Professional services firms try to limit personal networking as executives rise in the ranks because they fear their staff will take clients with them when they leave. But this also limits the value executives could bring to the firm, say Michelle Rogan, an Associate Professor of Entrepreneurship and Family Enterprise at INSEAD and her co-author. ouise Mors, an INSEAD PhD graduate and now a Professor of Strategic Management and Globalisation at the Copenhagen Business School.
A firm’s growth and survival depend on its managers’ ability to look for new business. Well-connected executives are often recognised as valuable in this regard. However, professional services firms often try to de-emphasise the personal interactions of their executives with clients. It turns out t however that managers who build personal networks are more valuable to the firm, bringing in more new business and knowledge to the firm.
The researchers examined the links between business development and personalised networks (as opposed to networks mostly acquired as part of one’s official role). The results of their research, Managerial Networks and Exploration in a Professional Service Firm, have just been published in Organizational Studies.
They find that managers who use personal assets (such as their knowledge, experience and interests) to build professional relationships are more successful in seeking new business than managers who chiefly network using their firm’s processes and resources. In addition, Rogan and Mors found that broader networks, with contacts loosely linked if at all, amplified benefits for the firm.
“A firm’s growth and survival depends on the ability of its managers to explore for new business. However, the specialised roles, routines and procedures companies create can limit the exploration of individuals working for them,” said Rogan.
Rogan studied the professional networks of 77 managing partners in a large, global consulting firm. Face-to-face interviews provided insights into their networking styles. Some executives retained a formal approach, while others preferred to keep things personal, with less emphasis on their official role in the firm.
Results show that managers with a personal touch do more to help their firm expand. This could be due to at least three reasons, says Rogan.
Firstly, such managers have access to a greater diversity of information. For instance, a manager could be exposed to – and incorporate – ideas from other industries. Secondly, managers are not constrained by their role or their firm’s resources as they go about networking. Thirdly, the reciprocity principle - the idea that I will help you if you help me - is known to be stronger in relationships imbued with a personal dimension.
The impact on firm expansion was magnified when the executive’s network was composed of individuals hailing from different industries who were unlikely to know each other. Such a network provided managers with more novel knowledge, propitious to innovation.
Controls ensured that findings were not influenced by the resources or skills held by individual managers. In essence, the research showed that the managers’ knack for business development was directly correlated to their tendency to use their own knowledge and resources when networking.
In small firms, managers will naturally leverage contacts made in their own name. These contacts could be people they met in school, at conferences or even in situations removed from their job. In larger firms, interactions with clients tend to become more formal, relying less on individual affinity. This often suits employers worried that clients will follow executives who leave.
“The findings suggest it would befit top managers to encourage their executives to nurture and use individual ties when exploring for new business opportunities or knowledge. Doing so may place the firm at a greater risk of losing clients if an executive should leave, and give executives more leverage when bargaining for position or salary, but the overall benefits to the firm outweigh these vulnerabilities,” Rogan added.
A firm’s growth and survival depend on its managers’ ability to look for new business. Well-connected executives are often recognised as valuable in this regard. However, professional services firms often try to de-emphasise the personal interactions of their executives with clients. It turns out t however that managers who build personal networks are more valuable to the firm, bringing in more new business and knowledge to the firm.
The researchers examined the links between business development and personalised networks (as opposed to networks mostly acquired as part of one’s official role). The results of their research, Managerial Networks and Exploration in a Professional Service Firm, have just been published in Organizational Studies.
They find that managers who use personal assets (such as their knowledge, experience and interests) to build professional relationships are more successful in seeking new business than managers who chiefly network using their firm’s processes and resources. In addition, Rogan and Mors found that broader networks, with contacts loosely linked if at all, amplified benefits for the firm.
“A firm’s growth and survival depends on the ability of its managers to explore for new business. However, the specialised roles, routines and procedures companies create can limit the exploration of individuals working for them,” said Rogan.
Rogan studied the professional networks of 77 managing partners in a large, global consulting firm. Face-to-face interviews provided insights into their networking styles. Some executives retained a formal approach, while others preferred to keep things personal, with less emphasis on their official role in the firm.
Results show that managers with a personal touch do more to help their firm expand. This could be due to at least three reasons, says Rogan.
Firstly, such managers have access to a greater diversity of information. For instance, a manager could be exposed to – and incorporate – ideas from other industries. Secondly, managers are not constrained by their role or their firm’s resources as they go about networking. Thirdly, the reciprocity principle - the idea that I will help you if you help me - is known to be stronger in relationships imbued with a personal dimension.
The impact on firm expansion was magnified when the executive’s network was composed of individuals hailing from different industries who were unlikely to know each other. Such a network provided managers with more novel knowledge, propitious to innovation.
Controls ensured that findings were not influenced by the resources or skills held by individual managers. In essence, the research showed that the managers’ knack for business development was directly correlated to their tendency to use their own knowledge and resources when networking.
In small firms, managers will naturally leverage contacts made in their own name. These contacts could be people they met in school, at conferences or even in situations removed from their job. In larger firms, interactions with clients tend to become more formal, relying less on individual affinity. This often suits employers worried that clients will follow executives who leave.
“The findings suggest it would befit top managers to encourage their executives to nurture and use individual ties when exploring for new business opportunities or knowledge. Doing so may place the firm at a greater risk of losing clients if an executive should leave, and give executives more leverage when bargaining for position or salary, but the overall benefits to the firm outweigh these vulnerabilities,” Rogan added.
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