CERCLE VICIEUX (Part One)

I stumbled upon a realisation last Friday night after plying myself with several pints of beer in the company of my colleagues.

While having another round of our ritualistic weekly cerebral discussions about our chosen profession (some chosen by themselves, some chosen by their parents, some chosen by their non-existing wealth - all chosen nonetheless), we came to our favorite topic, what is lacking in our industry, and what can be done to improve it.

First, a disclaimer. The following is neither a researched nor an educated dissertation of the industry. It is merely the opinion of a lowly employee with little experience and exposure, and is most probably not reflective of the truth.

Now, where were we? Oh yeah.

The "cercle vicieux" alluded to in the title represents the unending process in which we try to break from stagnated mediocrity to achieve high performance, and all the challenges and brickwalls in between. It is the age old "chicken or egg" conundrum.

In every industry where the main product you are selling is a service, an intangible consultative advice, the differentiation between you and your closest competitor is the quality of the work you deliver.

To achieve and maintain a high level of quality in our work, we need to invest in highly qualified employees as well as lower the attrition rate.

Retaining employees means providing incentives for them to stay. It means rewarding them more than what the outside market can offer.

To pay a premium on remuneration for their employees, firms have to be able to generate sufficient revenue, i.e. higher fees, and to charge a higher fee, they have to convince their clients that they in fact paying for quality work, which brings us back again to how do we achieve quality work.

Now, the reverse holds true as well. If firms are not differentiated via quality, they are differentiated by price. In an equal playing field, the cheapest one wins.

So, firms low-ball the fees that you charge, which in turn means less revenue, which leads to lower cash to provide incentives and attract and retain high quality employees, which of course results in the deterioration of work quality.

If all the industry players do the same to ensure they remain competitive, well, total industrial quality goes down hill, and clients will demand for lower fees to be charged, and voila, you get a circle.

(to be continued)