Internal versus External Clients – A Management Concept

Deloitte organises itself in a very particular manner. There is a strict hierarchy that is common to the entire organisation. The hierarchy is representative of an employee’s level in the organisation in regards to his/her career inside the firm. The title that every specific place in the hierarchy holds denotes retribution and level of authority being comparable amongst all other functional areas and divisions of the firm. The different hierarchical levels are, from top to bottom:

 Partner – They hold part of the member firm equity and are at the highest point in the organisation. They are responsible for top management decisions such as strategy direction, supervision and control over all activities as well as commercial interface with the clients of their specific division.

 Associate Partner – Very much the same as partners, it is an intermediate point between managers and partners. Although sharing similar activities as partners, their share of responsibility is smaller as they do not hold a share of the company’s equity.  Senior Manager – Senior Managers are the leaders of operational management teams.

Their responsibilities include CRM, assembly and coordination of teams for specific clients and/or projects. Their main performance goal is to grow the practice, namely by achieving maximum billable hours and consequent returns.

 Manager – Very much the same as the senior manager, he/she shares similar activities without the same degree of responsibility as there are no coordination responsibilities at the management level.

 Senior Consultant – Senior Consultants are the backbone of the enterprise working as the interface between management and the team staff. Their main responsibilities include managing and coordinating a number of clients’ and/or projects’ operational service development.

 Consultant – Consultants conduct most of the operational service work with help and guidance from their senior consultants at every particular client and/or project.

 Analyst – Analysts are somewhat of a consultant in training. They are the base of the organisation and are composed fundamentally by professionals with a very low level of expertise and technical skills related to their specific tasks. As on-the-job trainees they perform similar activities as consultants do.

For the Tax – Incentives division, in 2009 the team spread across the following hierarchical pyramid:

There is an important separation that is made at Deloitte, which dictates the organisational processes and work flow of the firm. The primary goal of all employees regardless of hierarchical position is to satisfy the client’s needs. There are two types of clients though, internal and external clients.

To any employee, his potential internal clients are all fellow employees that, inside is division and functional area, hold a rank above his/hers on the organisational pyramid. When a new assignment or engagement, always related with a specific client and project, is created, it means an on-going agreement or new proposal has been accepted. A specific manager and partner are previously assigned to monitor and coordinate all activities. Following the CRM process, the manager responsible contacts a partner to “sponsor” his/her project or the partner “hires” a specific manager to do the job. The next step is for the manager to assemble a team that will carry on the job. This team will be leaded by a particular senior consultant that the manager “hires”, which in turn has the responsibility, together with the manager, to decide which consultants and analysts will require. This market works very much the same as a traditional one would function. Considering the demand created at one extremity by the needs of an external client, that demand is met by the supply of knowledge and expertise of the partner who then delegates to a manager that supplies his knowledge and expertise. The relationship goes all the way down to the analyst and functions by meeting the demands of a specific need with a supply that is characterised by availability, technical expertise, knowledge and other factors that relate with CRM like historical performance, perception of quality and on the “hired” side, their ability to have long term acquisition, retention, loyalty and profitability of clients. Profitability for internal clients materialises in the “tap on the back”, compliments and ultimately promotion and career development. This management concept allows for the optimisation of resource utilisation as available resources supply internal demand as it appears. It also incites internal competition considerably as successful

suppliers go on to create fruitful relationships with their internal clients having more and more demand for their services which leads to rapid career growth.

One other particularity of the work methodology at Deloitte is how the hierarchy validates the deliverables produced for final release to the external client. As the analysts and consultants at the base of the pyramid finish a task and produce a deliverable, this is handed over to their internal client, generally the senior consultant. The senior consultant revises the entire deliverable making all modifications he/she sees fit or even returning it back with a note on all adjustments needed, until it is on his/her view ready for delivery. This relationship goes all the way up the hierarchy satisfying all internal clients until it reaches the external client and ultimately satisfies the original need. The following figure shows the relationship described above: