Most consulting leaders say “people are our greatest asset,” then design firms where the best people burn out, stall out, or quietly leave. In this episode, Neal sits down with Jason Gandy, CEO of Performance Improvement Partners, a technology advisory and private equity–focused consulting firm, to examine what it actually looks like to lead from the front in a modern consulting business where careers, culture, and revenue all collide.
Listen in as they discuss the real implications of running a player coach model, refusing to “promote on potential,” and treating delivery as more than just fulfillment work. You’ll hear how leadership style, business development strategy, and compensation design connect in consulting and private equity portfolio company work, as well as why those links quietly determine who stays, who leaves, and how fast your consulting firm can grow.
What You’ll Learn:
- Why the player-coach model builds stronger teams.
- The #1 sales mechanism in consulting that most people overlook.
- How to stay technically relevant as a CEO without chasing every new trend.
- Why Jason’s firm doesn’t “promote on potential” and what it means for career progression.
- How to lead through influence, not authority, in a client‑service business.
- How to make “everyone is in sales” work without destroying collaboration or culture.
Ideas Worth Sharing:
- “There is no better sales mechanism than good delivery.” – Jason Gandy
- “We don’t promote on potential. You’ve already got to be doing the role.” – Jason Gandy
- “I prefer to think of myself more as a player-coach when it comes to a leader… the team has a chance to really learn from folks that are leading from the front.” – Jason Gandy
Resources:
- Jason Gandy: Website | LinkedIn
- Neal McNamara: Website | LinkedIn
- Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies by Charles G. Koch
About Jason:
Jason Gandy is the Chief Executive Officer of Performance Improvement Partners and a senior consulting leader with over 28 years of experience. He has led complex merger and systems integrations, target operating model design, product launches, and technology strategy and growth initiatives. Much of his career has focused on modernization, consolidation, and technology adoption in financial services, working with clients from start‑ups to leading global banks across North America, Europe, India, and Japan.
Connect with Neal:
If you lead a consulting, finance, or professional services team and want to stay close to how investors and private equity are really thinking about growth and value creation, connect with Neal on LinkedIn to keep the conversation going and share your perspective.
To learn more about how Virtas Partners helps clients navigate major financial transitions from acquisitions and carve‑outs to IPOs, restructurings, and other complex changes, visit the Virtas Partners website.
Read the Transcript:
Welcome to Consulting Uncensored, the podcast that pulls back the curtain on the good, the bad, and the ugly of the consulting world.
This is where real conversations happen about leadership, strategy, culture, and careers in consulting. Hosted by industry veteran Neal McNamara, each episode features candid discussions with consultants, executives, and firm leaders who are building, challenging, and reshaping the industry from the inside.
No filters. No fluff. Just honest insight into what actually works and what needs to change.
This is Consulting Uncensored. Here’s Neal.
Neal McNamara: Okay. Well, Jason, welcome to Consulting Uncensored. Thought I’d start with just, instead of me introducing you and telling about your background, I’ll just give you the floor. Why don’t you give a bit on your background, and then we’ll get into content?
Jason Gandy: Sure. No, I think it’s a good topic. I’ve been in consulting my entire career, so I started back in the ’90s when it was still Andersen Consulting. I’ve seen large consulting, and then I’ve moved into smaller consulting. I’ve really liked the middle market and the private equity space, which is where I’ve spent probably the majority of the last, call it seven or eight years.
Just because I think we have such a chance to change the business a lot more in the smaller mid-market space than you do at some of the larger firms, and so I get a lot more satisfaction out of that. But I grew up on the delivery side for many, many years, so most of the way I think about how to run the firm, Performance Improvement Partners, and how I’m going about talking with clients always kind of goes back to a background on delivery.
But more recently, I guess last nine months, I took over as the CEO of Performance Improvement Partners, so I had a chance to come here and take on, I’ll call it the next wave of the growth of this firm. It’s a great firm that’s been around for 23 years, so kudos to the folks that were leading it prior. The founders are still heavily involved, so it’s been a great, welcomed partnership with them. But as we think about how we’re going forward, we’re definitely making some changes, so I’m excited to be at the helm to do that.
Neal McNamara: All right. Well, and again, one of the benefits of being on here is that you get to give a commercial for Performance Improvement Partners, as well. So why don’t you give us the elevator pitch on who you are and what you guys are doing?
Jason Gandy: Sure. We’re a technology advisory firm, and we focus on the middle market, mainly private equity-backed clients. The firm’s been around for 23 years, and we’ve got a great client base. We’ve supported over 250 different private equity firms throughout that history, and most of our clients are long-term clients that are constantly repeat buyers, so good long-standing relationships.
The firm really focuses on how we drive value from technology. So it’s not technology for technology’s sake, it’s not just running a technology project or a system implementation, but how are we really unlocking the value behind it? A lot of times what I like to say is it’s thinking about technology as a profit center. Most of our firms, especially smaller firms, think of technology still as a cost center. Yes, there’s a cost to it, but it’s such a good value enabler. And so thinking about driving enterprise value through technology is the way that we go about it.
And since we’re focused in the private equity landscape, we really try to map to the end-to-end life cycle of a PE transaction. From pre-transaction—how do we do IT due diligence and help with the value thesis through technology, put together a roadmap for it—to post-transaction—how do we do merger integration work? If it’s a carve-out, do the carve-out and stand up all the new technology behind it, as well as then cybersecurity, infrastructure, ERP, and system implementation. And I know you and I were joking about this earlier, as we’ve made it almost through the intro before mentioning artificial intelligence and data and AI.
Neal McNamara: Yep.
