Cover feature: Crisis control

Graham Jarvis reveals how to implement the changes necessary in times of fiscal trauma without irrevocably damaging a firm’s culture and the services it offers.

A recession and the re-evaluation of law firm business strategies, relationships, practices and models undeniably go hand-in-hand. Indeed, in tough economic times cutting staff numbers is often the first money-saving strategy that firms opt for. And yet it is the people in a firm – your staff, your partners and your clients – that make a firm’s success happen. Changes to staff and business processes can undoubtedly encourage uncertainty, and thereby insecurity, to seep into the culture of an organisation, if not properly communicated across the firm. It is an issue exacerbated in the partner-led law firm environment, where the leadership culture can seem authoritarian rather than inclusive and consultative. Faced with an uncertain future, staff morale can drop substantially, affecting employee engagement and, by extension, the client service offered by a firm. What’s more, when employees leave a firm they take invaluable intellectual capital and relationship-building experience with them, thereby damaging client relationships further and forcing a firm to start over with the training of new staff, many of whom might not have a complete knowledge of the business or its clients. So, how is it possible to implement the changes necessary in times of fiscal trauma without irrevocably damaging a firm’s culture and the services it offers?

Cohesion through collaboration
Adopting consultative management practices can enable firms to identify where improvements to their people management and client strategies can be made, and where value can be added.
Indeed, involving staff more closely with the business creates a greater level of cohesion and engagement, and trust and respect between managers and their staff. Additionally, a collaborative approach widens the possibility for the firm to become a learning organisation – preventing the loss of information should firm employees be made redundant or moved to other practices and improving the organisation’s ability to deliver a higher level of client service as a result.
For example, if client issues, and the solutions to those issues, are captured by staff in a client relationship management (CRM) system, the service offered to that client and the resolutions to the problems faced by them in the future can be carried out consistently regardless of whether or not the staff or team that had built the relationship originally remain with the firm.
“It is the people at a law firm who deliver the product and the service, ”says David Brady, the director of marketing and technology consultancy Vuture. “They are the acid test of what is going well and of what the firm’s client really wants.” It is impossible, he says, for a law firm’s partners to know what is going on within every aspect of the business, particularly because the ultimate service is being sold and delivered by individuals within the firm. Within any firm, it is therefore the ‘people power’ that counts the most when delivering effective client service. Client feedback should therefore be obtained by asking staff a series of questions about their interactions with each client and by recording their responses for discussion with managers and practice partners. This client and operational knowledge can again be collated using a CRM database or by establishing regular brainstorming sessions, having regular one-to-one discussions with each member of client-facing staff or by having a suggestions box (where ideas or comments can be made explicitly or anonymously).
Capturing as much staff knowledge about the firm’s clients as possible is critical as discussions between clients, lawyers and other client-facing staff could determine the future client-related and organisational strategy of the practice. A vital opportunity is therefore lost if this information is not recorded, particularly if staff working at ‘the coal face’ are not asked for their opinion, reducing the ability of the firm to optimise its business processes, to remove or reduce the impact of any inhibitive practices and to increase its overall performance.
“Decisions made without knowledge are going to be poor decisions”, says Brady. They are also quite often made according to someone’s gut instinct, based on past experience and how this might relate to the future. Indeed, they are subjective in their nature and inherently imperfect. “Having additional feedback is therefore vital because businesses change and the dynamics of the change alter too,” he says. Maintaining consistency in service delivery in the face of change is vital. “To gain a competitive advantage, law firms need to demonstrate that they understand the difficulties presented to their clients by the current, uncertain economic climate, and to their own organisations, showing their support for them throughout these difficult times,” says John Curtis, director of people management consultancy MC2. He agrees that law firms should engage in more personal direct marketing, which should involve an increase in client communication to emphasise that they know their clients well – using language they can clearly understand rather than legal jargon. By understanding this, managers will be able to make better decisions and, with the help of technology, capture and report the insights gathered from client-focused feedback to analyse the key points of reference for any given action in order to deal with any immediate problems. Clients may be happy with your existing services, but they might be more loyal (and, crucially, spend more money) if value were added to the experience and the firm’s offerings.

