Presentation on theme: "Partner reward – a help or a hindrance to effective business development? Peter Scott Peter Scott Consulting www.peterscottconsult.co.uk."— Presentation transcript:
Partner reward – a help or a hindrance to effective business development? Peter Scott Peter Scott Consulting www.peterscottconsult.co.uk
For law firms now and in the future.... Achieving high performance will matter as never before if they are to gain competitive advantage over their rivals Competitive advantage? ‘an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and / or retain more customers than its competitors.’ Why does competitive advantage matter? - because it is the part or parts of your firm which place you ahead of the competition. It means you have to do things differently and keep innovating to stay ahead
Competing as a law firm is a requirement for long term success To compete, a firm has to outperform its rivals in the ways specified by clients The primary task of law firm managements is to understand what it is that will improve a firm’s competitiveness and then organise all of a firm’s resources to achieve that improvement All a firm’s structures, systems and support processes need to be directed at improving its competitiveness – including reward
An appropriate reward system is strategic and should be seen as a component part of achieving competitive advantage over rivals To become more competitive than rivals a law firm will need to consistently deliver what clients require – and do so better than rivals. To do this will mean ensuring a firm’s people perform at higher levels than rivals Ensuring that a firm’s people are highly trained, skilled and motivated should be a critical objective if a firm is to achieve a competitive advantage over its rivals Essential to get the best out of people to maximise their potential and performance -but how skilled are firms in getting the best out of their people?
What does it presently take to succeed at your firm? Are business development skills really valued? Are they measured; Are they appropriately rewarded?
Unlike in this firm “The only thing this firm values (and rewards) is personal billing!” “Why should I share clients with my partners? What good will it do me?” Responses to a confidential questionnaire from 29 out of 30 partners in a firm
A silo culture No sharing of work and clients No co-selling / cross-selling No efforts made to - enhance the entire firm’s profile and reputation - build long term profitability No effective business development to a plan Risk issues
Compare with this firm “Which other partner or partners has passed you the most work over the last 12 months?” A question designed to ascertain the level of work / client sharing in a US law firm. Those partners in that firm who develop work / build and maintain client relationships AND who share work and clients with others are some of the most highly rewarded.
What does it take to succeed at your firm? if effective business development is a priority for a firm then that should be one of the determining factors in what it takes to succeed at the firm A firm should invest in and reward what it says it values if it is to get the best out of its people
Is EFFECTIVE business development a priority for you? If so, how do you define ‘effective’ business development? Do you measure it? Do you measure INPUT or OUTCOMES? Do you reward it?
A firm’s people will need to know what it will take for them to succeed in relation to business development the key areas in which their business development performance will be measured; their performance goals pertaining to business development; how their performance rates in relation to those goals; and how their performance will be rewarded if those goals are achieved What do you do?
Objectives of reward system to encourage more effective business development? Be consistent with and advance the strategic and business development goals of the firm Determine the relative contribution of each partner with respect to other partners Help to create a culture of high performance and sharing Encourage and develop new and more effective business development skills and behaviours within the firm
Elements of performance-based reward? Should establish individual goals and plans Attempt to move individuals to strengths and away from weaknesses Can be ‘weighted’ to help a firm achieve its needs from time to time Should involve sustained performance over say three years
Developing performance criteria Appropriate performance criteria are fundamental to developing a successful reward strategy in relation to effective business development and should be designed to advance a firm’s competitive goals by helping to develop, for example - How would regard as successful business development outcomes in your firm which should be rewarded?
Developing reward criteria Involve partners in clarifying criteria to define ‘high performance’ Partners will then feel they ‘own’ the process Will provide greater transparency for future partners Focus on what will help the firm to achieve its goals “What will it take to succeed at our firm in the future?”
For example, start with a client relationships, business development & marketing online self analysis Excellent client service is a top priority for me and I have built effective working relationships with clients and external contacts I take time to question clients to fully understand their needs I actively look for opportunities to contribute value for clients I manage client expectations effectively I am able to demonstrate value to clients, as a basis for value pricing I regularly refer work to other parts of the firm I maintain an up to date contact database
self analysis, continued I positively contribute to marketing, including contributing to seminars, pitches, presentations, media liaison, articles, etc. I actively network to develop contacts I make a special effort to stay in touch with clients and contacts I set aside time to get feedback from clients I am a good rainmaker for the firm I have a full awareness of the firm’s services and actively promote them
How can you evaluate effective business development? Do you have performance development reviews? Do you measure effective business development? Effectiveness of different types of performance development reviews? - downward only once a year? - on – going / informal? - 360 degree (all round) feedback?
360 degree (all round) feedback May involve - Feedback from those you report to Feedback from your peers Feedback from staff who report to you to provide an all-round perspective of performance.
Online questionnaire on client relationships, business development & marketing Please comment on particular strengths: Please provide constructive suggestions for improvement:
“Those who contribute the most to the overall success of the office are the most highly rewarded. Notice that this does not suggest what the pay scheme should be. The determining factor is just whether the people think it rewards the right people.” David Maister
360 degree (all round) feedback Needs to be part of an on - going performance management process and reward cycle Can be used to support a particular development programme such as a business development project Should aim to provide each partner with an agreed and actionable performance development plan and serve as a basis for reward
A typical 360° performance development review process Obtaining feedback from colleagues can be an essential stage… to build on peoples’ strengths and to reinforce what they are already doing well to identify what they could do better To form the basis for reward
Advantages of 360 degree (all round) feedback to evaluate performance Who better to give feedback on peoples’ performance than their peers and the people with whom they work closely? Compared with downward feedback - - More constructive - Better received - More effective to enhance performance or change behaviour
How to introduce a 360° feedback performance development review process No single best way to do this – whatever way best suits your firm Must be a process to which partners are willing to commit - do not seek to impose it on partners Partners must fully support the process if they are to accept the feedback and change as a result The process must not be seen as threatening
Evaluation of performance and deciding on rewards - who decides? trust is essential management must have significant representation and influence involve non-management trusted individuals for checks and balances
Reward – methods of decision making and allocation? Arithmetical formula? Discretionary bonuses? Moves up and down? Transparency of the process is vital
A final thought … Whichever form of reward system you use, you should never lose sight of the guiding principle that a reward system should always work to improve your firm’s competitive edge.