Jason Gandy: But yeah, it is a hot topic, and it is something that really is a game changer for our clients. And so it’s an area in their industry—
Neal McNamara: Broadly, right?
Jason Gandy: Right. So you can’t have a technology conversation without actually talking about the importance of it, and we’ve got a really good capability behind it that’s got real use cases, in production, driving value. And I know that’s a topic that a lot of our clients have struggled with, where they’ve started doing things with it but haven’t gotten a return. We’ve driven returns on it.
Neal McNamara: And will continue to. Will continue to. Well, great. And as we spoke before, one of the topics that I’m passionate about, and it’s a natural obviously as a CEO in our industry, is starting with leadership. And starting with a couple of things from your perspective is, you know, in a consulting firm, what do you think are some of the most important parts of leadership within a firm like ours, right? And then I’d love to hear just some of your own—because we all have our different styles and strengths and weaknesses—just some of your own personal philosophy and how you implement that in your role as a CEO.
Jason Gandy: Sure. I’d say first and foremost, consulting is such a people-oriented business. And so I think there’s a lot of value in how the leader’s interacting with the team on a regular basis, right? I tell people all the time, I prefer to think of myself more as a player-coach when it comes to a leader, as opposed to somebody that’s going to kind of sit in the back office and lead. The team has a chance to really learn from folks that are leading from the front.
Again, going back to that background of being a delivery person, most of the roles that we’re asking the team to do on a day-to-day basis—whether it’s building practices, doing project delivery, doing sales—somewhere in that 25- to 30-year history of doing this, I’ve played just about all of those roles. So it’s a chance to really lead from the front out in the market, and I enjoy the client-facing piece. I enjoy changing the businesses for our clients and helping them with that. So I prefer to be out in the market talking with the clients and working with the team as opposed to doing some of the more administrative things that sometimes, as a CEO, you have to put on that hat, too.
But our team has a chance to kind of learn from the leaders and so instilling that culture of not just myself, but our entire leadership team. Our founders were that way as well, and still are. So that part’s great, too, where it’s not just me as a leader, but the entire leadership team believes in leading from the front and being out in the market with the team.
Neal McNamara: So that’s a—I came up with a question or something I was thinking about as you were talking there on how do you stay fresh and up-to-date in a technical business? Because I’ve got the same challenge myself: the very technical things that we do, how do you make sure that you’re staying relevant and able to bring value to clients in those conversations as opposed to being too far removed from the actual execution?
Jason Gandy: Right. Well, I think one of the beauties is you’ve got a fantastic team around you, the same way I’ve got a fantastic team around me. So a lot of staying relevant is through the talent on the team. Nobody’s going to be an expert and be able to keep up with everything that’s going on. So if you’re talking about trends in cybersecurity versus what’s the latest enhancements on different ERPs, versus putting together the right technology strategy and roadmaps on different diligences and so forth, it changes on a regular basis.
So trying to be the expert in all that would be impossible. Yeah, the way to stay relevant is to spend time with the teams, empower them to be thinking about things from an innovation perspective, both in how we are delivering what’s right for the client, what’s all the new solutions that are out there, but also the tools and accelerators and proprietary assets that we build ourselves. Give them a chance to really run that practice.
We’ve told them in a lot of cases where we’re setting ambitious growth targets and so forth, what we’re trying to do when we’re setting the ambitious growth targets is asking the team, “What’s it going to take to deliver this?” and empowering them to say, “We need to move in this direction. We need these assets. We need these investments. We need this talent.” And a lot of staying relevant comes from the team talking about what it’s going to take to deliver this as we go forward. So I learn a lot from the team, and I learn a lot, obviously, from being out in the market while we’re doing the delivery.
Neal McNamara: So you’re actually involved in projects still?
Jason Gandy: I get involved in projects from a subject matter expertise from time to time. So if we’re doing merger integration, especially in industries where I’ve got a lot of experience doing that, then yeah, I like to stay close to it in terms of what the project team’s doing and what the teams are doing. Can’t do that for every project. It’s impossible. So you pick and choose the ones that are most important, and you also pick and choose the ones where you can actually be relevant and have the conversation.
Neal McNamara: Yeah. That’s, I think that’s one of the really big differences between our industry and legal. Right? Managing partners in legal firms are still—they still are having 1,500, 2,000 billable hours. That’s just a lot. Whereas I think what we’re seeing now is that the majority of CEOs in consulting firms now really don’t have a tremendous number of billable hours.
They really probably shouldn’t. But they probably should have some, again, to stay relevant and fresh to be able to articulate how the firm is bringing value, or to stay just relevant for clients to want their opinion on a critical transaction or issue.
Jason Gandy: Yeah. It’s an interesting dynamic, too, where depending on who you’re talking to—I’m sure you’ve run into this—sometimes selling the senior-level person with the higher bill rates is the easier part to do because the client wants the experience. Other times it’s the harder part to do because they don’t want the higher bill rate. And so depending on who you’re talking to, changes, but—
Neal McNamara: Yeah. Depends on what you’re doing, too, right? I think both of us, we have services that are more or less commoditized, and then we both try to stay way the heck away from the commoditized. But some of the things we do are viewed a little more commoditized than others, or less than others. So, yeah, that’s where the higher billing rate gets to be more of a challenge.
Jason Gandy: Right. But all of our managing directors have billable targets. Yeah. And I think that’s fairly standard in the industry.
Neal McNamara: It is, yeah.
Jason Gandy: And I think it’s a good thing. I think, again, going back to just leadership culture, it is getting them out at clients, not asking our team to do anything they wouldn’t do themselves.
