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Now it was September 2005 and Roberts was looking at the two proposals on his desk. He pondered the advantages and disadvantages of each.

Option 1: Build a Three-Legged Stool

The first option would introduce a series of measures to build 0n the existing structure while addressing its key areas of weakness. The firm would continue to be organized around its three core business units (TRC, PDS, and CPS), each of which would continue to manage its own P&L. This would be the first leg of the stool. (See Exhibit 9 for the proposed organizational structure.) The client management function would be the second leg and would remain an overlay function, creating a matrix with the three business units; and the larger, multi-service clients would be overseen by corporate client managers. A concerted effort would be made to further streamline this matrix organization. Some of the improvements would come in the form of (a) enhancing shared IT systems to enable tracking 0f total client profitability; (b) empowering client managers (and potentially, regional managers) to make decisions that were in the mutual best interests ofthe clients and JONES LANG LASALLE; (c) increasing reliance on client-performance-based incentive compensation; and (d) enhancing Communication and trust between Client managers and those Within the business units.

The key difference between this option and the existing organization was the addition of a third function (or third leg of the stool) in the form of a regional organization. Like the one that had been established in New York, this regional organization would be superimposed on the existing matrix structure. And like the client management group, the location-based units would have a client-facing, business development function, identifying and selling to clients in specific geographic locations. Market areas would be established in such locations by relying first on existing resources, and would be grown both organically and through strategic acquisition. Each market would have a regional head Who would develop a regional strategy and build a local team to the sales and marketing activities of that region. While these regional market heads would be given the autonomy to manage their regions, they would effectively have a dotted-line reporting relationship to the other two legs of the stool-the three core business units and. the client managers who conducted business in their region. In turn, some of the staff working for one of the three business units that Was located in a

regional head. Client rnarîagers megion-al-m-anagers would divide clients based on the geographic footprint of the services a client needed. Thus, in this model, the corporate client managers and the regional managers would serve as the client-facing, coordination forces for clients or geographies, enabling the three business units to focus their attention on actual service delivery.

Iust as the client managers would "own" the corporate clients and serve as their advisors across all business units and global geographies, so regional managers would own local markets and the clients that executed transactions in a single market. The client managers would take the lead in coordinating activities that served the needs of a large multi-geography corporate client ín a specific market. When a corporate client needed a transaction in a local market where JONES LANG LASALLE had a regional presence, the client manager would pull in the relevant regional manager and business units to deliver services on the client's behalf. Conversely, when a small client in one of the local markets needed to execute a transaction in another market, the regional manager would take the lead. In this case, the local markets group would Work with the relevant business unit to deliver services to the client. If the client's needs moved beyond the local geography, the regional manager would coordinate with a client manager to ensure that the client's needs were being met, and if the client's needs continued to grow in scale and scope, the client would be passed on to another client manager to be Coordinated from a broader vantage point. When each of these three groups (client management, business unit, and geographic organization) collaborated, they would share the credit for that transaction with each other using a pre-established formula to ensure that each was properly compensated for collaborating with the others.

In addition to shared decision-making, the reporting structure under this three-way matrix would be shared. The client function and the regional function would remain very lean groups, While the majority of the firm's staff would continue to reside in one ofthe three business units. As the clientfacing functions sold Work to their clients or within their geographic regions, they would pull together teams from one or more of the three business units. While the team members Would be direct reports of their business-unit manager, they would also have dotted-line, or indirect, reporting relationships to the region ‘m which they resided. In addition, if they worked for a corporate client, they Would also have a dotted-line Connection to the relevant client manager while deployed on a particular project. Once the project Was complete, they would be reassigned to another multifunctional team. The roles and responsibilities of the different groups would be clearly defined, and the intersections among the groups Would be closely managed.

The service-based business units would be retained as the central organizational units and would retain primary P&L responsibility within the firm. As one senior executive at the firm commented: l’JONES LANG LASALLE has always been recognized for the strength of its products. FIhat's what the brand stands for; that's what customers know they are getting.” The business units would continue to serve as the foundation(s) of the organization. They ensured best-in-industry products and staff, and continued to define employees' identity within the firm. Revenues for a specific service Offering would flow into the P&L of that business unit. Team members Working to generate that revenue Would be compensated by that unit and their bonus would be determined, in part, by their contribution to the revenue generation for their unit.

