Feature

posted 1 Oct 2007 in Volume 10 Issue 5

Cover story: Getting personal

Law firms are struggling to attract and retain top talent. Do new approaches to employee engagement offer a solution?

By Tina Lofthouse

It is argued that the ‘war for talent’ is one of the biggest problems currently facing the legal industry and that firms should be doing their utmost to attract and retain the best people by putting considerable time, money and effort into offering over and above what their competitors provide.

Generous salaries are no longer enough, nor are gym memberships, pension schemes and private healthcare. Flexible working, community participation, counselling and even onsite massage are all up there on the list of incentives being used by law firms in a bid to keep their brightest stars.

But how far do these strategies actually go in truly engaging employees, and how can firms ensure that their efforts really deliver competitive advantage in the battle for the best talent?

Social drivers

Employee engagement is often defined as the willingness of staff to give discretionary effort. They are committed to the organisation and are motivated to further its interests. Engaged employees stay loyal to the firm, and keep retention rates high.

The notion is nothing new, and this has been happening to a certain extent in law firms for many years – even if the term hasn’t been used so much. But what has brought the issue so much to the fore is the changing employment landscape over the past few decades.

Employees today are more like consumers, able to pick and choose not only from different careers, as their lives and aspirations change, but also who they work for according to their own personal values.

As David Dalgarno, head of McDermott, Will & Emery’s London office, points out: “When I started 30 years ago, your boss told you what to do and you either said ‘yes sir’ or went somewhere else. But today employees aren’t just taking what they are given – they want more out of their careers, more involvement, more interaction and they want to be part of it. That means that the people who run organisations can’t just say take it or leave it.”

A whole number of social factors have been driving this change but a major influence has been the increasing number of career opportunities available: “It used to be that there were a limited number of professions for smart people who want to get on in life – teaching, banking, medicine, and law, for example. But now they are looking outside of the professions for their career. Why not go off and be an IT entrepreneur, or an inventor, or open a bar in Brazil?” says Dalgarno.

Additionally, client demands have become greater, making the role of a lawyer much more pressured than ever before, career aspirations have changed among associates, and there is a greater desire for work/life balance. To this end, law firms have to go that extra mile to tempt and retain the top talent. Creating employee engagement is top of the agenda.

Salary is not the only issue

How exactly you create employee engagement, however, is a moot point. Generous remuneration packages still remain a vital weapon, and it is widely accepted that you have to be competitive, but most firms say that it is by no means the only factor.

“If you are the firm who can only recruit or retain because you pay more than anybody else then you have a problem,” says Quentin Poole, senior partner at Wragge & Co. “But it is unreasonable, no matter how good your culture is, to think you are going to retain and attract people if you’re not there in terms of remuneration.”

Mark Devereux, senior partner at Olswang agrees: “Do we feel we have to be the number one payer? No. Is it important people feel they have a fair deal and a proper package? Absolutely. So we check the market every year. If you’re below market you’re asking for trouble.”

But this is becoming harder for UK firms in certain markets – especially when you consider that some US firms in London are paying newly-qualifieds over £90,000. However, some in the industry say that the high salary comes at a price in terms of the hours and level of commitment that is expected from the employee. Today’s associate is just as likely to be looking for other benefits from their employers such as work/life balance.

At graduate level, obviously much depends on the motivation of the individual as to whether the salary is a prime consideration. “To a lawyer who is motivated strongly, or purely, by money, salary will be paramount, and they will be prepared to put in as much work as is required to attain that,” says City Law School’s LPC course director Melissa Hardee. Other graduates, however, are looking for work/life balance, which is why it is vital firms are honest about their culture and recruit the right people accordingly.

Clearly, a high salary is one of the reasons people choose to practice law and it does work as a retention tool. According to a recent survey commissioned by The Lawyer and carried out by YouGov, nearly a quarter of lawyers want to quit law. This figure rises to a third among associates with between six and 10 years’ post-qualification experience (PQE). Of those who want to quit, 70 per cent cite the prospect of a cut in pay as the main barrier to leaving. So the pay packet evidently keeps some lawyers in the profession but the results of the survey point to a far more worrying trend of dissatisfaction in the industry.

