Manpower planning – the key to value

From October onwards, Managing Partner will feature a regular section devoted to recruitment trends across UK law firms. In this article, Kevin Cooper, a director at Longbridge International, provides an introduction to the scene, explaining the core values of HR and why it is so essential to the make-up of a successful law firm.

In a practice, people are the engine room and without them nothing happens, no profit, no value. As a consequence, HR strategy needs to be at the centre of the total business planning process. The current value of a practice and its ability to be profitable will be based on how successful it has been in managing the ‘people element’ of its practice in the past. Developing and refining an integrated HR strategy can significantly improve future profitability.

In overall terms the HR strategy needs to be flexible and able to deal with issues affecting the short term (next 12 months), the medium term (2-3 years), the longer term (4+ years).

In the short term, the key issues will be to resource the immediate workflow and balance the work demands against the resources available.

In times of economic slow down, firms will find that resignations drop and this will need to be factored in to the forward plan. In the worst-case scenario, firms will have difficult decisions to make about potential redundancies.

In the medium term, the business plan and manpower plan will need to identify projected workflows and manpower needs. The underlying assumptions should be written down as this will help future evaluation of changes and facilitate an accurate review of requirements.

Long-term issues will involve the future strategic direction of the business, its ownership and structure. Whatever the objectives, a sound HR strategy will assist in achieving them.

The HR strategy should be dynamic and iterative and capable of adjustment as actual events unfold. Crucial to any strategy is knowing where the process started and where it is headed.

Identifying the requirements

At the centre of the HR strategy is the manpower plan. This document should draw on past experience and staff utilisation and also the business plan and objectives for the future.It may be useful to develop the plan in four dimensions:

Current clients - projected recurring work;
Current clients - projected non-recurring work;
Business development - targeted recurring work;
Business development - targeted non-recurring work.

The process should be broken down in sufficient detail to enable a specific comparison to be made against the manpower plan as time progresses, thus enabling the firm to revise and remodel the plan based on the actual outturn of events.

For current client work, there should be an individual manpower plan broken down as follows:

By work type;
By grade level;
By timing;
By hours

The value of the hours should be automatically linked to the financial plan and capable of being modelled.

Specific staff/partners should be allocated against the plan and after the first comparison the overall surplus or deficit and the impact of timing differences assessed.

The process then moves to the planning stage in an attempt to balance resources against needs. Crucial gaps or surpluses in skills and resources can be identified early and action plans implemented to provide a solution.

Impact of technology

In the current climate of dramatic changes in IT, the impact of new technology on the business plan and the manpower plan is critical.

The rationale for introducing a particular system may be to reduce manpower levels and improve efficiency. This needs to be factored in.

In a business that relies on revenue generated through hours charged by professional staff, the impact and benefits of technology need to be carefully evaluated to ensure that the benefit accrues to the firm and that revenue is not lost.

It is likely that the skills required by staff may need to be upgraded. The training and familiarisation time will need to be factored in to the manpower plan. You may require additional resources to manage the IT support.

Whatever the scenario, a major change to IT or the introduction of any major new systems will have a dramatic impact on the manpower plan

Staff planning and succession planning

As a parallel exercise, individual staff plans for each member of chargeable staff should be prepared anticipating known events e.g. study leave, holidays, retirements. Promotions and grade changes should also be factored in to create a forward staff profile.

It is very difficult to factor in to the forward staff profile potential leavers from the practice. Some firms prepare the plan without incorporating this data, knowing that their profile is the optimum and any unforeseen leavers will have an immediate impact on the manpower plan. In some cases, firms may wish to plan actively for people reaching a certain grade as a maximum. Firms should also be actively planning to improve the quality mix of staff by keeping an ‘open door’ policy on recruitment in line with their strategic objectives. The potential costs of recruitment need to be factored into the financial budgets.

For this reason, you should never ‘turn off’ the supply of potential recruits. You should maintain a dialogue with recruitment consultancies on a regular basis. All that should change is the specification of the type of person you would be prepared to recruit.

When the staff profile plan is compared to the manpower plan this will identify a number of issues including:

Wrong mix of staff;
Seasonal peaks and troughs;
Wrong skill sets for short, medium or longer-term needs of the practice;
Future gaps at certain grades, particularly partner level.

All of these could have a damaging impact on the profitability and value of your practice and your HR strategies should be designed to minimise the operational impact and smooth their financial impact.

Kevin Cooper is a director at Longbridge International. He can be contacted at: kcooper@longbridge.com