I think Tom was first to write about the Professional Service Firm (PSF) in Liberation Management back in 1992. The preface describes Tom Strange and Joe Tilli of Titeflex, profiled in chapter 5 of the book, as the living breathing examples of internal professionals working in their own PSF with a clear "worth our wages" mindset.

PSF as a theoretical organization model has certainly grown in profile in the intervening years, with professionals often clustered these days into "practices" and contracted to fulfill projects across their "client" businesses. But is anyone really taking the PSF mindset seriously?

As far as I can see on my travels in European businesses, there seem to be two typical approaches:

1. Outsourcing professionals en masse to organizations that specialize in their skill set—IT professionals are often treated in this way.

2. Setting up internal professional service divisions, with service level agreements with their internal clients. HR, Training, Finance, and Project Management are quite commonly handled in this way.

I am doing my best not to be totally cynical about this, but from what I have experienced so far, the best that can be said for these "PSF" manifestations is that they shrink the cost line on the balance sheet. Frankly, I have yet to find an organization that finds the internal value added, the client service experience, or the attitude of the professionals themselves to have been much improved, if at all, by these approaches!

Maybe I'm wrong! What's your experience of how businesses are shifting their approach to managing their essential professional service providers? Where are today's shining PSF operating examples? Or have you found the service from the PSF you depend on to be disappointing, too?

Richard King posted this on April 14, 2005, in Strategies.
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