“I think that is very sad,” says Olswang’s Mark Devereux. “But there is no doubt that the legal profession generally is becoming a harder environment and that is largely down to practices in the way communication is handled with e-mail and client deadlines, which are getting faster.

“I hope that wouldn’t happen at my firm. But we’re also realists and you can’t escape the fact that expectations have risen about how quickly you do something and the price for which it is done – faster and cheaper is the way the world is going. One has to manage that.”

Olswang has brought in policies to combat this such as the opportunity to take a sabbatical. This applies at all levels, and not just partners. “We would much rather people took some time out to refresh themselves and come back rather than just disappear,” Devereux adds. The firm has also put in place care organisations so employees can speak to someone privately if they’re feeling under stress.

The high level of disenchanted associates is of particular concern, and the perception that there will be fewer partnerships around is causing many to consider their long-term prospects.

Law firms are putting a great deal of effort into tackling the problem. Sandy Boyle, HR director at Mills & Reeve, says: “It is particularly challenging in that not everyone can be a partner. The research shows not everyone wants to be – however, they still want a rewarding and fulfilling role.” Mills & Reeve is in the process of putting its associates through career-development workshops. For those who want to become partner, the firm sets out what it is they need to do to achieve that. Those not aiming for partnership are encouraged to look at how they can apply their skills in other ways, such as people management.

This emphasis on career development is one of the main ways that employee engagement has changed in recent years. “There is a more organised approach to career development,” says Tim Foster, managing partner of Reed Smith Richard Butler’s London office. “Having mentoring is nothing new but the sophistication that big firms are bringing to it is. There is more emphasis on identifying the competencies associates should be judged against and how they should be developing from one level to the next. There is more of a sense of structure.”

Each person at Reed Smith has a career supervisor with regular meetings to monitor progress. Additionally, there is a major focus on communicating with associates and getting them involved in business development. “Associates can be underestimated by partners in terms of their sense of the strategy and direction of the firm,” says Foster. “A key factor in keeping talent is whether the firm has a credibly strong strategy for the future, and whether the associates can recognise that and see what opportunities there will be for them.”

Dalgarno says creating a feeling of empowerment is also crucial. “Generally speaking, lawyers have a strong idea of what they ought to be doing and a strong work ethic. They want to get on with it; to be empowered. You need to create an environment and support network, so if they need help or additional resource it is available, but you shouldn’t be micromanaging people.”

New ways to the top

Much is also made of alternative career paths as a way to engage employees. Many firms are embracing the idea of a meritocracy, and dismissing the notion that you have to have come out with a first from Oxbridge in order to become senior partner. Glass ceilings are being shattered and new ways of working are being explored in order to keep talent in the industry. Efforts are being made, for example, to retain women who have had children.

Half of Manchester-based law firm Pannone’s total partners are women, most of which have families. Managing partner Joy Kingsley is clear, however, that this can’t be done at the expense of putting extra burdens on the rest of the team. “We don’t say they can have a totally different way of working that will make things difficult for their colleagues, but we encourage them to look at ways they can work.”

Firms are also looking at whether flexible working can help retain their top talents – however, the jury is still out on whether it makes business sense to go down that route. According to a survey by The Lawyer, more than three-quarters of the UK’s top-50 law firms have introduced flexible working. Mills & Reeve tops the list with 153 fee-earners out of 407 no longer working traditional ‘nine to five’ hours. Linklaters has the second highest number of flexible workers, but the number equates to less than one per cent of the firm’s overall fee-earners. Dalgarno is of the view that if you can make the client happy, it doesn’t really matter where you’re sat. Pannone’s Joy Kingsley, however, says, that they don’t have a policy of people being able to work from home whenever they want: “We don’t think it works well. A lot of what needs to be done is done in teams, and if you’re not here you can’t join in with that. That’s not to say it doesn’t happen, but it is not really a path we go down.”

