Internal affairs: Better managing people to meet strategic objectives

A lot of firms now talk about the importance of values in supporting a firm’s growth. Values mean nothing, however, if not reflected in the day-to-day behaviour of staff, a challenge requiring excellence in people-management skills. Alison Denton, director of human resources, assesses how firms can get the best out of people so that the business as a whole can move forward more profitably.

The nature of employment has undergone a massive shift in the past twenty years. The great swathes of redundancies in the 1980s, which saw whole communities out of work, and the constant drive towards ‘leanness’ since then, has radically changed the way people view their jobs. Gone is the idea that there is a ‘job for life’ with its associated security and the reassurance of a final pension. In its place is a more worldly-wise, ‘what’s in it for me’ attitude.

Alongside this, traditional working structures involving hierarchies of line managers have also changed. Flatter or more fluid management is now the norm. Greater demands from clients and customers put increasing pressure on organisations and their employees to deliver ever higher levels of quality and service. Competition in all markets often also means that in any business or profession, individuals have to carry more responsibility than in the past, as their employer seeks to get a good return on their investment.

‘Human capital’ is, without doubt, more critical than ever to today’s knowledge and service-based economy. The simple reality of today’s commercial world is that good people performance means good organisational performance, with the attitude of the person on reception just as important as the highest paid partner or director to the firm’s success. How that translates into a reality for the employer – against the backdrop of changing and increasingly competitive labour-skills markets and workplace attitudes – is now the subject of tremendous debate.

The psychological contract

Currently, expert thinking revolves around the ‘psychological contract’, which, over and above the legal employment contract, has greater influence over the day-to-day behaviour of a member of staff. Loosely defined as the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other1 it is the underlying bond of respect and trust that is now paramount in the workplace.

It is not written down or enforceable, but evolves from the recruitment process, performance appraisals and the general corporate culture. It includes implicit promises and a set of expectations on both sides. It is a framework that sets out what the employee is required to do and what he or she can expect in return. Most of all, it is about a sense of fairness and respect that in return for the employee doing a good job, the employer will always do what’s right.

From a recruitment point of view, it can also help differentiate one organisation from another. In a people-based profession such as the law, recruitment is now, more than ever before, a war for talent. Law graduates have a raft of options. As well as being courted by legal firms, their skills are sought by the big corporate players and increasingly by management consultancies such as the Deloittes and PWCs of this world. And, on the whole, these businesses will have more sophisticated human-resource strategies than the average firm of solicitors and will potentially therefore be more attractive.

For the legal profession, this is a very interesting concept to take on at the point when many firms are embracing corporate values and brand statements. The belief that all businesses need a corporate ‘brand’ or external personality should also be reflected internally, with the similar creation of an employer brand. An employer brand then outlines the positive benefits for employees and defines the qualities they are signing up to, the psychological contract, when they join the organisation. Whether ‘progressive’, ‘ethical’, ‘forward thinking’ or ‘first class customer care’, these brand values instantly say to an employee what they can expect by being a part of that firm and what will be expected of them in return.

Under the new framework offered by the psychological contract, employees recognise that a business cannot offer them a ‘job for life’, but they do want security in another form. Employees are quite prepared to offer their loyalty and commitment, but in return they expect fair treatment, plus opportunity and development. Research shows time and again that high salaries are not as important as career opportunities, involvement, training, team spirit, appreciation and a work-life balance.

Motivation

Almost all research on employee motivation shows that compensation is not the predominant reason why people leave their jobs for supposedly greener pastures. Rather, studies continually find that people are eager to grow and develop in their jobs, relishing new opportunities and responsibilities. Time and again, studies point to providing recognition and the creation of an optimum working environment as the most effective way of boosting employee morale and keeping talent within an organisation.

This is why the impact of the immediate line management is critical and why increasingly, all senior personnel, whatever their functional job title, have to be leaders as well. More often than not, employees cite their manager’s attitude or disinterest as their reason for leaving. Appreciation, therefore, is the first rule of motivation. Employees want the recognition they feel they deserve and proper feedback on how they are doing. Such expressions of appreciation should be made to all team members doing their jobs well and not just those with responsibility for the bigger, riskier pieces of work. Achievements should be shared and praise be specific.

Another point that regularly crops up in staff surveys is that people need to feel involved in their work and that their contribution is important to the success of the organisation. While it would be impractical to involve everybody in every decision, discussion or project that takes place, asking people their opinion, particularly on changes that will directly affect them, does give them a sense of inclusion and importance. In the workplace, if people are not invited to offer their ideas and thoughts, it’s all too easy to begin to feel like a non-entity, someone who doesn’t matter, which can in turn have serious consequences for creativity, innovation and productivity. Staff commitment grows when people are invited to have a say and feel their views matter.

Another factor that can boost morale is the feeling that a manager is genuinely concerned about the individual. Any manager who disregards the feelings, aspirations or problems of individuals is never going to enjoy the benefits of a truly motivated workforce. As well as finding out what interests staff on a personal level, this translates into finding ways to stretch or challenge that person in a way that promotes their growth and development. Achieving targets that are challenging can give employees the element of excitement that makes their working lives interesting and satisfies their need for personal development.

By taking staff welfare into consideration, a manager also achieves loyalty, which is one of the best ways of ensuring high morale. By trusting them to cope with difficult pieces of work, it also impresses upon employees that they are respected.

