Understanding Your Firm's Organizational Culture As a Path to Success

The leaders of modern organizations, law firms included, are beset with exhortations to change. Dynamic change, transformational change. How do you drive it? How can the firm look different tomorrow than it did today? It seems as though few components of a firm are exempt from calls to re-imagine and re-engineer. While it is critical for institutional learning to include the mastery of shifting competitive dynamics, recognizing and reinforcing the valuable fundamentals that do work is just as important. Knowing who and what you are is just as powerful as knowing what you want to be. This identity, which drives lateral recruiting, mergers, departures and development, is organizational culture.

For many law firms, culture is often thrown into this change basket without giving proper thought as to whether it is actually advantageous or aligned with strategy. One reason for this is that climate, which comprises the more temporal and subjective reported experiences of individuals within a firm, can be confused with culture, which comprises long-term, widely held common expectations within a firm that explain why those experiences happen. And, given the complexity of the owner-manager structure of a law partnership, where more voices are heard at the same volume than in a hierarchical corporation, the positive fundamentals of culture can be more difficult to identify.

So before throwing the baby out with the bathwater, firm leaders should understand who they are, and what competitive advantages result from this cultural understanding. Not only will this approach allow more effective positioning overall for the firm, it will also put the firm in a position of strength to attract and retain high-value lateral partners and groups. The encouraging reality is that culture is not a one-size-fits-all proposition. And as partners move away from indistinguishable platitudes of “cooperation” and “collegiality,” and take a more honest look at their firms, a properly identified culture can be embraced and leveraged to deliver value to all stakeholders.

Organizational Culture: What It Means

Organizational culture has a number of different analytical frameworks and taxonomies. One of the best articulated is the “Competing Values framework” (CVF), developed by academics Robert Quinn and John Rohrbaugh, which breaks down culture into several distinct types, each with its own characteristics. The dimensions of the framework ' focus, structure, and means-end ' are meant to signify competing fundamental principles that are indicia of what people value about a firm. Firms will not fall perfectly into each of the CVF's categories ' clan, adhocracy, market and hierarchical, but the CVF is a telling lens through which to view these identities. Are you internally or externally focused? Are the controls loose or more structured? How can these characteristics be embraced for success at the modern law firm?

Clan Culture

A clan culture tends to be internally oriented with a more flexible firm structure that encourages connected interpersonal relationships and open communication. The focus is less on economic results than on harmonizing employees and encouraging attachment and affiliation.

This scenario sounds appealing, and there is no question that managing partners would like to bring a greater human component to their firms. However, a clan culture is not without significant trade-offs. Typically, firms with this culture will be those that place a premium on “work/life” balance, with less required coordination of activities among members and with fewer directives from management that impact the tactical activities of members. A great deal of trust abounds among members to handle their own affairs in a fashion that does not adversely impact any other member, effecting a “fairness” in operation, neutralizing revenue disparities found in firms with different cultures.

It is a difficult endeavor for a managing partner to attempt to change this type of culture. Often, the call to change comes from a desire for increased profitability, enhancing working attorney revenue or to attract higher-profile, more demanding clients. The interests and historical comfort of partners who receive psychological remuneration in lieu of financial rewards in this system typically stand in the way of these attempts.

Rather than fight their identity, clannish firms should seek to acquire partners who are a legitimate fit for their culture. These environments are most likely to appeal to partners whose risk tolerances are relatively low, but who value and manifest stability in practice and behavior. Firm leadership can emphasize these qualities by being honest about what the firm is not as much as what it is. Ultimately, this type of WYSIWYG (What You See Is What You Get) attitude enhances and solidifies organizational commitment via candor and reinforcement of the culture.

Adhocracy Culture

In stark contrast to the clan culture stands the adhocracy, where there is decentralized decision-making, fewer behavioral norms and organic structures; in sum where a relative absence of standardized procedures define a realm of highly independent operators. The organizational culture here fosters risk-taking and creativity, without the strictures of internally focused rules and processes. The adhocracy favors the bold, externally oriented partner, who sees collaboration as a situational benefit rather than a codified norm.

