Performance Management: The cost of getting it wrong, the reward of getting it right

Some numbers for you:

32
£39,887
£805,000*

The first is the average number of weeks it takes it takes to get a new member of staff in the legal sector up to optimum productivity. Yes, for nearly 70% of the first year with a new member of staff, managers will be advising, nudging, monitoring, appraising and cajoling them. If your firm employs multiple staff over a period of years without the right recruitment and performance strategies in place, your leaders and managers will have become counsellors. Costly business.

The second and third figures are the cost per replacement employee and the annual cost to the legal sector as a whole of bringing new members of staff up to speed. What law firm HR manager can afford to waste £40k?

You may be thinking that these figures are hidden in the accounts of any successful law firm hiring multiple staff. However, you’d be wrong. The leanest, most successful law firms don’t keep recruiting solicitors and administrators, they retain them. How? By recruiting the right people, developing their talent and maximising their performance and proactivity. Imagine the peace of mind … lawyers that don’t need babysitting, and keep bringing in business!

Part of the key to retaining high performing fee earners, practice managers and support staff is to develop, challenge and reward them effectively. And with the Solicitors’ Regulation Authority relaxing its compliance regulations for legal sector CPD, this is a time of opportunity for law firm HR managers and those they serve; are you ready for the challenge this poses to your leadership skills?

I believe this is a major opportunity for law firms to go back to basics and ask themselves “Why are we in business?” (Some may even ask: “How are we in business?” but let’s not go there). I’m fairly confident the answer will be “Because we provide a service our clients need.” Yet, hand on heart, can you say how well your service is performing against other law firms? And how to align the performance of individual members of staff to the organisational performance?

The SRA has in effect, stated that the quality of training should be seen as more important than the quantity, that firms should be given more flexibility to focus on what they need most from training and that there is a need to reduce the burden of regulation. Why? Because they are waking up to the fact that the SRA exists because of law firms and law firms exist because of client demand. So is there a more pressing priority than helping your firm retain and develop high performing staff? It’s back to leadership again, but where to start?

Leadership here is not some lofty management concept, it’s simply knowing what clients want and how to pull the necessary levers to deliver it at a profit to the firm. So perhaps the new SRA system is the stimulus that all managers need to inspire others and manage performance across the firm.

Here are three questions for you, which I urge you to use as tips to decide the first steps in your HR strategy:

1. Do your managers know what motivates their staff?
2. Can you help managers align their staff’s goals with the firm’s?
3. Can you help managers inspire their staff to achieve?

You may have the tools: the corporate and team plans, the competency framework, the service improvement plans, the PDR process, one-to-ones and capability maps. Yet do you, as the leader have a clear roadmap to deliver all of this?

At my first meeting with any prospective new client, I make a promise to equip them (and their leaders) with a dynamic, refreshing and inspiring methodology for managing and improving the performance of the whole firm. And here’s the real difference … the firms we work with keep doing it. Staff turnover falls and performance rises.

So do the maths. You can watch your leaders recruit the wrong member of staff or fail to develop their highest performer and therefore lose them to the competition, and it’s a £40k hit on the bottom line. Fail to get the right processes in place whereby it becomes a chronic problem and you’ll rate-limit your fee earners’ potential to ever be profitable.

When you get your taste of freedom from the SRA, I urge you, put managing performance at the top of your list.

Simon Bernstein,

Managing Director, Empathy for Legal

*Reference: Cost of Brain Drain: Understanding the Financial Impact of Staff Turnover. Unum and Oxford Economics. 2014. http://www.oxfordeconomics.com/my-oxford/projects/264283