Overall, however, the essential weapon for fighting flagging morale and keeping talent motivated within the organisation is communication. Lack of communication, whether in the office or at home, is perhaps the main reason for deterioration in relationships and a slump in energy. Communication is essential for keeping people informed of what is going on around them, preparing them for change, instructing them as to their responsibilities, making them aware of what is expected of them and letting them know they are appreciated. Failure to communicate means a failure to do any of the above.

This does not mean that a manager can rely on a simple pep talk when they eventually notice a slump in the level of enthusiasm. It’s usually too late by then. Nor is it one way: dialogue has to be as much about being prepared to listen to an employee’s opinions and concerns. Communication is a constant activity and it has to be both informal and formal.

One of the principal means for this is through a system of performance management and employee appraisal. Critically, the fundamental principle for appraisals is for ‘enhancing performance’; not simply to check on whether jobs are being done. Employees want to be stretched: it goes with the values of trust and respect. The key is to challenge staff at the right pace and provide the support they need to succeed.

Coaching, training and development

The ability to raise the performance of staff and seek long-term goals for them to work towards is an important element of being a good leader. Through coaching – the art of improving the performance of others – it is possible to develop a motivated team of individuals to take on more responsibility. Done successfully, it also creates more time to concentrate on priorities, rather than mopping up mistakes or simply dealing with day-to-day activities, and more time to focus on achieving better results for an organisation.

As a coach, a manager develops his or her employees by mutually assessing performance. As well as supporting them through action plans, it is about discussing the present situation, defining stretching goals and exploring new initiatives. Good coaches also help employees learn from their mistakes, identify their performance targets and help them take responsibility for implementing the first step. As a coach the guiding principle is to avoid trying to tell people what to do, but, instead, help them choose the best route to succeed in their objectives.

Not developing staff will mean they are unable to cope with the responsibilities the organisation wants or expects them to take on. Asking searching questions and giving constructive feedback will encourage staff to become more aware of their strengths and weaknesses and, learning from both, staff can be helped to build on their strengths and develop new skills to take on new challenges. As their competence and confidence improve, their self-esteem grows and they will take more initiative in meeting agreed goals. Increasingly, by using all of their abilities and expressing their potential to the full, the whole team will benefit.

The reverse of this is to deal with underperformers. Underperformers de-motivate talent in the rest of the team and cannot be ignored if you want to keep motivation high among your best performers. A proper appraisal system allows the employer to identify potential problems before they become an issue.

Supporting change within the profession

In the climate of flux that currently exists within a large part of the legal profession, people management is closely linked to the success of structural and strategic change management. Whether it is a firm becoming an LLP, or a firm repositioning its services for the modern commercial environment, the development of talent and more employee-centric philosophies has seen a momentous shift in lawyers’ thinking.

Over the past four years, Pagan Osborne has actively undergone substantial internal change, dramatically transforming the way the firm delivers client services through a more modern management structure.

To provide a high level of service, we recognised that understanding how the staff felt about the firm and gaining their support was crucial.

Before the Pagan Osborne HR team began implementing any changes within the organisation we set out our ‘psychological contract’ in the form of five key ‘people principles’ - a code of practice that linked the aims of the organisation with the way we managed our people. We set out the beliefs that underpin the firm’s commitment to staff under the following headings: good conditions of employment; good human relations; diversity and equal opportunities; good communications; and a commitment to lifelong learning.

Since then, we have built on these to develop transparent recruitment and promotion policies that ensure all decisions are made on the basis of merit, rather than the number of hours logged each week. Every employee’s programme of development starts the moment they join the firm. This is supported by a comprehensive training programme for all managers, the ‘effective people manager programme’, which is open to everyone.

Two years ago we created an in-house college, the ‘Pagan Academy’, which supports the training and development of all individuals within the firm. Under the Pagan Academy umbrella, nearly half the firm have undertaken nationally recognised training programmes designed to equip them with the skills they need to perform to their full potential.

As part of our commitment to employee involvement, the firm established an employee forum, and successfully secured DTI funding to develop the forum’s role as a champion of change. They developed an intranet through which all staff can keep up-to-date with the latest news and information on the business, as well as giving them the opportunity to share their ideas.

The results of this work have helped build a workforce that is enthusiastic and dedicated to helping the firm reach its core strategic objectives. The firm introduced a profit-share scheme for staff in 2002, which has just paid out an average £350 per person following a very successful 2004. Other measurable business benefits have been a significant reduction in staff turnover, to just six per cent (down from 20 per cent in 2000). Client delivery has also been improved through a reduction in absenteeism and Pagan Osborne has achieved its third Investors in People accreditation.

The lesson for all firms is that applied management of individuals through their career is crucial to organisational performance and, in turn, business success. The legal profession is now well and truly part of a more competitive business world: a world where 25 year olds run successful million-pound businesses and customers’ loyalty is not guaranteed when bombarded with ever better, cheaper services. Human capital is a firm’s best and often undervalued asset and good people-management strategies are now a prerequisite to keep and nurture talent for the good of the business.

Reference:

1.Guest, D. and Conway, N., Pressure at work and the psychological contract, published by CIPD, 2002

Alison Denton is director of human resources at Pagan Osborne. She can be contacted at adenton@pagan.co.uk