Professional service firms (PSFs), as part of tertiary sector companies rely on proficient service providers

who offer non-routine services to clients. The position on PSFs is increasingly growing in the financial
market today providing knowledge-intensive services and specific services for companies. Based on three
main principles, - knowledgeability, relational competence and reputation – PSFs’ professionals need to
be quick, resourceful and flexible because this sector is far from the standardized production
manufactories where all the processes are very similar. Similarly to mainstream or traditional companies,
service firms have their numerous challenges and follow a pretty tall or vertical governing structure which
makes it hard for the experts to provide the best solutions for the customers’ requests. Through the use of
case studies, we are attempting to provide not only an outline of the hierarchy and power in service firms,
but, a thorough overview of the steps to incorporate to fulfil the customer needs.

As the study shows, PSFs need to incorporate a more decentralized, horizontal or flat structure, since the
typical centralized organizational form results inefficient when experts have to maximize productivity and
focus on time to quickly react on customers’ requests. Moreover, management need to embrace a less
controlling attitude towards experts who know exactly what is best for the customer, how to act in their
expertise area and possess the autonomy and the possibility to work free and independent. Only by doing
this, can companies escape the danger that experts feel demoralised and think of leaving the company.

Leadership, power and structure in service firms complement each other and have to be balanced out.
These types of firms frequently face problems in the control and power distribution between the centre
and the subsidiary counterparts. In case of serving of “global” client, PSFs’ centre exerts greater control
over their subsidiaries, for the sake of safeguarding their reputation. With regards to professional
resources, PSFs’ centre tries to allocate the resources evenly to serve the client in his location and
maintaining high quality. PSFs’ centre owns the former experience, knowledge and networks, and,
consequently, uses these sources of power to coordinate and control their activity within the firm, keeping
the staff always motivated to avoid the absence of professionals abroad. To conclude, the relative
autonomy of professionals generates limited effectiveness, power distribution and control over
subsidiaries. That is why, in a professional service firm, the most valuable resources are specialist
professional expertise and lucrative client relationships.

Another point of reference is the role and the position of the CEO in PSFs compared to traditional
companies. The CEO in PSFs lacks the inherent power and control that usually CEOs of traditional
companies enjoy; they live and work together with the colleagues and serves to fulfil the partner-owners’
financial satisfaction.

In line with the theoretical framework, two study cases were conducted, one on Bezirksaltenheim
Leonding nursing centre and the other on VKB private banking. As the study case on the nursing centre
demonstrated, the operating core of the nursery centre requires authority and independence to that degree
to meet the different clients’ demands appropriately and on time. Nonetheless, nurses and caretakers do
not have an all-embracing authority. They need to consult their superiors (and the relatives of the care
recipient if necessary) on life-and-death issues or decisions that have far-reaching consequences. As this
service cannot be standardized under any circumstances, it is not possible to fulfil a straight and direct
structure with strict guidelines and rules. On the other hand, as the Private Banking business case showed,
highly customized and individually-tailored solutions for high-end customers are required. Therefore,
consultants build their work on the authority to come up with the best and most suitable solutions to the
customers’ problems. However, granting autonomy and authority to employees would cherish their
immeasurable knowledge, experience and expertise to provide excellent and customized service.
Naturally, when it comes to a high level of customization, standardization is no option. As a consequence,
there is no better way than granting some degree of autonomy on decision-making to the consultants and
building the organization the individual strength and knowledge for each professional.