 and 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.

30:40Laura Empson: 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 organization is no longer loyal to you and your families 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.

31:15Laura Empson: That's still there, but what overlays 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.

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32:21Hey, 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. Taxes and fees apply.

32:53Thank 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.

33:32Hey, 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. Taxes and fees apply. This podcast is brought to you by Thomson Reuters. The best don't just do their work, they change what's possible.

34:07Cases 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, empowers the outcomes that matter. So when professionals act, the impact is felt by everyone. Be a changemaker. Visit tr.com forward slash changemakers.