Nonetheless, the client managers and regional managers would also have parallel P&Ls that would help them manage their clients and markets profitably. Revenues for a particular client, regardless 0f service offering, Would be recorded by the Client managers on their P&Ls, and total client profitability would be determined after consideration of the inputs the client managers used from JONES LANG LASALLE. Client managers would continue to generate their own income from incremental work they did for their clients, and this would usually be tied to their achieving some specific goals for the client. Client manager compensation would be based on the total amount of this incremental income as Well as overall client revenue and profitability. Regional managers would do the same, although they would manage P&Ls for all of the services provided in their region, and their compensation would be determined based on regional performance.

Incentive structures would be increasingly weighted in favor of client and market profitability and satisfaction, rather than on individual business-unit performance. Management would reward business units not only for their profitability as before, but also on how well they worked together to share clients and information, provide optimal service delivery, and grow client business across geographies and business units.

Option 2: Organizational Realignment

The second option Roberts Was considering, more radical than the first, aimed to break apart the existing structure and start With a "clean slate." rIltis proposal recommended dissolving completely the three traditional business units and establishing, in their place, two new client-facing groups: global client management ("Clíents”) and geographic market execution ("Markets"). (See Exhibit 9 for a depiction of the proposed organizational structure.) The three core service offerings of the firm would continue to exist; but rather than operating as distinct organizational units, they would be embedded in the Clients and Markets groups. All of the former service-line employees Would become staff members of either the Clients or Markets function, depending on their interests, skill sets, and career paths. In addition, a Central Business Services group would be established to consolidate support activities including call centers, information technology, procurement, engineering and operations consultation services, quality control, and product training.

Clients group The Clients group Would focus on marketing to and managing the firm's relationships with its large, multi-service clients. The Client management role would remain similar to what it had been before the restructuring, with client managers working directly for client companies as the single point of contact for all of their clients’ global real estate needs. Beyond just offering client-facing coordination of tasks, the new Clients organization would also encompass some service delivery activities as Well. The former PDS and CPS units would be folded into this clientfacing unit because in the prior organization, these units achieved their greatest leverage from working with corporate clients and managing multiple office sites or development projects simultaneously for a single client. As a result, it made sense for these specialists to work directly Within the corporate Clients group. This meant that the new Clients organization would be responsible for both coordination and fulfillment of some of the services that JONES LANG LASALLE offered its clients.

Client teams Would be assigned to specific client companies. Team members would be offered the opportunity to cross-train in other service offerings within their specific clients. They could also continue to enhance their original service domain of expertise by sharing best practices with their service counterparts in other client teams While receiving ongoing training and development.

Client managers would have P&L responsibility, hiring and firing authority, and full accountability for increasing client profitability. They would continue to be compensated based on the salary-plus-bonus formula, rewarding their staff based on total client-performance metrics. According to one of the members of the task force that made the proposal, this new organization would enable JONES LANG LASALLE to Ilfocus on products that we've always had in the past, but we will also have a true focus now on managing our accounts as a business, taking our accounts to a much greater level."

Markets group The Markets group would "own" specific major metropolitan areas and would serve-tw@ primary-functions; First, it would manage the' local markets-and---serve force Within these geographic areas, Working to establish significant market penetration for JONES LANG LASALLE in core metropolitan areas. Second, its staff would execute transactions on behalf of single- and multiservice clients Within specific markets. These would include its own clients who were primarily operating in local markets, as Well as those of the Clients organization that encompassed global clients. Some service delivery employees would be retained Within this organization. The employees of two former groups-the TRG and the Leasing and Management Group of the parallel Investor Services organization of JONES LANG LASALLE-Would form the foundation of the Markets staff, since their expertise was derived from very specialized local market intelligence. ln addition, some staff from former CPS and PDS groups would join the Markets staff to manage local projects in these service offerings. Additional resources would be developed or acquired as needed to ensure rapid market penetration. The New York office would serve as a model, which could be replicated in Boston, Washington D_C., and other U5. metropolitan markets that JONES LANG LASALLE felt Were key to serving the expanding needs of its corporate clients or deemed strategically important to building the firm's market share. As one task force member working on this proposal explained, "Our strategy is aimed at projecting a much larger footprint into the marketplace. We expect that this team could offer clients greater personnel depth, broader market coverage, and enhanced market knowledge and insight.

