Feb 8, 2006

Professional Services Firms are better off being private entities?

"When your principal strategic assets are your people, private ownership is the better model," said Ashish Nanda, associate professor at Harvard Business School. "It has the advantage of binding together capable professionals into a shared organization, in which they each have a financial stake, which in turn delivers genuine commitment to produce results."

So does that mean other organizations in which human capability is also a strategic input but happen to be publicly traded have a lower hope to produce genuine commitment to the goals of the organization?

Incidentally I got Nanda’s quote from the AT Kearney website which details how the Executive Search business of AT Kearney was sold by the partners to a private equity firm led by Edward Kelley, who led Korn/Ferry’s business in Europe before that.

The AT Kearney partners who led AT Kearney Executive Search however chose to move to the new private firm. Why is that?