A method of increasing performance is based on the Hawthorne Effect. Although several of the experiments have been downplayed by social psychologists, the effect that attention has to performance is as true today as it was when recorded at the Hawthorne Plant in the 1920's.
Basically, when attention is given to the performance of an employee, the employee's performance increases. Simply put, measurement improves performance. If you set goals for your timekeepers and don't measure them against the goals, the incentive to succeed is left to trusting individuals to meet their goals.
How well suited is your firm for a loss of a client such as Bear Stearns (or, perhaps, Lehman Brothers)? Gerry Riskin wrote in January to make your firm recession-proof. Some of the factors listed in recession-proofing the firm:
- Ramp up frequency of financial reporting (monitor the firm's key finanacial metrics);
- Make hard decisions humanely and fast (monitor under-performing timekeepers);
- Manage internal expectations (monitor expectations to keep staff motivated and avoid "business as usual");
Each of the above requires attention. Trust alone that the individual timekeepers will respond to economic crises is a recipe for disaster. A better management model is the Hawthorne Effect. Everyone needs to be accountable for results. Let the effect of attention to performance help the firm during difficult times.
The effect of measuring performance brings other benefits. Beyond improving results, keeping attention on profit drivers has the added benefit of opening opportunities - even in bad economic times. As Riskin notes, [w]hile strategy may be more challenging during recessions, if you grasp the nettle, opportunities will arise to enhance your client mix and your talent base.
We have begun taking submissions towards the 2008 Law Firm Economic Survey. If your firm is interested in participating or if you would like more information, please contact Brian by clicking here.
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Filed under Benchmarking, Firm Culture by Brian J. Ritchey
I spoke Friday at the ABA Techshow on profitability and the key drivers of partner income. At the end, I posed some questions to the audience to facilitate discussion on the findings of the 2007 Law Firm Economic Survey. One of the questions I asked was "why would firms have low associate utilization?" A partner in the audience responded, "Partners don't trust them to do the work."
That is a common answer I hear from partners. However, without fully utilized associates, firms can't leverage. Leverage affects the growth of the firm and there was a strong correlation between leverage and income by respondents of the 2007 Survey. The challenge for small to mid-size law firms is finding ways to increase associate utilization so that the firm positions itself to leverage. If trust is an issue, then confront it. Mentor associates so that you can trust them to do the work as you would.
An article written by Allison Wolf in her Lawyer Coach Blog titled The Fine Art Of Delegating was the basis of a post by Tom Collins in August, 2007 called Spinning Increases Law Firm Income. Both Wolf and Collins stress that partners who aren't "spinning" work to associates need to face the reasons that prevent them from delegating - don't let the reasons be an obstacle.
Wolf writes:
Delegation is one of the lawyer behaviors that need to be rewarded by compensation committees. For a law firm to be most profitable partners are required to spin work down to juniors. Savvy compensation committees look at the combination of billable hours and spin earnings when allocating partner income.
Collins adds:
[A] firm’s compensation plan is often the reason Why Partners Hoard Work. That, in turn, leads to poor leverage, underutilization of associates and high turnover.
On the issue of trust, Wolf writes:
Successful people surround themselves with talent. Your challenge is to help develop the juniors so that they do the work as well if not better than you do.
Formal mentoring programs are still rare in small and mid-size firms, yet the need is apparent based on the findings of the 2007 Survey and from what I hear from partners. In a year where inflation may very well end up over 4% (over 1% higher than the annual average the past 10 years), firms can't rely on rate increases alone to maintain income. Develop programs to help associates manage more caseload. Give partners an incentive to delegate and mentor. Those who do will create the circumstances necessary to leverage and grow the firm, ultimately leading to sustainable increases to income.
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While sitting on a plane on the way to the ABA Techshow, I was reading the February 2008 issue of the Harvard Business Review. An article titled, Task, Not Time: Profile of a Gen Y Job, caught my eye. I often hear managing attorneys lament the lack of motivation of associates. The article in the HBR may provide a reason for the disconnect - it isn't that young associates are not motivated, but that they may respond differently than their elders to the conventions of work. Where many look to the hours you spend at the office as a measure of productivity, the HBR article suggests that the younger generation looks more to results, or task-based productivity.
Many younger employees find they can complete tasks faster than older workers,perhaps partly because of technological proficiency but even more . . . because they work differently. They spend less time scheduling and are comfortable coordinating electronically. They resent being asked to log hours and stay in the office after their tasks are done, and the idea of face time really annoys them. [Generation] Ys love to work asynchronously - anytime, anywhere. One said during out research, "What is it with you people and 8:30am?"
Does this explanation fit with your experience?
The article suggests ways to devise a better model of how to define work:
- Articulate the results you expect - and tie accountability to getting the job done;
- Make physical attendance in the office, including at meetings, optional;
- Gauge performance on the quality of work performed;
- Help managers and employees learn to measure dedication in ways other than face time;
- Use today's networking capabilities to allow employees to work from anywhere;
- Support the changes by creating drop-in centers
The above also appears to support what Chuck Newton has termed the 3rd wave law firm.
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Filed under Firm Culture by Brian J. Ritchey
Met Kevin O'Keefe today and he had Rob La Gatta interview me - it is posted here.
Also went to a session hosted by Debbie Foster and Steve Best. The session was about Document Management. I'll admit, document management has always been a component to me. It was really just the process of profiling documents electronically. Today, though, Foster and Best explained what differentiates document profiling systems from document management systems: forced compliance. A true document management system will force you to use their profiling system when you save a document.
Why is this important? If you are shopping for technology that will help move you more towards a paperless office, knowing the difference between a profiling system (which is predominant in the "all-in-one" case management systems), and document management (which is reserved for the "best of breed" packages), will help you avoid making a long-term investment error. You don't want to dedicate your office to a profiling system that requires them to store documents in a standardized way and then find that the system you deploy doesn't require compliance.
At the same time, if forced compliance is not what you need, then you may be wasting dollars on a product you could have had elsewhere for less.
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Filed under 2008 Tech Shows, ABA Techshow by Brian J. Ritchey
This morning I am off to Chicago to attend the ABA Techshow. I am speaking on benchmarking and the results of the 2007 Law Firm Economic Survey Friday at 2:30pm central. If you are attending the conference I encourage you to drop by. I plan to do some blogging at the event as well, including recording some interviews.
In the meantime, I did a little more research on inflation yesterday and learned some interesting things. I'm no conspiracy buff, but I have to admit that connecting dots is a fun exercise.
First, the Federal Reserve just two years ago decided to stop tracking what is called M3 transactions.
A House Bill was introduced shortly thereafter requiring the Fed to reinstate the policy (introduced by ex-Presidential candidate Ron Paul) - http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.4892: - no legs sprouted from it.
Some are therefore calculating M3 themselves:
The final worrying sign is the runaway bull market in oil. Oil is near $110 per barrel.
How will this affect law firms? Well, as noted yesterday, you need to keep an eye on inflation and your margin. With high margins and low inflation, you are pretty well insulated to inflation's effects. If inflation spikes, though, all bets are off. Based on the above linked articles, however, are we (as Larry Bodine has stated several times) already in a recession? And is inflation already well above 4%?
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Filed under economic outlook by Brian J. Ritchey
Comments on Management ABCs: The Hawthorne Effect
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"Management ABCs: The Hawthorne Effect"…
Posted by Brian J. Ritchey: A method of increasing performance is based on the Hawthorne Effect. Although several of the…