Neal McNamara: So that’s a—I love that point because I think that’s really important. That’s a huge leadership principle, right? You’re not asking other people to do things you’re not willing to do yourself. And sometimes we just have to push through things with our teams to show them that we will do as much, if not more, if required.
Jason Gandy: If they had any idea of some of the things that we’ve had to do in the past, it would be a different conversation.
Neal McNamara: For sure. For sure. But that’s, so to that point of just, like, now thinking about your team, right, and leaders in your firm, and you’re growing a firm, and you’re probably going to add leaders over time, and you’re developing leaders over time—what are some of the things that you’re looking for in a leader at PIP? Because I mean, in every firm it’s a little different on what we are calling a leader. What are our expectations of a leader? What they should be doing, what they shouldn’t be doing. I think that’s interesting for me when I’m thinking about and articulating kind of who and how you define a leader. Because is a leader just because they are an MD or a VP? Is it a title that makes you a leader? How do you view that kind of through the organization?
Jason Gandy: Yeah, I think it’s a lot more than the title. What you’re responsible for changes depending on the title, but in terms of acting in the best interest of the client, acting in the best interest of the firm, acting in the best interest of your team and your employees and so forth, those are leadership traits that trickle down to everybody in the firm.
Most of the folks that come into our industry have been high performers in whatever they did before, whether that was in school, prior jobs, other things. So they’re used to being in leadership roles. Even if you are a mid-level employee from a consultant perspective, a lot of times you’re still leading a project engagement, so you still have to have those leadership traits. I will say all the time, or at least I will say all the time, it is harder to lead people that don’t directly report to you than it is the people that do directly report to you.
And so as an outside consultant, when we’re coming into an organization, these folks don’t report to us, right? So you’ve got to gain their trust, their commitment, sustain their focus. That’s a leader from early on, whether you’re leading a workstream, leading a project, or leading a client account. So those are a lot of the things that we’re trying to do: who are the folks that can kind of gain and sustain commitment, whether that’s internal or external? Who are the people that are always going to do the right things, whether everybody’s watching or nobody’s watching, as the saying goes?
Neal McNamara: Yeah.
Jason Gandy: And then as they move up, it’s really acting as a business owner, right. Whether they’re an owner or not, the people that are going to be the owners going forward are the ones that start very early with that mentality.
Neal McNamara: Well, that’s—one of my career kind of quips or premises is that you operate and act in the role before you have the title. Right? So you basically are being that person before the promotion actually happens. So much so that people are actually surprised at the promotion. So it’s like demonstrate you are that guy or gal in your execution before getting the title, and then that just naturally flows.
And I think it’s the same thing on like, don’t say, “I’ll start acting like an owner when I get some equity.”
Jason Gandy: Right.
Neal McNamara: Don’t do that. No. Yeah. Like, actually demonstrate that you behave like an owner that other people that are owners would want you—to have equity, that would want to go into business with you, want you to be in business with them, to demonstrate that you actually deserve it.
Jason Gandy: I had a great mentor and coach early in my career that had the ability to follow and do a lot of things with, but his saying was, “We don’t promote on potential.” So you’ve already got to be doing the role, to your point, because we’re not going to promote on potential. And in a merit-based promotion cycle, tenure doesn’t matter. Shouldn’t. What have you actually driven? And the one that people probably even have a harder time with is: do you have a track record of doing it? So now it’s that you have to already be doing the role.
Neal McNamara: Yeah.
Jason Gandy: But have I seen you do the role for a long enough track record where it wasn’t just a one-time you did the role? It was time and time again.
Neal McNamara: Yeah. No, that makes good sense. The other thing you touched on, which again, falls into a topic that I’m very passionate about with regards to leadership, was what you described was it’s leadership through influence versus authority. And I’m all about the influence, right? Because leadership through authority only works in a very limited capacity for a limited period of time, right? Like, yes, you will in your career have the ability to tell somebody to do something. And they’ll do it, but that’s not leadership. Yeah. Like you said, what you described is that when you can get a bunch of people to do, to work together towards a common goal that you actually don’t have any authority over, that’s leadership.
Jason Gandy: Right. We have one of our co-founders and owners, John Giezek, who has a saying that I’ve now adopted. He said, like, “People shouldn’t manage folks; they should lead folks.” And so I think the people that are trying to do it based off of authority are trying to manage teams versus the people that are leading teams. Right. So I love that John uses that quote, and I’ve now stolen it multiple times.
Neal McNamara: That’s great. That’s great. On leadership, one of my other things I like to talk about is books. Are there any particular books on leadership that were highly influential in your own kind of leadership journey?
Jason Gandy: The short answer is no. I would tell you, I read a lot, right? Including a lot of leadership books. But what I have found is there’s really no substitute for doing it.
Neal McNamara: 100%. Yeah.
Jason Gandy: And so I can’t point to a single book that I’d say, “Well, this was the book that really changed my mindset or changed my thought process.” There are probably a lot of them where I picked up bits and pieces along the way, and tried different things, and thought about some things differently. But there’s just been no substitute for actual experience being out in the field doing it.
Neal McNamara: Makes sense. Makes sense. Yeah. So why don’t we move on—unless there’s anything else from a leadership perspective you want to dip into? We can maybe move on to a couple of other topics?
Jason Gandy: Let’s go into some other topics.
Neal McNamara: Okay. I’ll start with just some of my—you’ve heard this from me before. So my premise is that business development in consulting and scaling business development in consulting is very hard. I don’t know that it’s too terribly complex because I do think that simplicity is the answer ultimately, but it’s still really hard. And it’s hard on an individual level. It’s harder if you’re trying to scale a business or if you’re going to scale a business development function in a consulting firm.