Change to gain
For many law firms this entails a complete change in mindset and a substantial cultural shift, but nonetheless, a number of practices have realised the need to make significant investments in order to break with old traditions. “I don’t think you can simply switch on collaborating and sharing decision-making without cultural change,” says Andrew Hedley, the director of professional services firm, Hedley Consulting. He adds that change will only happen if the “pain of change is less than the pain of staying where you are and the benefits are more valuable to you than the status quo”. However, change cannot occur if the right questions aren’t asked across the firm. Indeed, if you don’t ask your staff for their opinion, they will become reticent.
In fact, as the human resources (HR) management trainer and author of Pro£itable Performance Management, Patricia Wheatley-Burt explains, a lack of consultation with staff leads to what she terms ‘difficult child behaviour’ in which staff become disengaged and potentially less productive or mindful of achieving high quality results. This is obviously counterproductive; a more positive approach would be to give staff ownership of their daily tasks. Part of this equation might involve delegating work to more junior staff in order to build up their confidence and knowledge of the business. But, at the same time, it’s important for managers and practice owners to set boundaries. There is no point in having a ‘management by committee’ culture as this will slow down decision-making and the organisation’s ability to respond to its clients. Yet if all of the work and decision-making and business activities are kept to the top echelons of the practice, it could stifle the ability of senior partners and managers to find new business or focus on their own core competencies.
“Research by the US-based research and consultancy group, the Gallup Organization, shows that client-facing employees who are given the opportunity to manage their daily tasks are likely to more be productive, loyal and motivated than other members of staff,” says Curtis. This approach usually acts as an incentive to work harder than someone who isn’t given the chance to fully become part of the organisation. What’s more, happy employees generally lead to happier clients, and a satisfied employee is more likely to want to share information than one suffering from low morale. Additionally, a people-skilled and motivated employee will be better placed to empathise with a client facing difficulties (economic or otherwise) and deliver higher levels of client satisfaction.
However, staff in any organisation won’t necessarily be willing to give feedback without an incentive to do so. In fact, employees at every level need to be assured that they can speak up without being reprimanded. Moreover, they should be rewarded accordingly and such rewards need not always be financially-based for as Wheatley-Burt explains, “cash rewards turn what should be communal and voluntary process into a transaction”.
It is also important to bear in the mind the motivating factors as outlined by the US physcologist and business management expert, Frederick Hertzberg in his ‘Motivation-Hygiene Theory’. This asserts that people are influenced by two factors, motivating factors (which include achievement, recognition, work, responsibility, promotion and growth) and hygiene factors (which include pay and benefits, company policy and administration, relationships with co-workers, physical environment, supervision, status, and job security). Referring to Hertzberg’s theory, Hedley indicates that salary is incrementally a hygiene factor that could “demotivate as much as it motivates”. Firms should adopt smarter ways in which to reward their staff, he say, because “a salary increase isn’t necessarily going to get you where you need to be and isn’t a sustainable model”. That means enabling staff to think for themselves and to get more closely involved in the ‘nitty-gritty’ of firm business, effectively making them feel that they are partners in the business and not someone with no right to contribute to the intellectual development of the organisation.
Above all, most employees want to do a good job, and, more importantly, they want to feel valued and recognised for the work they do. “In generic terms, you could have all kinds of incentives, but before you reward staff you need to work out what you are going to do with the information and how the business will benefit from it,” explains Brady. The process has to be managed with absolute integrity, he says, there is no point in gathering feedback for no real purpose. Indeed, every organisation should work to build up an ‘integrity base’ to prevent low morale from becoming an issue.

Don't divest, invest
Recruiting, as opposed to cutting, business development and marketing personnel is imperative to boost business further and build on CRM processes during the downturn. The ‘powers-that-be’ in any firm are often not equipped with the particular skills, time or knowledge to involve themselves or recognise how sales and marketing is an effective way of growing their practices. And yet, in spite of this, it is often marketing and business development professionals that are most severely affected during a recession, with marketers commonly being among the first in an organisation to receive a redundancy cheque. To gain the most out of marketing, the connection and understanding between marketing and partners should be improved, enabling increased engagement in effective communication and in staff of all disciplines sharing ideas and realising where the firm stands within the bigger picture.
By doing this in a transparent, open and honest fashion, staff can see where they are adding value to the business and what metrics are being used to measure their individual and team performance. Investment in staff training can further help with this. Yet, in an uncertain financial climate, focusing on educating employees is often seen as an unnecessary and costly activity. By investing in this activity, and thereby monitoring individual and team performance, you can identify poor performers as early as possible, enabling you to realise where your firm’s individual staff, team and organisational strengths and weaknesses lie. Training and mentoring, as an ongoing investment, can then be utilised to correct or resolve any issues that arise. This approach ensures that disciplinary action is the very last resort, while improving staff retention and motivational levels.
Remember that a downturn is a time for you to invest in your firm’s future. Widespread redundancies will make those that remain wary of losing their jobs, and this is very demotivating. It can also be a self-defeating approach to fiscal trouble, reducing the efficiency and effectiveness of the organisation. By investing in your workforce and openly celebrating their successes, it is possible to ensure that staff, and by extension clients, remain loyal, motivated and satisfied.
Those that take positive action and focus on investing to succeed, rather than divesting to survive, will lead the way out of the downturn. Those that don’t, and cut costs and staff numbers across the board, will find it hard to turn on the tap once business and the economy starts to pick up. By investing for the long-term in your staff, you will be investing in your clients as you will be more able to cater for their needs, and create stronger and more profitable client relationships. If you avoid following the pack, and have the courage to do things differently, it’s more likely that you will be more than rewarded for your approach. It is an approach that will undoubtedly require great dedication and substantial commitment to continually improve the firms’ performance. Motivation is the keyword.
As long as you retain your staff during the recession you could emerge as the market leader, and that can only be good for business.

Graham Jarvis is a marketing and business journalist. He can be contacted at info@mc2.gb.com.