Assuming interests and endeavors either align or do not conflict, significant benefits can accrue to the members of an adhocracy, who often operate at high speed and with great efficiency. Independence reigns where bureaucratic controls are minimized, thereby allowing partners to adapt to a complex working environment with sometimes competing priorities and projects, the byproduct of which can be someone's subjugation. There is a foundational element of trust endemic to the adhocracy, that the individual agendas can be reconciled in cases of conflict or when synergizing goals creates value for the firm. Certainly, adhocracies can be frustrating for partners who are accustomed to agreement or what they perceive to be coherence among the larger group. However, these are exactly the type of people who do not and cannot thrive within these cultures.

From the outside, this organizational culture can appear non-strategic. The very name “ad-hoc” connotes “of and specific to the moment or situation” and thus lacking permanence or universality. It is important, though, to understand the strengths of this type of human capital. Lawyers who are accustomed to operating effectively with high degrees of uncertainty and without interference from monitoring and guidance mechanisms fit naturally in these arrays and can be prolific. Rather than hiding or attempting to obfuscate the adhocracy, managing partners should seek to understand the operating parameters of it within their firms and how to best make use of the informal networks that result. This system can then be clearly articulated and made visible to potential laterals who would thrive there and perhaps are chafing elsewhere under either a more rigid structure or one that does not value their heuristic aptitude.

Market Culture

Market culture shares the pace and drive of the adhocracy, but with a much clearer set of rules and expectations that often get described as part of a meritocracy. It is achievement-oriented and utilizes active, centralized decision-making as well as rapid, multi-channel communication networks. Wins here are measured by total market share, high profitability and a focused aggressiveness. The culture is reflexive, where the system is built for victories in high-stakes competition, and the product quality, attitude and results provide motivation to further optimize the system. Expectations and the objectives of members are clear, and firm members hold one another to a high standard of efficiency and performance.

In this type of culture, the word “platform” takes on its most legitimate meaning. Platform in a market environment not only embraces the breadth of interconnected practices or the geographic locations of offices, but also encapsulates a way of working and demands that differentiated deliverables and service from competitors. While the totality of the performance is considered, the bottom line ' “the ends” ' is more heavily weighted in the calculus.

Counter-intuitively, firm leadership may incorrectly de-emphasize the presence of this culture, or proffer initiatives to reduce or anecdotes to explain away the market orientation, lest it be seen in a negative light as a “shark tank” or excessively hard-charging. As a result, the very behaviors and mechanisms that are enabling success at the firm could be unintentionally hampered, either through negative perception or fear of a social penalty. These errors can also mistakenly be extended into lateral recruiting, when hiring partners or chairpersons position the firm otherwise to partners who do not run at a high RPM, or go out of their way to ignore, rather than emphasize a market culture. In fact, a proven market culture should be embraced by firm leadership, and those laterals who are properly aligned, ready to run at the same speed and with similar values can be accretive in a way that perpetuates the development and retention of the “best athletes,” and thus sustains a prime competitive advantage of the firm.

Hierarchy Culture

This culture emphasizes predictable systems, rules and direction, with a high degree of control and stability. With visible paths and formal practices, few participants make wildly independent decisions, because consistency and precision dictate. In these firms, their systems, rather than serving as a complement to the behaviors and pursuits of the members, tend to drive and define behaviors, lessening operational ambiguity. Conformity is valued to ensure proper functioning in this environment, where the means are important in and of themselves. Clear signals on how things are done are provided from leadership, and are inculcated into the different generations of the firm.

It is not uncommon for firms of this type to have senior members speak of the Firm X “way of doing things,” which is at the very essence of culture. In this case, the cohesiveness of the organization is derived from the codification and memorialization. Values can be both espoused and enacted transparently, since they flow from a framework that is maintained for the benefit of the collective. Though less malleable than others, this culture is highly reliable, and thus a visible and marketable asset for a law firm.

The variances of personalities, to the extent they exist, have a minimal effect on the direction or initiatives of the firm. As a result, there is a certain comfort afforded partners in these organizational cultures, because clear precedents have the ability to temper political machinations or outlying self-interest.