I’ve been talking to other investors in our space that are trying to do this with peers and competitors and whatnot, and nobody have I ever spoken to says, “Oh, yeah, we got this nailed. We’ve done this, we got it,” or, “We know what the playbook is, we’re going to go charge down there.” So what’s your perspective on, again, broadly, what works in our industry, and then again, how are you taking that and applying it to what you guys are doing at PIP?
Jason Gandy: Sure. First thing I’ll say is I think there is no better sales mechanism than good delivery. So when we think about business development at PIP, everybody is involved in sales. And I mean everybody from the most junior person all the way through the CEO. A lot of that is because the folks that are out there on the ground doing delivery are one of the best sales entry points.
Neal McNamara: Sure.
Jason Gandy: I think of things like a client saying, “I really liked how Neal did this project. I want more of Neal’s time. I’d like to extend Neal.”
Neal McNamara: Those are the best.
Jason Gandy: Right. Well, yeah, those Neals are great.
Neal McNamara: Yes. We are.
Jason Gandy: But yeah, in my mind, that is a sales mechanism. So no substitute for good delivery when it comes to sales.
Neal McNamara: One of the—I’ll throw in one of my quips again in the firm, because you’ll get this from the bigger firms, from people who have been at bigger firms. They’ll say, “Okay, we’re in there, we’re working on this project. We need to get a meeting with them and talk about how we can help them with this and this,” which has nothing to do with the project. I say, “No, we don’t. You know what we need to do? We need to execute the shit out of this project.”
“Do such good work that they want to hire us for something else. The best thing that team can do that’s on the ground right now is to do great work, not bring you into the client to talk about doing something else.” Focus on this, do great work. If you do great work, you’re going to be asked to do more work, even if it’s not directly related to what you just did.
Jason Gandy: Well, the other part I’d say to that particular example is if you’ve only been there for five minutes, have you really learned what the client needs? Or are you just trying to shove product down them versus I’m trying to solve a problem or help with an opportunity based off of what I’ve actually seen? Which is the other part of the delivery piece being a huge part of the sales mechanism.
The folks that are on the ground actually have, especially in our space where we’re doing technology, we usually will see the broader application landscape that they have. We know whether or not they’re on old legacy systems, whether they need to modernize, or whether there are things that they’re doing in manual processes that they could be automating. Our folks have some of the best intelligence for us to go do more consultative selling to the client and say, “You have these opportunities,” or, “I see these risks or challenges,” versus me just showing up and guessing and saying, “Would you like to hear about this offering or this product set?”
So for a lot of those reasons, we think of business development at our firm as everybody having a role, not just dedicated business development individuals. The other side of that, where I would say the delivery people—those examples I gave of them either seeing things that are going on or being able to extend themselves—are great examples of origination, but we also want our folks involved in the capture. It’s not a “once the business development person sells it, now they call the delivery team”. The delivery team are the experts in it, so they’re the ones that need to be involved in solutioning it, explaining to the client the approach, showing them where we’ve done it before, convincing them that the right staff is there.
So that whole capture side of business development is also really important from our delivery professional’s perspective. So we’ve got people that have both origination targets but also capture targets, because we see those as two different motions, and people have to play a role in both. Now, we have dedicated business development individuals work as well. Not every firm that I’ve seen has that. Some of them have it, but it’s only for really large deals or mega deals.
We think it’s important to have that dedicated person for continuity on the accounts. Otherwise, if you have a delivery person and the next project that that client wants to have—let’s say we’re doing an ERP project and that project wraps up, but they now want to go do a data warehouse project or a cybersecurity project—that’s a different expert that’s going to come in and deliver that. So rather than lose continuity of what’s going on in that account and in that business, having a dedicated business development person that says, “I can see the history, I know the background, I know the people, there’s trust there,” I think is a really important component. Otherwise, you’ve just got the revolving door of delivery people coming in without somebody sitting over it.
Neal McNamara: What’s your view on the ability for someone to do business development or industry without having actually executed any of the work that your firm does? So, again, probably saying that more of that pure salesperson type. So what’s your view on that?
Jason Gandy: I think it’s hard. It’s the short answer. It’s not impossible, though, right? And the people who do it really well are the ones that collaborate with the delivery teams really well. So they’re able to understand what that team is doing, and they’re bringing those teams in usually early. And they’ve got great relationship skills.
On a sales call, what was that, maybe two or three weeks ago, I was with one of our business development folks, and they talked about how they knew the individual, they knew their wedding plans, their fiancé, and that they were in the process of moving. They knew all these family things that a good business development or relationship person will take the time to get to know and so forth.
They will have a harder time going deeper on, “Well, why would you choose NetSuite versus Dynamics from an ERP perspective?” But I think the business development folks who are really good at those roles are the ones that play to their strengths and then bring in the other people that can play to their strengths. So it’s not impossible for business development folks to come into this industry if they haven’t done the delivery. They just have to be very collaborative. And in the case of the person I’m referring to on a sales call, she is one of the most collaborative people we have. She’s great to partner with. She brings people in early. She knows what she knows. She does not try to fake it through discussions, and I think that’s important because, as you know, our clients are savvy. These are good business operators. They will smell somebody trying to feed them a line that isn’t genuine.
Neal McNamara: 100%. Yeah, I would agree with that completely. I think it’s possible. You must have great relationships, like you said. Without the relationships, especially in what we do, right? Because, yeah, it’s not a quantity thing. And so this has always been and will be, broadly speaking, a relationship-based sales industry. So it starts with the relationships. And then you have to deliver.
