People are our key assets - really?

There is little debate surrounding the importance of people to professional service firms – they are essential, the most important assets in a service-led business. Many law firms, however, are still failing to use the right management and leadership strategies to ensure that they motivate and retain their staff. Robert Halton, director of human resources at DLA, assesses the mistakes and explains how law firms should be managing their HR strategy.

“People are our key assets” – how many times have we heard that quote? Yet, in the case of professional-services organisations, it has a real meaning. The intellectual capital of these organisations is what differentiates them from each other and presents the value proposition to clients. Over the last few years there has been considerable change in the legal marketplace. Given the degree of change, it is remarkable that the essential structure of a partnership remains the same while there is a real need for law firms to adapt and meet the demands of the marketplace. This means that there needs to be a greater focus on “the firm” rather than the “partners”, which will inevitably lead to tension within partnership structures. To go back to the quote at the beginning, a real effort needs to be put into living the words if law firms are to really capitalise on their key assets.

A firm’s culture is one of its key differentiators from the competition and the concept of organisational culture is a rich one. It emphasises the importance of people, their values and beliefs rather than emphasising the more traditional dimensions of strategy, output and profitability. Although the importance of the latter cannot be underestimated, unless they are built around an understanding of what makes the organisation tick in terms of culture and values then there will be many false dawns as far as change is concerned.

If we accept that law firms have undergone major change over the last few years – and there can be no doubt that there is now greater emphasis on strategy, management and business planning – to what extent has an emphasis been put on “the way we do things around here”? Changing the culture of an organisation takes time; it cannot be achieved by the quick fix, and yet many law firms focus on the short-term, the next budgeted year, “when are we going to see the results?”

Ironically, there has probably been more emphasis on the cultural aspects of organisations in the manufacturing sector than in the service sector. In our business, people are fundamental to our success and yet the terminology of the past persists. Differentiation between fee earners and non-fee earners, talk about support staff, lawyers and non-lawyers, all reflect the culture of the past. Even in an organisation where this terminology has been changed, it persists, deeply rooted in people’s minds.

Chargeable/non-chargeable time suggests that non-chargeable is less relevant than chargeable; it probably is if you are an assistant solicitor; it most definitely is not if you run a department. Many will agree that there is a need to focus on the future, develop the client base, manage the people, work in teams, but then they go back to behaving in the old way because it is safer focusing on your own work; it is seen as being more secure and probably reflects a deep-seated belief that what law-firm management espouses when it talks about these changes is not reflected in the way that they actually run the organisation or remunerate those within it.

Language is the important element in this process. Language conveys messages; non-fee earner indicates something that is less important, less valued, a negative rather than a positive. Changing the way people think and speak about various activities is crucial. Leadership is essential here. The language that senior management use when communicating with people within their organisation sends important signals. “Do they really mean it?” is a common cry from all levels in professional service firms. Management needs to constantly reinforce the core firm-wide messages in order to build a solid organisational culture.

The key motivators for people in the professional service sector are as follows:

Quality of work;
Personal and professional development;
Quality of life;
Quality of working environment;
Financial reward.

All these things need to be blended together to motivate and retain people. Yet, all too often, financial reward is seen as the only and predominant factor. It is a fallacy that people leave organisations because of monetary issues. They may well leave an organisation for more money but the factors that led them to make this decision are rarely understood by organisations. People move on to gain more experience, to build their career, because they do not feel valued where they are or their contribution is not being recognised. In a recent retention survey, “the overwhelming message being given by leavers, in a variety of forms, is that they were not valued...” Attitudes and behaviour are critical; if people do not feel valued they will leave and go somewhere where they think somebody else will value them.

Management and leadership are key factors in attracting, motivating and retaining talent within an organisation yet these are the very areas that can be neglected in the “billable hours” culture. It is important to have a focus on what is important in the culture of your organisation – what do you value, what do you need to value and how can this be reflected in how people get rewarded? Quite often, where bonus arrangements apply, the hard measure of chargeable time is the determining factor.

This can totally undermine all the other things that an organisation is trying to achieve. A recent IOD survey said: “The most effective methods for retaining employees are the simplest (although possibly the hardest to get right) – ensure that the individual is comfortable with the organisation’s culture, is well managed and knows where he or she fits in. Quick fix solutions such as bonus or long- service payments are dismissed as ineffective.” In terms of retaining staff, the following elements were highlighted in order of effectiveness:

Cultural fit;
Management effectiveness – good coaching and feedback;
Clear communication of organisation’s goals;
Empowered employees;
Providing continuous learning opportunities;
Promotion opportunities;
Appraisal systems;
Bonus or long-service payments.

Getting the right balance between rewarding hard work, focusing effort on investing in the future and rewarding people for doing the right thing given their level of seniority and position within the organisation is important. Sir John Harvey Jones, former chairman of ICI and creator of BBC series The Troubleshooter, once said: “I wouldn’t invest in a business that didn’t invest in its people”, I’m sure there are many individuals for whom this could be turned into: “I won’t invest in an organisation that doesn’t invest in me”.

This does not mean that organisations need to go for flavour-of-the-month type benefits. Logic and cohesive thinking needs to be applied when developing total reward packages to support the culture of the organisation. People leave highly-paid jobs when they do not feel that they are getting value out of the effort that they put into their work.

To what extent has your financial-reporting system changed? Does it still focus on the individual billable time? Does it take any reference to cross-selling activities, team billing and so forth? Are the only measures that you have in place those that relate to financial performance? If they are, then people will quite rightly sit back and say that is the only thing that is important here and ultimately, that means that only the measured things get done. Many changes that are introduced to tackle the issue of profitability are not accompanied by strategies that tackle the culture issue, the values and beliefs, the fears and concerns of the individuals who make up the organisation.

People will notice if promotions are made for “business reasons” when that very promotion runs against all the “cultural” initiatives that have been taking place. What does this mean for the human resources function? It means that there is a great opportunity.

The people issues within law firms have a far more strategic importance than in many other organisations and yet this function remains very much rooted in the administrative background. Of course you’ve got to get the administration right, but the impact of training and development, the way in which we organise people, the way in which we deal with people, can have a profound impact on the success of an organisation. The past focus on the financials has been extremely important, but financial management alone will never improve your business. For sure, improvements in financial management will make the business more hygienic, less wasteful and therefore contribute to short-run profitability, but in the longer term it’s about developing your markets, delivering the service and products, and you do that through your people. HR, training and development may well be the Cinderella, but let’s take a lesson from Cinderella because she went and married the prince.

Robert Halton is director of human resources at DLA. He can be contacted at: robert.halton@dla.com.