While there are exceptions to every case, these firms will struggle to retain or attract highly autonomous or proactive partners who need significant agility from the firm or the ability to market and practice based on rapidly shifting dynamics/opportunities. Those types of partners are more likely to create internal static as their proclivities to advance market objectives or act on instinct run counter to the predominant hierarchical culture. As difficult as it is to consider losing revenue or talent, leadership should match recruitment and retention with a sensible strategy. Hierarchical cultures are not adept at frontal assaults on new clients, but they may be better suited to managing large scale or longtime client relationships.

Direction and Challenges

Armed with some of the nomenclature of organizational culture, law firm leaders and partners can take a holistic and more pragmatic look at their firms' own culture. Most firms will not fall rigidly into one category or another of the CVF, but the framework itself is one of several productive entry points to understanding the building blocks of your firm's culture. While a formal measurement tool exists (the Organizational Culture Assessment Instrument) to produce metrics, an informal qualitative approach, where firm leaders themselves initiate and facilitate dialogue, will signal to colleagues and lateral candidates that the issue is on equal footing with the related concerns of revenue, profits, rankings and client relationships.

Recent research further highlights the relationship between culture and organizational effectiveness (Hartnell, Ou & Kinicki 2011). Managing partners who struggle against their firms' natural orientation are less likely to form and execute successful strategies. More worrisome are those leaders who ignore the cultural underpinnings and still seek buy-in for strategies that are not the best use of the firm's organic systems and partners' qualities. They do so at the risk of an ersatz buy-in from colleagues who either pursue their own agendas or begin examining alternatives.

This is not to suggest that organizational culture cannot or should not change within the firm. But to know thyself is the first step toward wielding the knowledge powerfully and making informed adjustments. Law firm leaders who confront, embrace and open up their organizational culture to definition and optimization can alchemize a misunderstood quality into a sustained competitive advantage.

A former corporate and IP transactions attorney, Peter Daniel Ocko is a Managing Director in Major, Lindsey & Africa's Partner Practice, based in Los Angeles. He can be contacted at [email protected] or 213-689-0704.

The leaders of modern organizations, law firms included, are beset with exhortations to change. Dynamic change, transformational change. How do you drive it? How can the firm look different tomorrow than it did today? It seems as though few components of a firm are exempt from calls to re-imagine and re-engineer. While it is critical for institutional learning to include the mastery of shifting competitive dynamics, recognizing and reinforcing the valuable fundamentals that do work is just as important. Knowing who and what you are is just as powerful as knowing what you want to be. This identity, which drives lateral recruiting, mergers, departures and development, is organizational culture.

For many law firms, culture is often thrown into this change basket without giving proper thought as to whether it is actually advantageous or aligned with strategy. One reason for this is that climate, which comprises the more temporal and subjective reported experiences of individuals within a firm, can be confused with culture, which comprises long-term, widely held common expectations within a firm that explain why those experiences happen. And, given the complexity of the owner-manager structure of a law partnership, where more voices are heard at the same volume than in a hierarchical corporation, the positive fundamentals of culture can be more difficult to identify.

So before throwing the baby out with the bathwater, firm leaders should understand who they are, and what competitive advantages result from this cultural understanding. Not only will this approach allow more effective positioning overall for the firm, it will also put the firm in a position of strength to attract and retain high-value lateral partners and groups. The encouraging reality is that culture is not a one-size-fits-all proposition. And as partners move away from indistinguishable platitudes of “cooperation” and “collegiality,” and take a more honest look at their firms, a properly identified culture can be embraced and leveraged to deliver value to all stakeholders.

Organizational Culture: What It Means

Organizational culture has a number of different analytical frameworks and taxonomies. One of the best articulated is the “Competing Values framework” (CVF), developed by academics Robert Quinn and John Rohrbaugh, which breaks down culture into several distinct types, each with its own characteristics. The dimensions of the framework ' focus, structure, and means-end ' are meant to signify competing fundamental principles that are indicia of what people value about a firm. Firms will not fall perfectly into each of the CVF's categories ' clan, adhocracy, market and hierarchical, but the CVF is a telling lens through which to view these identities. Are you internally or externally focused? Are the controls loose or more structured? How can these characteristics be embraced for success at the modern law firm?

