Professional service firms (PSFs) continue to increase in importance in the overall economy. The distinctive characteristics of professional service firms (importance of human capital, high degree of customization/innovation, high labor intensity, intangible inputs/outputs, high degree of customer interaction, professionalized workforce) as well as the characteristics of the professionals themselves (high level of expertise and autonomy, professional commitment) do not lend themselves well to traditional market or bureaucratic types of management control.
Despite general consensus that PSFs are distinct from other types of firms and these distinctive characteristics may require the use of alternative mechanisms of control, the academic literature has focused primarily on the PSF as an organizational form and largely ignored the design and implementation of management control systems in professional organizations. This project aims to correct these shortcomings in the literature by developing a taxonomy of the types of controls employed by PSFs. This taxonomy is then utilized to examine the interaction between the control system and the characteristics of the professional, and finally the role of leadership within PSFs is considered.