How not to lose the war on talent
To attract and retain talented people, firms need to forget about trying to outbid the competition and instead focus on creating a culture and HR strategy that will appeal to the millennial generation, writes Paul Stothard
'Our people are our most important
asset' is a rather hackneyed phrase that remains a default statement trotted out by senior figures in law firms. Treating people as assets is, in my view, worthy of debate, but there
is no doubt that the war for talent is one of three main fronts where firms can win or lose in this increasingly competitive and fast-moving legal marketplace.
The other two fronts, clients and funding, are equally important and closely linked. A firm cannot grow and develop a client base without talent
and investment in IT, brand recognition, and infrastructure. However, as I travel around the country meeting law firm leaders, the hottest topic is the difficulty in attracting and retaining people.
As one CEO put it: 'We have plenty of work coming through the door; we just cannot get the people to service it.'
The second topic soon follows, which inevitably evolves into a discussion about mergers and the need to get bigger. Generally, there is a perception that by getting larger the firm is made more attractive to the pool of talent that currently shuns the smaller firm. It should come as no surprise that, given this conversation takes place with firms of all sizes, this article does not suggest that size matters but suggests that, as E F Schumacher put it, 'small is beautiful', or at least it can be.
Ed Michaels, Helen Handfield-Jones, and Beth Axelrod, the authors of The War for Talent, argue that winning the war for leadership talent is about much more than frenzied recruitment tactics. Rather,
it is about the timeless principles of attracting, developing, and retaining highly talented managers '“ but applied in bold new ways. It is about recognising the strategic importance of 'human capital' because of the enormous value that better talent creates.
This basic truth still holds. Indeed, if anything, it is all the more important as firms try to cope with the changing nature of the people they are trying to attract. Whatever tag we give them '“ the latest being 'millennials' '“ there is no doubt that what this group seek from a working relationship is far removed from the majority of those who lead in law firms.
There has been a fair amount of research
into the aspirations of this pool of talent. PwC undertook a survey in 2011 entitled 'Millennials at work: Reshaping the workplace' which looked at 4,364 graduates across 75 countries. Some 52 per cent of respondents put career progression on top when considering a new role, while 36 per cent considered the reputation of an organisation to be important.
The millennial generation is seen as being uncomfortable with the strictures of traditional management structures and information silos. They expect rapid progression, a varied and interesting career, and constant feedback.
This ambition, coupled with a desire to keep
on learning and develop quickly within an organisation '“ not to mention their high propensity to move on if ambitions are not realised '“ requires a properly thought-through strategic response from law firms.
In short, if you are competing for talented millennials, then your firm needs to have a management style and culture that is markedly different from anything that has gone before. As
one employer is quoted as saying in the survey: 'Our capacity to attract, retain, and manage executive talent does not depend on the compensation package, but rather on our ability to create a sense of belonging to an organisation that offers a long'“term relationship and professional development opportunity.'
Compensation and relationship
It is easy to get sucked into a war of attrition when trying to outbid the competition for the skill sets
you need to service clients. Some firms go to extraordinary lengths to attract people at all levels. However, if you try to win the battle by just paying more, it is highly likely someone will always be able to pitch a bit higher.
At the same time, bringing in people attracted to higher salaries and bonuses makes clear the culture you want at your firm. But most important, as the PwC survey suggests, while millennials will look at the salary package, it is not going to be the deciding factor and you could be better off investing in other areas that are key to them.
Increasingly, people are looking for an 'adult to adult' relationship with their employer rather than the paternalistic one that has dominated in business since the Victorian era. A firm needs to demonstrate a culture that has, at its core, mutual trust, shared responsibility, and openness if it is going to win over this new breed of employee.
In a more recent survey, Deloitte found that 63 per cent of the respondents felt the values that support long-term business success are wellbeing, ethics, and client focus. Deloitte found that while salary
and other financial rewards remained important, when these are removed from the equation, work/life balance and opportunities to progress or to
take on leadership roles stood out. Those factors are followed by flexible working arrangements, deriving a sense of meaning, and training programmes supporting professional development. Deloitte suggested that an employer that can offer these is likely to be more successful than its rivals in securing millennial talent.
Employee value propositions
What can a beleaguered firm do to address this key issue? Well, recognising HR as a strategic area is an important first step, as is ensuring you have the commensurate investment in talent in that area.
The authors of The War for Talent suggest five key actions: Embrace a talent mindset; create a winning employee value proposition (EVP) that will make your firm uniquely attractive to talent; rebuild or design your recruitment strategy; weave development into your firm; and differentiate and affirm your people.