Clan Culture

A clan culture tends to be internally oriented with a more flexible firm structure that encourages connected interpersonal relationships and open communication. The focus is less on economic results than on harmonizing employees and encouraging attachment and affiliation.

This scenario sounds appealing, and there is no question that managing partners would like to bring a greater human component to their firms. However, a clan culture is not without significant trade-offs. Typically, firms with this culture will be those that place a premium on “work/life” balance, with less required coordination of activities among members and with fewer directives from management that impact the tactical activities of members. A great deal of trust abounds among members to handle their own affairs in a fashion that does not adversely impact any other member, effecting a “fairness” in operation, neutralizing revenue disparities found in firms with different cultures.

It is a difficult endeavor for a managing partner to attempt to change this type of culture. Often, the call to change comes from a desire for increased profitability, enhancing working attorney revenue or to attract higher-profile, more demanding clients. The interests and historical comfort of partners who receive psychological remuneration in lieu of financial rewards in this system typically stand in the way of these attempts.

Rather than fight their identity, clannish firms should seek to acquire partners who are a legitimate fit for their culture. These environments are most likely to appeal to partners whose risk tolerances are relatively low, but who value and manifest stability in practice and behavior. Firm leadership can emphasize these qualities by being honest about what the firm is not as much as what it is. Ultimately, this type of WYSIWYG (What You See Is What You Get) attitude enhances and solidifies organizational commitment via candor and reinforcement of the culture.

Adhocracy Culture

In stark contrast to the clan culture stands the adhocracy, where there is decentralized decision-making, fewer behavioral norms and organic structures; in sum where a relative absence of standardized procedures define a realm of highly independent operators. The organizational culture here fosters risk-taking and creativity, without the strictures of internally focused rules and processes. The adhocracy favors the bold, externally oriented partner, who sees collaboration as a situational benefit rather than a codified norm.

Assuming interests and endeavors either align or do not conflict, significant benefits can accrue to the members of an adhocracy, who often operate at high speed and with great efficiency. Independence reigns where bureaucratic controls are minimized, thereby allowing partners to adapt to a complex working environment with sometimes competing priorities and projects, the byproduct of which can be someone's subjugation. There is a foundational element of trust endemic to the adhocracy, that the individual agendas can be reconciled in cases of conflict or when synergizing goals creates value for the firm. Certainly, adhocracies can be frustrating for partners who are accustomed to agreement or what they perceive to be coherence among the larger group. However, these are exactly the type of people who do not and cannot thrive within these cultures.

From the outside, this organizational culture can appear non-strategic. The very name “ad-hoc” connotes “of and specific to the moment or situation” and thus lacking permanence or universality. It is important, though, to understand the strengths of this type of human capital. Lawyers who are accustomed to operating effectively with high degrees of uncertainty and without interference from monitoring and guidance mechanisms fit naturally in these arrays and can be prolific. Rather than hiding or attempting to obfuscate the adhocracy, managing partners should seek to understand the operating parameters of it within their firms and how to best make use of the informal networks that result. This system can then be clearly articulated and made visible to potential laterals who would thrive there and perhaps are chafing elsewhere under either a more rigid structure or one that does not value their heuristic aptitude.

Market Culture

Market culture shares the pace and drive of the adhocracy, but with a much clearer set of rules and expectations that often get described as part of a meritocracy. It is achievement-oriented and utilizes active, centralized decision-making as well as rapid, multi-channel communication networks. Wins here are measured by total market share, high profitability and a focused aggressiveness. The culture is reflexive, where the system is built for victories in high-stakes competition, and the product quality, attitude and results provide motivation to further optimize the system. Expectations and the objectives of members are clear, and firm members hold one another to a high standard of efficiency and performance.

In this type of culture, the word “platform” takes on its most legitimate meaning. Platform in a market environment not only embraces the breadth of interconnected practices or the geographic locations of offices, but also encapsulates a way of working and demands that differentiated deliverables and service from competitors. While the totality of the performance is considered, the bottom line ' “the ends” ' is more heavily weighted in the calculus.