And if you’re able to pull in—I think about that because it’s even like I still lead, right? I’m not doing it—yes, I did it a long time ago, but I’m not in the weeds of it, so it’s really kind of no different. I need to pull in the technical expert that’s actually going to do the work when I’m pitching something as well because I’m not the one actually doing it. And so, like you said, it can be done as long as you have that partnering with the folks that are going to do the work and you have the relationships.
And I think, too, the ones that are successful are able to learn over time how to actually articulate enough of the value prop and enough of the “what we do and how we do it,” even though they’re not the ones that are actually doing it. So they’ll actually become a bit more of a student of the firm to understand more about the value we’ve created in other projects that were like this and other clients that we’ve served that can allow them to still be successful.
Jason Gandy: Yeah, I think the other part of that is not only are they the collaborative folks, but they’re the ones that are truly kind of genuine and humble versus the person that is trying to be the arrogant, like, “Let me tell you why you need me.” They’re actually the ones listening, and they’re taking the information. So we do have a tendency sometime from a delivery perspective to go, “Okay, well I’ve done this three times before so this is how we should do it.” A really good business development person is listening more than they’re talking, and sometimes that’s a difficult skill to teach somebody that’s not grown up in more of a business development capacity.
Neal McNamara: What I would say is it also, when you’re bringing a technical expert along, that’s another challenge there depending on, again, the solution and the expert’s approach, is that they will also sometimes want to just tell the client how they should do it instead of listening and tailoring, “Well, here are ways you could solve this.” As opposed to just jamming down, like, “Oh, this is—like, I’ve done this a bunch of times. This is exactly how you have to do it.” It’s almost like cutting the client off. Instead of like, “All right, let’s understand more and the nuance of what they’re really concerned about and figure out if we can kind of tailor a way we can do this that’s going to solve the need that they have.” Again, it’s a dance that’s learned over many years.
Jason Gandy: One of the things—I’ve shared this story a number of times with my team—but my own kind of progression from earlier days in my career when I first started moving more into a sales function as opposed to the delivery function, it’s such a different mentality when you don’t have a project plan sitting in front of you dictating what you’re going to do next. And so in a sales perspective, I always thought about it in terms of putting together my own project plan of, okay, what’s it going to take to get to the buyer if I was reaching out to prospects? I’m probably not going to get to the buyer on the first call, but what’s the progression of people that I know, people that can introduce me to various folks, ways to get in front of somebody?
But I found myself putting together project plans almost on, “I want to be able to break in here. Here’s my timeline for doing it and the steps that I’m going to go do.” And like every good project, you run into issues and you change along the way and so forth, and you adjust. But for me, that was helpful. I know other people that are just really good at the business development and it naturally flows and they don’t have to do that. I think it’s a personal preference, personal styles, and also people’s backgrounds on what works best for them.
The other story I’ve shared with folks in the past in this regard was one of my promotions. An individual said, “Look, you develop great relationships, you can deliver, people want to buy from you, they want to extend you—all of those things that we expect in somebody at the next level. But now I need you to convey that confidence to the client in your first meeting as opposed to after you’ve been delivering for 30 days.” Because you have it in spades after you deliver in 30 days.
Neal McNamara: Yeah.
Jason Gandy: Can you convey the same level of confidence in the first meeting?
Neal McNamara: And not everybody can.
Jason Gandy: And that’s a different sales skill.
Neal McNamara: Yeah, I mean, there’s some people that literally just simply won’t be able—ever be able to do that. It’s just not what they do.
Jason Gandy: Sure. Yeah.
Neal McNamara: No, that’s a challenging one. Okay, so compensation, specifically for BD, right? So there are, I think, two ends of the spectrum here broadly in our industry, right? You’ve got the big firm where you are expected to, as you’re developing your career, you have sales; the sales is all to prove that you should be promoted, right? You sell all this work and you don’t really get crap dollars attributed to it. It’s just for the—you’re selling all this work for the opportunity for this wonderful partner role that you could get promoted to in the future at some point. So you just keep selling, keep selling, keep selling.
And then even when you’re a partner, you’ve got a compensation level that’s ascribed to expectations of sales, but there’s no real tie. And it’s not like the guy that sells twice as much at EY from one guy to the next makes—he certainly doesn’t make twice as much. it’s not tied; compensation is not tied to that. Now, on the other end of the spectrum, it’s super commission-based, very low draw. Eat what you kill. Go get the work. All right. What do you think is the best within, you know, obviously, I’m not saying one or the other, but kind of like, where do you fall on that spectrum? What do you think is a better way of structuring comp around BD?
Jason Gandy: We use a hybrid. So is it the best? Everybody’s probably got a different opinion.
Neal McNamara: There is no best, right?
Jason Gandy: Right. But we use a hybrid where we do have business development folks that are on base plus bonus with a commission. So they have a lower base than what our delivery folks have.
Neal McNamara: So the bonus layer and a commission, direct commission layer. Okay.
Jason Gandy: The bonus layer is to reward them for firm success, though, as opposed to individual success.
Neal McNamara: Makes sense.
Jason Gandy: So if you think about most bonuses—I know maybe, I don’t know how you do it at Virtas, how we do it from a delivery perspective—our people’s bonus, there’s a portion of it that is tied to firm success, and then there’s a portion of it that’s tied to individual success. On the business development side, the individual success is your commission. So the bonus side is tied to the firm’s success. So that’s why we still do base plus bonus for our business development folks, so that they can share in some of the firm’s success, because they’re not just out there being individual contributors. Again, going back to being leaders in the firm. If they’re doing the right things for the firm, we want them to be able to share in that.
Neal McNamara: Yeah, that comes down to—speaking of books, one of—one of the books that was really formative for me when I was thinking through both strategy and the compensation for our firm overall was Good to Profit, written by Charles Koch. And Koch Industries set up their own management system, kind of like their own Six Sigma, and it includes the compensation element. And one of their kind of conceptual points in that is that everybody’s compensation, from janitor to CEO, should be directly tied to the value they created for the organization.
Jason Gandy: Right.
Neal McNamara: And so you want to set up a structure, and like you said, every one of them isn’t perfect. But I always say, “I’ve got to set something up here that acknowledges that and does its best to tie compensation directly to the value that you’re creating for the firm there.” And that need to, and if at the end of the year, you look at it and you say the formula didn’t actually get to that answer, we need to adjust something to get to that answer. That’s what we’ve said. We have individual compensation questions, and I’ve got some funny stories along the way where people are complaining about their level of compensation. It’s like, well, is it a formula problem, or is it an “inputs into the formula” problem?
Jason Gandy: Right.
Neal McNamara: And to date, we’ve only had “inputs into the formula” problems, but not—
Jason Gandy: Yeah. Well, I was going to say, it’s amazing how you can use the exact same model and that answer will change
Neal McNamara: Almost depending on the year and how they did.
Jason Gandy: Yeah. I mean, our view, right, is on our business development folks, the biggest part of their compensation is tied to commission. And so, right. But there is a portion where they’re leaders in the firm, they’re part of our overall success, so—
Neal McNamara: They’re driving value also in a different way. So therefore, if they are creating value, they should have some form of compensation that ties to it.
Jason Gandy: Yeah. So that package looks very different than delivery, and it’s a much smaller component than delivery would be, but the commission is the biggest driver for them.
Neal McNamara: Question: can non-salespeople get commissions?
Jason Gandy: No.
Neal McNamara: Okay. That’s another interesting one to think about.
Jason Gandy: It is, and what I would tell you is we used to have that. The reason why we moved away from that is to promote this collaboration.
Neal McNamara: Yeah.
Jason Gandy: So with the—
Neal McNamara: Yeah, you’re risking the sharp elbows if everybody’s fighting for—
Jason Gandy: And we also introduced the idea of origination and capture
Neal McNamara: Yep.
Jason Gandy: Because now—
Neal McNamara: We call it referral closing. Yeah, we call it sourcing, closing, same thing. Yeah, different words for the exact same thing.
Jason Gandy: Right. So you can have two people that are both getting credit for sales, rewarded differently for it. They have different targets, they have different roles on it, but they’re not fighting each other for it. Instead they’re trying to work together collaboratively on it.
Neal McNamara: And I mean, for you guys, in the capture element, or we call it closing, most of the time it’s not just one person. And most of the time you have to be able to acknowledge that there was a broader team effort, and sometimes you have to slice that up as well to share for acknowledging that. Very few times is it just one person that closes a piece of work.
Jason Gandy: That’s right. I mean, if you can get up to 100% of origination, if we want to split it three ways, people can split it three ways. And yeah, the people that have had the best success are the ones that actually never take 100% of the credit.
Neal McNamara: Yep. No. Well, it’s a great test to be, “Okay, what do you think it should be?”
Jason Gandy: Right.
Neal McNamara: Right? And it’s really good to see the ones that’ll be like, “Well, it was all me,” or they’re like, “No, this person was involved and I think that he needs some credit on this as well,” and you know—
Jason Gandy: And the reason why I say that too is because those are the ones that then get brought in by the other person. And so now they’re constantly in these sales calls. And what they found is, one, the deal ends up usually being larger because they think about the broader solution as opposed to in a silo, going back to everybody’s got their own subject matter expertise and so forth.
So one, a lot of times the deal will end up being a little bit bigger when it’s collaborative. Two, they end up winning more. The win rate goes up. So together they found, “Why wouldn’t we do more of this, right?” It may sound counterintuitive that if I’m only getting 50% of the credit as opposed to 100% of the credit, aren’t I going to—or won’t my sales credits be lower at the end of the year? Turns out it’s higher if you win more. It’s always been the higher earners.
Neal McNamara: Smaller percent, but a bigger top line.
Jason Gandy: And I won’t say “always,” right? Yeah. You would never say—
Neal McNamara: Yeah. Over time, and that’s scalable. There’s all sorts of other good reasons for doing it that way.
Jason Gandy: Right.
Neal McNamara: Yeah, and it is funny because, again, certain compensation structures can get people to think a little more narrowly about, “Well, I’m not confident,” but there are other reasons you want the firm or others to be successful that are not tied directly to what you get paid for. Lots of them.
Jason Gandy: If you want the best people helping you too, those best folks are in demand. So, if you’re sharing credit with them, they’re going to be there. You start cutting them out, they’re not going to be on your project anymore.
Neal McNamara: Yeah, they’ll work for you once. And yeah, back to the leadership point, one of the questions I always asked back in the day when I was on these kind of partner panels or MD promotion panels was like, “Who can you call on Friday night and say, ‘This big proposal just came in, and I need you to work with me through the weekend’?” Not just do this yourself, right? To our point, of “I’m asking you to do a thing” I’m not. But I mean, “I need you with me to work through the weekend to get this proposal out on Monday morning. Give me five names right now” that’ll do that. If the person couldn’t give me five names, you’re not ready because in that role, you can’t do it all yourself. And again, it’s like as a leader, when you get moved up to that role, if you’re not the one doing it all yourself anymore, you’ve got to have others do for you. And if you haven’t treated them well, whether it be through this example or just how you treat them day-to-day working for you, again, kind of like the influencer or authority, you’re not just telling them to do stuff, and you’re helping them, and you’re mentoring them and guiding them, or sharing with them, you’re dead in the water. Your career, your role here will be capped because you can only do so much on your own without the help of others.
