“Failure to attract and retain top talent” was the number-one issue in the Conference Board’s 2016 survey of global CEOs—before economic growth and competitive intensity. In more complex jobs, this will continue to be true as baby boomers (and their long experience) exit the workforce and technology demands more sophisticated skills.
—McKinsey, “Attracting and retaining the right talent,” June 2018.[Note 1]
If this is true for Fortune 500 CEOs and their ilk, running organizations where maybe 2% of employees can have a real impact, how much more so for law firms where essentially everyone matters–or certainly should.
That may strike you as self-evident, but how often do we honor it in the breach? And do we know (1) who really is our firm’s critical talent–that is, who drives results for clients; and (2) how to motivate and retain them?
Many of you just jumped to the readily available conclusion that your key rainmakers are clearly the critical folks, and I’m not going to pick an argument with you that I’d lose over that. But who else matters? Consider an analogy: Most armchair football fans would guess, correctly, that the quarterback tends to be the highest-paid player on a team. But who’s usually second? A running back or wide receiver, because they help the QB put those points on the board? Rarely. It’s frequently the offensive left tackle, because he protects (or doesn’t) the quarterback from being hit by defensive linemen coming from his blind side.
Maybe the second most valuable category of professionals at your firm should be the COO and CFO, because they can dramatically enhance or impede the actual delivery of client service, through efficient, fast, optimized, and intuitive-to-your-lawyers tools informed by financial metrics–or get in everyone’s way.
Disconnects such as this between talent and value are risky business—and regrettably common. Gaining a true understanding of who your top talent is and what your most critical roles are is a challenging task. Executives often use hierarchy, relationships, or intuition to make these determinations. They assume (incorrectly, as we will explain) that the most critical roles are always within the “top team” rather than three, or even four, layers below the top. In fact, critical positions and critical people can be found throughout an organization. (McKinsey, “Linking talent to value,” April 2018.[Note 2]
Let’s make this a bit more concrete. Suppose you’re looking to grow top-line revenue . (We hear this every so often in our consulting practice. Surprise!) Absent any grounding in insight developed from real-world data and analysis, a popular modus operandi for many law firms when it comes to running their business, one might assume the most effective approach is the “peanut butter strategy:” Spread a little bit more everywhere, evenly.
The opposite is closer to what might might work: Put your most talented and highest-performing lawyers and business professionals where your research and analysis shows you the firm’s best growth opportunities are, and pull resources from mature and declining practices and/or geographies.
We recently encountered an extreme case of a firm (AmLaw 200) whose practice mix was divided sharply between one set of industry clients driving a high-margin, high-growth, high-realization line of business and another large group of lawyers devoted to a quiet, predictable, static, low-margin, low-pressure group of clients. You could think of it as the “high performance” practice under the same tent as the “lifestyle” practice. We suggested an approach lifted directly from the playbook of corporate strategy: A spin-off. Let the lifestyle group set up its own firm and enjoy life on their terms unfettered by invidious comparisons, perennial guerrilla warfare over compensation and billable expectations, and all the rest of fallout from amazingly incompatible lines of business occupying the same organization.
Shall we open an office pool among Adam Smith, Esq. readers as to whether this proposal for a spin-off was accepted?