Like the Clients group, the Markets group would have dedicated teams of local market specialists "owning" their metropolitan areas and executing transactions across the service offerings of JONES LANG LASALLE. The "lead" 0n a specific client would be determined primarily by size, range of service offerings required, and geographical scope. For example, if a corporate client purchasing multiple serůices across various regions Wanted office space in Washington DC., the client manager (in the Clients group) would liaise with a Washington regional manager, who would execute the local transaction to JONES LANG LASALLE standards. The local manager would "own" the local relationship, but would have a dotted-line reporting relationship with the Client Manager, who would ultimately oversee all aspects of the client portfolio and Would be responsible for client satisfaction. Conversely, if a smaller, single-city client serviced by a local manager in Boston wanted access to the various products and services the firm had to offer, it Would be handled by the Markets group. However, if the client Wanted to grow into the New York market or perhaps a foreign market such as London, the local manager Would liaise with the Clients group and the client would transition to a corporate client, while still maintaining a relationship with the local manager in the Boston market.

As with the Clients group, teams in the Markets group would have their own P&Ls, full-time teams made up of local market and product execution specialists, hiring and firing authority, and full accountability for growing market profitability. But unlike client teams, market teams would consist of both advisors who developed the local strategy and portfolio of options for a client, and "hunters" who executed transactions on a client's behalf and sold new business for JONES LANG LASALLE. While the advisory positions would continue to be compensated under Jones Lang Lasallesalary-plus-bonus structure, the hunters would revert to industry-standard, commission-based compensation structures to instill the "fight and Win’l attitude that Riguardi had shown Was important for achieving a commanding presence in a specific geographic area.

In order to ensure that the Clients and Markets groups were working together effectively, an incentive system would be created to reflect both client profitability and regional profitability, with extra benefits for sharing and growing service offerings to clients. For instance, for large, established corporate clients, regional managers would be provided With incentives for efficient, timely transaction execution in their relevant local markets. Regional managers would be rewarded for growing a local client beyond its primary geography. Although the regional managers would be effectively losing their clients to corporate client managers once the clients grew beyond their local markets, the regional managers would have succeeded in establishing a multifaceted, long-term client relationship for JONES LANG LASALLE.

Making a Decision

Roberts Was pleased with the Work of the task force and could see the merits of each option. Both were based on sound rationale, and both solidly aligned the firm's activities around the clients’ emerging needs. To maintain its competitive edge, JONES LANG LASALLE needed to be globally and locally oriented at the same time, and playing this dual role would require distinctive skills. In the same way that JONES LANG LASALLE was considering how to change its client-facing activities, it needed to retain its deep product expertise within its three core business units. Both options recognized the complexity of a clientfocused organization that also needed to be built on product excellence. Cut-and-dry distinctions between business units were a thing of the past. Yet there Were still important questions that concerned Roberts:

0 Was it better to build the new organization on the existing foundations, or start anew? Roberts knew that Dyer was not afraid to "shake things up,” but Roberts also knew how potentially disruptive it could be to an organization to shake things up too much.

0 How strong Was the need to build up a geographical organization, and in how many regions? Could a leader like Riguardi be found in every market? And if JONES LANG LASALLE pursued this goal, should it be done by acquisition or organically?

How important Was ongoing service-offering excellence going to be in the future, and which proposal provided the greatest assurance for maintaining an adequate level?

Finally, how would either restructuring affect the morale of the organization-especially those who had spent their careers within a single service business?

As Roberts pondered these issues, he thought of even broader ones:

How much organizational disruption Was good for the firm? Was this a good time for radical change?

HOW could Roberts best build on the momentum created by the 2001 restructuring?

At what point would the "internal noise” of restructuring distract managers from their true task of serving their customers? Because the firm's goal was to produce an outward-oriented organization, Roberts did not want the process of restructuring to have the unintended consequence of focusing the organization's attention inward.

Roberts reflected on these concerns. Although he knew that Dyer and Martin supported the idea of restructuring, he knew they would question every aspect of the chosen plan. I-le repeated Dyer's Words in his head: "What do our clients really want? How can We give them what they really need?” Roberts felt he knew the answers: JONES LANG LASALLE's clients Wanted a partner, an advocate in helping them establish the best real estate strategy and portfolio locally, nationally, and globally. But which proposal would be best for achieving the desired results?