Swallow the jargon and embrace performance management systems

Lawyers, probably more than anybody else, hate jargon. And the worst jargon is management speak. Near the top of the pile of hated jargon that is encroaching on all of our lives must be ‘performance management’. Let me try to explain why we have to embrace it.

Inevitably, as we move from a more discretionary compensation system to a more evidence-based one, the methods of gathering that evidence have to be discussed.

The industrial sector and, more recently, the professional services sector, has for many generations used systems under which individuals or teams are set objectives. The delivery of those objectives is measured and then the objectives are reviewed and reset. An element of compensation is linked to the delivery of those objectives.

The legal profession has in the past generally resisted such management tools. Some in the profession simply took the view that, as professionals, they did not need measurement, management or supervision – they had accepted the responsibility of their professional calling and believed their own self discipline would deliver.

Such an attitude could prevail in an environment where lawyers dictated their terms of business to clients, when they were ‘men of affairs’. Our professional bodies have taken a different view, however, imposing more regulation and performance-based measurements, such as compulsory professional development.

The environment has changed, with an explosion in the work available to lawyers over the past 50 years. A vast increase in the amount of law and the complexity of law, together with lawyers demanding higher fees and offering greater service levels, has made this model unsustainable.

Law firms have become complex businesses dealing in high-risk matters and charging significant fees. There is much greater specialisation.

Clients have become more demanding, particularly in the past few years, as they have realised that, in recessionary times, the buyer is king. Clients still require the high quality levels offered by lawyers, but now expect lawyers to provide those services at lower prices. Many clients apply their own value to elements of legal work rather than the value that lawyers put upon them.

All of this creates an environment of much greater pressure and risk and requires that lawyers, like other people, be set objectives and measured against them so that service levels are maintained and risks minimised.

Over the past few years, the culture of the profession has become more receptive to common performance management process. Many lawyers now undergo an annual appraisal.

There still remains some cynicism in some areas of the profession about the approach of such appraisals. However, there is also a great appetite amongst more junior members of law firms to be appraised and be told what is expected of them and where their careers are going.

There is a long way to go and we have a steep hill to climb before we catch up with many clients who adopted standard management practices, such as balanced scorecards, many years ago.

The counter argument is that performance management processes are bureaucratic, time consuming and simply unnecessary. Why not simply rely upon the ‘duck test’? If it walks like a duck, looks like a duck and goes quack, then it is a duck. The assessment of whether a duck exists is based upon informal soundings and the views of the individuals charged with making decisions.

This approach must be tested against the principle that decisions about performance and compensation need to be fair and transparent. The risks of such a system are that the views gathered can be entirely subjective (particularly if they are given on the basis of anonymity). In addition, the views of the individuals charged with the decision may be based on limited or inaccurate information, particularly if those involved are not the direct line managers of the individuals whose fate is being decided.

This system has the merit of being relatively simple and easy to administer. So, in an environment in which the decisions involve small sums or uncontroversial decisions, the process is more likely to work.

But, if individuals feel aggrieved, they are most likely to look at processes and ask on what information decisions were based and how they compare to other people in the pool. If individuals do not know what they are being asked to achieve before they are judged, they will have some justifiable grievance if it turns out that the judgement is based on something about which they knew nothing.

In the tougher environment that we now face for the coming years, where compensation in the form of pounds, shillings and pence will be harder to earn, people will examine their performance and compensation schemes more closely to see how they can benefit from them and if decisions are being made transparently and fairly. The answer to these concerns is to swallow the jargon and embrace performance management systems.

What do you think? Do we all have to learn to love performance management?