In embracing a talent mindset a firm needs
to acknowledge that its performance and competitiveness is achieved through better talent. The management and development of 'our most important asset' is not just the domain of HR, it is for everyone. For example, a partner must ensure that millennial staff are offered interesting work and experience, with supportive coaching, mentoring, and instant recognition. They will not put up with the dross while partners grab the interesting work and clients.
Investing in a clear EVP is absolutely key; it is the firm's internal brand and requires constant effort to reinforce it. This a large topic in itself and covers how an organisation engages with its people and how they interact with each other. Sometimes called culture, it is a key risk area to the business and should be considered at the same level as SRA compliance. Bluntly, if you are serious about competing for talent, then you have to be serious
in policing behaviours within the organisation.
The EVP must support your recruitment strategy, determining the type of person that will thrive and survive in your firm. Many firms have now stopped recruiting on technical ability and firing on attitude, but some still make that fundamental error, particularly in desperate times. Firms must move away from recruiting individuals based on their strong technical skills, mystical following, or good billing figures. If their attitudes and behaviour fall outside of the firm's culture then there is a risk of
not only losing that individual but others may
also depart out of confusion, disappointment, or frustration. All of which may prove expensive.
Weaving development into the firm is not just about training; it is about providing development opportunities underpinned by mentoring and coaching. Many firms will struggle with this unless they begin recruiting, developing, and supporting individuals who are capable of providing coaching and mentoring into senior roles.
If you are responsible for a team, how often
do you appraise your people? The writers of
The War for Talent estimated that a large majority of managers had not had a written, candid appraisal for years. It wouldn't be going too far out on a limb to suggest that this could easily be the case in many law firms.
The suggestion is that the better firms will differentiate the pay, opportunities, and other investments made in people. The best performers will receive quick career progression and be paid well ahead of the average performers. The average performers will be developed and supported in trying to raise their game. Weaker players are removed. Not tolerating behaviour or performance by anyone, including partners, that falls below the standards set by the organisation is absolutely essential in reinforcing the EVP and ensuring you get the best out of your expensive, talented bunch of people.
This represents the basics: firms must have a robust recruitment process supported by a clearly articulated and policed EVP operating within an environment that recognises the importance of talent and development. While by no means straightforward, this is within the grasp of most firms if they invest in the right HR skills.
However, the real winners in this war for talent will come from those who truly innovate. Innovation in the legal sector has been limited and tends focus on information technology. Although human resource is considered the most valuable asset in modern firms, examples of HR innovation delivering superior performance remain few and far between. A competitive advantage built on HR innovation is not easily replicated by the competition, and should be considered vital to the sustainability of firm growth and competitiveness.
There are examples out there. In 2015, Ashtons introduced a new approach to paid time off. The traditional annual leave policy was replaced with salaried employees taking holiday that reflected their own needs and that of the business, rather than being constrained by a set number of days per year. In short, no annual holiday entitlement. As Ashtons' CEO, Ed O'Rourke, stated: 'Firms wishing to thrive in the future need to be innovative, both in the way they attract legal talent and the way they meet clients' legal
needs. [The] focus needs to move towards overall productivity, client satisfaction, and results rather than the number of holiday days taken.'
To paraphrase a well-known remark, it is those who are most responsive to change that will survive in the war for talent. That is all very well, but law firms operating within a partnership structure are not the most nimble or agile in responding to change. Still, change is needed and it needs to go beyond HR. Firms should look carefully at their business models. Any business that sets out on a strategy of selling time is setting itself against the ambitions and motivations of the very resource it seeks to sell.
To be able to offer the environment the current crop of talent seeks, firms have to move away
from selling time to delivering solutions. If this
is achieved, firms can ditch the modern-day equivalent of clocking in and move away from performance indicators that measure input volume and towards output measures that concentrate
on quality, meeting client need, and teamwork.
In making this move, firms can transform the way they recruit, develop, and reward their people.
Of course, this new model demands trust, and mistakes will happen. But that should not prevent firms moving in this direction. The alternative is that firms will continue to recruit energetic, brilliant, intelligent, articulate, and ambitious people before squeezing them into a bureaucratic straitjacket, feeding them on a restricted diet of tradition, quality procedures, and business plans, with all risk carefully removed. In doing so, they will lose the war for talent and, ultimately, will
Paul Stothard is management consultant and partner at Pathways Management