The Functional Homogeneity Continuum

There’s a big difference between working in professional services and working in other industries.

At professional services firms, lots of people have the same jobs. Big law firms have dozens of associates in each department. Bulge bracket investment banks have dozens of analysts in each group.

Outside of the professional services industry, things are different. At most companies, less than a small handful of people perform any specific function. Every person has their own unique set of responsibilities.

On a continuum of companies from those with the most functional homogeneity to those with the least functional homogeneity, professional services firms mark one extreme. Small businesses that only require one person to carry out each role mark the other.

When everyone has the same job, a few things happen:

• Employees share similar backgrounds. They attend the same schools, study the same subjects, and come from the same socioeconomic statuses. This makes it easy for them to become friends with one another.
• Upward mobility forms. Mature organizations in which many people do the same thing tend to resemble pyramids. A lot of people produce the work. A smaller number of people check the work. And the smallest number of people sell the work. Becoming proficient in each task is often a prerequisite for accomplishing the others, so organizations usually promote from within their own ranks.
• A culture of competition emerges. Everyone’s performance is directly comparable when they do the same job. Sometimes, it’s even ranked-ordered. Elbows grind down to a pinpoint as employees jostle through the crowd to stand out.
• Hiring becomes a repeatable process. Firms that serially hire for the same roles fish in the same talent pools again and again and develop an employer-reputation that can make hiring easier over time, but if left untreated, can also have the unhappy byproduct of stifling diversity.

Professional services firms like to say that their assets are their people. That is true: people, along with technology and reputation, are critical to their operations.

But the surprising truth is that as important as retaining people is for professional services firms, it’s even more important for other types of companies with less functional homogeneity.

When everyone has the same job, everyone can be a pinch hitter. But if each and every employee is a single point of failure, losing critical talent is both more expensive and also more likely.

How do business owners plan for this?

Large companies can do so through tacit apprenticeships. They ask employees to learn one another’s roles so that in the event of an unexpected resignation or a car crash, someone else will be able to pick up the slack and ensure continuity. For example, title prefixes such as “vice”, “deputy”, “assistant”, and “associate” all really mean the same thing: “on deck.” Employees can hold these titles for up to several years in anticipation of a potential retirement. But smaller companies don’t have the wiggle room in their budgets to be able to afford these redundancies.

The more widely practicable alternative, for both large and small companies alike, is to ask employees to document their jobs. In other words, they should write an instruction manual to codify their knowledge and make it easier for someone else to substitute for them.

Most employees don’t like doing this. They resist documenting their jobs. It makes them seem less secure and it feels reductionist. But the truth is that over time, most people become harder to replace than they realize.

The reason for this is both simple and always true. Two people can execute the same exact playbook and deliver very different results. And when the playbooks are identical, it’s the results that matter most.