Counter-intuitively, firm leadership may incorrectly de-emphasize the presence of this culture, or proffer initiatives to reduce or anecdotes to explain away the market orientation, lest it be seen in a negative light as a “shark tank” or excessively hard-charging. As a result, the very behaviors and mechanisms that are enabling success at the firm could be unintentionally hampered, either through negative perception or fear of a social penalty. These errors can also mistakenly be extended into lateral recruiting, when hiring partners or chairpersons position the firm otherwise to partners who do not run at a high RPM, or go out of their way to ignore, rather than emphasize a market culture. In fact, a proven market culture should be embraced by firm leadership, and those laterals who are properly aligned, ready to run at the same speed and with similar values can be accretive in a way that perpetuates the development and retention of the “best athletes,” and thus sustains a prime competitive advantage of the firm.

Hierarchy Culture

This culture emphasizes predictable systems, rules and direction, with a high degree of control and stability. With visible paths and formal practices, few participants make wildly independent decisions, because consistency and precision dictate. In these firms, their systems, rather than serving as a complement to the behaviors and pursuits of the members, tend to drive and define behaviors, lessening operational ambiguity. Conformity is valued to ensure proper functioning in this environment, where the means are important in and of themselves. Clear signals on how things are done are provided from leadership, and are inculcated into the different generations of the firm.

It is not uncommon for firms of this type to have senior members speak of the Firm X “way of doing things,” which is at the very essence of culture. In this case, the cohesiveness of the organization is derived from the codification and memorialization. Values can be both espoused and enacted transparently, since they flow from a framework that is maintained for the benefit of the collective. Though less malleable than others, this culture is highly reliable, and thus a visible and marketable asset for a law firm.

The variances of personalities, to the extent they exist, have a minimal effect on the direction or initiatives of the firm. As a result, there is a certain comfort afforded partners in these organizational cultures, because clear precedents have the ability to temper political machinations or outlying self-interest.

While there are exceptions to every case, these firms will struggle to retain or attract highly autonomous or proactive partners who need significant agility from the firm or the ability to market and practice based on rapidly shifting dynamics/opportunities. Those types of partners are more likely to create internal static as their proclivities to advance market objectives or act on instinct run counter to the predominant hierarchical culture. As difficult as it is to consider losing revenue or talent, leadership should match recruitment and retention with a sensible strategy. Hierarchical cultures are not adept at frontal assaults on new clients, but they may be better suited to managing large scale or longtime client relationships.

Direction and Challenges

Armed with some of the nomenclature of organizational culture, law firm leaders and partners can take a holistic and more pragmatic look at their firms' own culture. Most firms will not fall rigidly into one category or another of the CVF, but the framework itself is one of several productive entry points to understanding the building blocks of your firm's culture. While a formal measurement tool exists (the Organizational Culture Assessment Instrument) to produce metrics, an informal qualitative approach, where firm leaders themselves initiate and facilitate dialogue, will signal to colleagues and lateral candidates that the issue is on equal footing with the related concerns of revenue, profits, rankings and client relationships.

Recent research further highlights the relationship between culture and organizational effectiveness (Hartnell, Ou & Kinicki 2011). Managing partners who struggle against their firms' natural orientation are less likely to form and execute successful strategies. More worrisome are those leaders who ignore the cultural underpinnings and still seek buy-in for strategies that are not the best use of the firm's organic systems and partners' qualities. They do so at the risk of an ersatz buy-in from colleagues who either pursue their own agendas or begin examining alternatives.

This is not to suggest that organizational culture cannot or should not change within the firm. But to know thyself is the first step toward wielding the knowledge powerfully and making informed adjustments. Law firm leaders who confront, embrace and open up their organizational culture to definition and optimization can alchemize a misunderstood quality into a sustained competitive advantage.

A former corporate and IP transactions attorney, Peter Daniel Ocko is a Managing Director in Major, Lindsey & Africa's Partner Practice, based in Los Angeles. He can be contacted at [email protected] or 213-689-0704.