Jason Gandy: When I was up for managing director the first time, I had to fill out all the managing director paperwork on why you should be—
Neal McNamara: It’s a business case.
Jason Gandy: Yeah. Well, part of that talked about your ability to be a value creator, ability to be a people developer, ability to be a business operator. And the coach that I had at the time was asking me, like, “What do you think your best trait is on this?” My answer was, “Yeah, I think it’s the people developer, but it’s so hard to quantify why, right? You can use 360 feedback scores and things, but I don’t believe too many people gain those. And there are ways of doing it.” And he’s like, “Let me ask you this. How many people are working for you on an engagement right now that have worked for you on other clients and other engagements?” Thought about it for a second. “Almost all of them.” He’s like, “Write that down.” He’s like, “That tells the story more than anything. Most folks don’t have to come work for you again.”
Neal McNamara: Right.
Jason Gandy: Yeah. If you treat them wrong on that project, they’re not—
Neal McNamara: Well, and they will find a way not to work for you
Jason Gandy: They’re not following you on the next one.
Neal McNamara: They choose not to work for you. Yep.
Jason Gandy: So that one was a good lesson of, like, “How should you think about it?” Yeah. And a saying that I’ve had a lot of times is, like, “Friends don’t want to let friends down,” and so if you become friends with the people at work, they will run through walls for you. Now, that doesn’t mean that you don’t deliver the hard message when the hard message is needed and other things. But people respect that. Building those personal connections, and doing things outside of work, and having fun, and when you’re in the trenches together, you build some really lifelong bonds a lot of times.
Neal McNamara: 100%.
Jason Gandy: Those are the five people, to your point, that you call on the Friday that says, “I need you to work the weekend,” and they drop what they’re doing to help you.
Neal McNamara: Yeah, that’s, and this could be a whole nother topic, I think. Retention in our industry, right? Because the turnover historically in our industry is high, really high, right? And so, but what you said was reminding me of a line that I had with—I had a really good mentor, and one of the reasons I stayed at the firm I did as long as I did was that I could not see how I could walk into this guy’s office after everything he had done for me. Like I said, he was a friend, he was a mentor, he was, I mean, he would’ve done anything for me that I asked him to do, and he did. He really went out of his way for me in a number of ways, both personal and professional. And I was like, “How could I walk into Brian’s office after everything he’s done for me over the past, like, five or 10 years”—take whatever year it is—”and tell him I’m leaving?” Like, I just—like, so much anxiety would build up. I mean, just thinking about having to have that conversation, it was enough anxiety to dismiss other opportunities out of hand, which is awesome. It was actually not terribly—I mean, that probably wasn’t actually the right answer to just dismiss these opportunities out of hand. But it’s an awesome thing in our industry, I think, that says a lot on why people stay in an organization.
Jason Gandy: Well, let me… and I’ll flip that around a little bit and give a different perspective on it, because obviously you and I have switched places in our career multiple times. The first time I went to do it, I toiled over it, right? I lost sleep, I had charts on pros and cons and weightings and all sorts of things to try to figure it out. But what I wasn’t doing was talking to anybody in the firm, because if I decided that I was going to stay, I didn’t want them to have this negative impression that I was thinking about leaving. When I finally told them I was thinking about leaving and I was going to accept this other offer, they were incredibly helpful and incredibly supportive, helping me think through things that I hadn’t thought about before. Though they weren’t—
Neal McNamara: That’s a rare experience, though, I think as well.
Jason Gandy: Maybe, but it goes back to, like, “How good are those relationships and those friendships?”
Neal McNamara: Yeah. It’s the right answer, right? Because that’s the other thing that I complain about in this industry—and I had this at my previous firm, which drove me nuts—is that we did not treat people who left the firm the way we should have.
Jason Gandy: Sure.
Neal McNamara: No matter how they… and again, take out, like, people that are leaving in a really bad way. But just broadly speaking, like, Andersen was awesome at this, right? Like, the second somebody left Andersen for its whole existence, right, they—when they told the firm they were leaving, they were immediately treated like a prospective client. Like, they were treated so well, helped so much. And so, and then that business development scenario, right, when you were Andersen or after Andersen blew up, ex-Andersen, you had somebody that was an alum, in a decision-making role, you always had an advantage because you knew that the firm had taken care of that person. I mean, that was almost like a fraternity.
Yeah, I had the opposite. I tell you, when we had somebody in a decision-making role, for 10 years, I cannot think of one time where there was an alum of my firm that was in a decision-making role that it wasn’t actually a deterrent to us getting the work. And it would go up again. And if it’s somebody at PwC—PwC, they were great at this. They had alumni. They were always pulling PwC in. It was just so shortsighted. It’s like somebody was leaving, either we don’t care about them or they’re pissed at them. The partner they’re working for is like, “Well, now I’m screwed because you’re leaving me,” and whatnot.
And it’s just, like, the way they treat you, that’s the way they’re supposed to. It’s the way I did it when my people left me, but it was also—it was great because I got some of that feedback, too, the kind of the way I felt about my mentor. I had guys going, “I really don’t want to have this conversation. You’ve done so much for me I’m leaving.” And every time I was like, “Okay, let’s talk about this. This is…” and most times it’s like, “This is a great opportunity. I’m sad that you’re leaving because I love working with you, but I’m so happy for you. And let me know how I can help.”
Jason Gandy: And they trust you—
Neal McNamara: Sure.