Research by the Law Society for its quality of life debate, which surveyed HR professionals at top law firms, accountancy firms, investment banks and local government authorities, found that the key factors affecting staff motivation and retention are challenging and interesting work; responsibility; good managers or supervisors; a clear understanding of personal workload and how it fits into the bigger picture; personal contact with managers or supervisors; developmental supervision; and good opportunities for career progression.

But it’s not just the areas directly affecting their careers on which employees are judging the firms they will work for. They are now also looking at how much a firm matches their own values in areas such as corporate social responsibility (CSR). They want their firms to give something back to society – and allow them the time off to do the same. Pannone, for example, gave staff time out to go and build a garden for a disadvantaged primary school. Olswang, acting on staff feedback, launched a charitable initiative for its 25th anniversary, raising £300,000 for its nominated cause. It also responded to employee concern over environmental issues, and set up a green initiative to deal with recycling and saving energy. Addleshaw Goddard’s employees get two days a year for community activities.

Addleshaw Goddard’s head of HR, Judith Hardy, says firms need to be flexible in what they offer. “Engagement is about understanding what matters to people that goes beyond the basic deal they sign up to. At any firm you need a whole range of things, because people have different priorities that vary with the different stages in their life. We find that CSR, for instance, is massively important to our graduates and our trainees, whereas flexible working is important to everyone.”

It’s the small details too that matter, and firms are introducing any number of perks that will make their company a better place to work and keep their staff loyal. Pannone’s Joy Kingsley says that extra holiday is one of the most popular incentives it offers. If the firm performs well or wins an award such as The Sunday Times ‘Best 100 Companies To Work For’, staff can choose an extra day off or take that as a financial reward. Wragge & Co, meanwhile, offers free onsite yoga and meditation.

Wragge & Co and Pannone, which are two of the seven law firms that feature on The Sunday Times list, say that while these incentives are nice to have, it is the firm’s culture that will win out when it comes to retention levels.

Pannone was the highest-placed law firm at number three in list for 2007. Kingsley says: “You can throw as many benefits at people as you want but they won’t stay if they’re badly treated by partners or their line managers. You need to create an environment where everybody is friendly and everybody’s door is open. You don’t have partners who are stressed out and are taking that out on others.”

Wragge & Co is also one of the UK’s top 50 employers, according to this year’s Financial Times’ 50 Best Workplaces in the UK. Poole agrees that the culture you create is far more valuable than any number of benefits. “The culture here is that everybody feels part of a team. We have a flat structure, and we operate open plan offices – it is all designed to reinforce the idea that this is a team game and we’re all in it together.” Part of that culture is being open with staff. Along with managing partner Ian Metcalfe, Poole answers staff questions every month in a firm-wide online chartroom.

Benchmarking

While clearly there are many areas and strategies that can be used, it is crucial that firms actually assess their efforts to see if they really are delivering their promise on employee engagement.

The obvious statistic is the level of retention and the churn rate within a firm. But it should go much deeper. Boyle says that on an 18-month basis, they monitor employee motivation, satisfaction, loyalty and employee advocacy of the firm. This is done across all employees to help identify any variations across the business.

Communication is crucial. This is where there is a difference between simply throwing money into a
package of incentives and true employee engagement. Devereux says: “We talk to people – all our initiatives are derived from talking to our staff. We have a lot of young people with different perspectives – you shouldn’t be afraid of that but use it and do something about it.”

It also goes further than simply job satisfaction. As Hardy points out: “Talented people have very high expectations and in the ‘war for talent’ you have to meet those while at the same time ensuring you have got these people focused on what it is you’re trying to do as a firm. That’s where the connection between the individual and the firm’s agenda is absolutely crucial and is at the heart of employee engagement.”