Watch future issues of InsideTrack for Michael Moore’s series offering career and practice management advice in today’s economy. If you’d like Michael to address a particular issue, please contact him at mmoore@moores-law.com.

Nov. 4, 2009 – The recent economic downturn has many law firms asking, “How do we retain our best people when raises and promotions are not available?” Further complicating the issue is the unique environment of a law firm. Most corporate human resource solutions are not relevant. There is seldom a predictable hierarchy and usually limited or no opportunities for promotion. Recently, many firms have frozen staff salaries or eliminated overtime, while some firms have eliminated positions as cost-cutting measures. Despite these negative actions, positive options are available.

Retention strategies

Why do people stay at organizations? Compensation must be market competitive, but when used alone is not a critical factor for retention. In Robert Half International's latest study, 61 percent of employees rated praise and recognition above compensation as the top two reasons they were satisfied in their present positions. The Bridgegate Company polled 660 people who had left their previous employer for another job and 43 percent did not name compensation as the reason for leaving. The Center for Stress Solutions found that 51 percent of employees interviewed said they would work for slightly less money if other conditions were present.

People stay at law firms because they have confidence in the firm’s leadership, their plans, and their ability to successfully execute these plans. People like to feel they make a contribution, their opinions are heard and valued, and there is recognition of their efforts. They want consistency and fairness in day-to-day operations. They want a firm with cultural values and principles, and they need to know that visible deviation from these is seldom allowed and never rewarded.  

Get the right people on the bus 

Getting the right people inside your law firm is the first step toward effective retention. In the book Good to Great, Jim Collins identified 11 companies in the Fortune 500 that had sustained exceptional financial results for at least 15 years. Collins and his team found that the first step was “to get the right people on the bus and the wrong people off the bus.” Effective hiring for culture fit is absolutely critical. Your hiring process should define the questions: “What does it mean to be a member of our law firm?” “What are our cultural values, and what activities demonstrate these?” Be sure you test candidates against these answers for culture fit.

If you are going to get the right people on the bus, you must also get the wrong people off. There is no room for baggage on this bus. As noted law firm expert David Maister observed in his book Strategy and the Fat Smoker, “You’ll never be good enough as a firm if participation in excellence is optional. Everyone in the organization has to decide if they want to sacrifice some of the present to achieve a better tomorrow. This requires more active leadership than many law firms are willing to accept.” Law firm leaders must be role models of the cultural values and mentors to other lawyers and staff. They must support efforts to “get the right people on the bus.”

The myth of zero turnover

Dr. John Sullivan, professor of management at San Francisco State University, a well-known thought leader in human resources and business advisor, observed that lack of turnover frequently stifles culture development. Dr. Sullivan suggests the first step in understanding turnover is to classify it. Positive turnover occurs when poor performers leave on their own. Better yet, when they leave and go to work for the competition. This can be an opportunity to leverage better talent into your law firm. Neutral turnover is when temporary or contract workers complete assignments and leave as expected. Negative turnover occurs when a high performer leaves or worse, goes to the competition. To be prepared, take an inventory of critical skills and critical client relationships. These carry a high cost of replacement. When your need for cost reductions translates into staff reductions, don’t be afraid of turnover. Manage it.

The “fun factor”

A recent U.S. Dept of Labor study found 48 percent of lateral employees left organizations because they felt unappreciated. Rewards illustrate a firm’s values. Child care and health benefits say you value family. Throwing a party at the end of a big project says you appreciate it when people go the extra mile. Alternative rewards are especially relevant in tough economic times but should be part of any retention strategy on an ongoing basis. Additional time off is a common alternative reward. If cost is an issue, make the time unpaid. Allowing flexibility in schedules is always appreciated, as is making accommodation for child care, elder care, and other special needs. Celebrate birthdays, anniversaries, and holidays. Distribute gift certificates, thank you notes, and event tickets. Involve your firm leaders whenever possible. If it comes from the top, the message will mean even more.

Your ability to retain your best performers will directly impact the future success of your law firm. Create a culture where people are valued. Use a hiring process that tests for culture fit. Manage turnover effectively. Remember the advice of David Oglivy, retired CEO of one of the largest ad agencies in the world, “If we manage people to be lesser than ourselves, we will have a company of dwarves, but if we inspire people to be greater than ourselves, we will have a company of giants.”

Michael Moore, Lewis and Clark 1983, is a professional coach for lawyers and the founder of Moore’s Law, Milwaukee. He specializes in marketing, client development, and leadership coaching for attorneys at all levels of experience. Moore also advises law firms on strategic planning and resource optimization. He has more than 25 years’ experience in private practice, as a general counsel, in law firm management, and in legal recruiting. For more information, visit www.moores-law.com.

• Related: Lawyer resources in a down economy (WisBar.org)

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