Jason Gandy: And yeah, I’ve got folks that have followed me to multiple places.
Neal McNamara: That’s nice.
Jason Gandy: Because you treat them with the right respect, whether you’re the one leaving or somebody else is leaving. If you’re helpful in their career, then as the opportunity comes along to work together again—which it’s amazing how small this world is and how often that it happens. Yeah, they remember that, so.
Neal McNamara: Yeah. So last point: growth in our industry, right? There’s, obviously, with this trend of private equity investing into institutional capital in our space, you’ve got quite a bit of aggressive growth inorganically from our peers, our competitors, et cetera. And so where do you fall from—and again, you maybe start at a holistic—what you think about inorganic growth in professional services. I mean, we both come on the… funny thing, one of the fun things is we both have firms that actually help firms do this. And so from my perspective, I love it for my clients. But it’s really hard, is why I love it, because we get paid to do really hard things. I don’t know how much I love it from my own personal perspective in order to whether I’d want to grow inorganically as a leader and owner of a firm. So I’d love to hear your philosophy on that and what you’re thinking.
Jason Gandy: Yeah. One of the things that always makes it hard, again, going back to that we’re a people-oriented business, right? And so if you bring together two firms that don’t think similarly, don’t have similar cultures
Neal McNamara: You’re just not going to grow value.
Jason Gandy: Yeah. It becomes very disruptive as opposed to having synergies. So I think first and foremost, we think that there are opportunities for inorganic growth, right? We have no aversion to it, but it’s got to be the right fit. It’s got to be a firm that has similar characters and values. Same way we think about people that we would promote, like, one of the first things is, “Does this person have the character that we want in a leader?” If we’re looking at another firm, it’s got to be folks that share our values, that have the same character.
The second part that’s always hard with inorganic growth is the assets of the firm are really the people. They walk out the door. So you’re not creating a true win-win. And yeah, there’s ways to lock people up and retain them for a certain amount of time. But if they just feel handcuffed and they’re not doing their best job, that’s no good.
Neal McNamara: You have to, there has to be another reason people are staying other than just…
Jason Gandy: And that only lasts for so long.
Neal McNamara: Yeah.
Jason Gandy: So again, you know, and a competitor can still just buy them out. Right?
Neal McNamara: Like, if they’re going to stay for money, they’ll leave for money.
Jason Gandy: Right. So I think there is good opportunity for inorganic growth in our business from a growth perspective, but you’ve got to be really selective given the type of industry we’re in on what makes sense and what doesn’t. So yeah, that’s the way we’re thinking about the inorganic side. Right now, we still see so much opportunity for organic growth that—
Neal McNamara: It’s a huge market. It’s a huge market for sure.
Jason Gandy: Yeah. Right. And while private equity funds are coming in and putting capital in and helping do some of the roll-ups and so forth, I think that’s great, and we will look for that at some point in the future because that additional capital will allow us to invest in talent, offerings, potential acquisitions on down the road. But right now, we don’t need it to grow. We’re on a good growth trajectory without it, and so let’s maximize that.
Neal McNamara: Recognize this message?
Jason Gandy: Right. Yeah. You said this once or twice before.
Neal McNamara: I’ve said this a few times. Right
Jason Gandy: So our first strategy is the organic growth, and then we’re looking at inorganic growth to fill in niches that would be either hard for us to build on our own or would just be way slower to build on our own.
Neal McNamara: Yeah. Yeah, and that’s a strategic way of looking at it, because I still think the strongest way to grow, the most stable way to grow, is a heavy organic play. I mean, that’s how… but it takes longer. There’s no question that it takes longer. And so again, depending on what the growth trajectory and growth needs are for the firm, the inorganic lever can be very helpful. But it also can be very problematic.
I think the other trend that we’re seeing quite a bit is that those that have taken institutional capital in what has been a pretty muted—probably been the best market for us all for the past couple years—they have to grow. They have to grow some way. And so some of that, there is a bit of—in our industry sometimes I’ll call it, like, lazy growth. And the two ways I call it lazy: there’s some that are just the pure inorganic, just buy stuff. Buy something to adopt. Growth is lazy, in my view. And then just “let’s just add more services.”
And it’s like, right? If you’re like me, it’s like, well, why don’t I start doing corporate tax now? Because that’s just growth. It’s just pure growth. My clients need corporate tax work. But I also think that whether it’s guys with IT backgrounds or accounting backgrounds, we’re not the most creative in people. So sometimes you just follow the leader and follow what people have done in the past as opposed to thinking about better ways to grow a firm.
Jason Gandy: Well, and more services are getting to a point, but are they part of your core competency? Do you have brand permission to do them? Do people think of you that way? And that’s why, full transparency to your audience here, right? We’ve got the strategic partnership between Performance Improvement Partners and Virtas, where we know we’re not finance and accounting folks.
Neal McNamara: Yeah, we know we’re not IT.
Jason Gandy: Right. So when we think about growth, we think there’s a lot of synergies for both of our firms to grow. But without me trying to add a new service and be something that I’m not.
Neal McNamara: We both entered into this for the exact same reason. So, yeah. I’m looking forward to that generating a bunch of value for both of us.
Jason Gandy: Absolutely.
Neal McNamara: All right. Well, I think that this was great, man. Thank you for—
Jason Gandy: Man, it’s been a pleasure.
Neal McNamara: —coming and joining this. And, yeah. Well, we may have to do this again at some point.
Jason Gandy: I would love it. It’s been a pleasure. Thank you.
Neal McNamara: Thanks.
And that’s it for this episode of Consulting Uncensored with Neal McNamara.
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