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Best
Practice #9
Hold Partners Accountable for Retention &
Attrition
If
an inflexible workplace hurts the bottom line, it follows that
managers who fail to implement effective work/life initiatives
hurt profitability. And managers who hurt profitability typically
feel it in their compensation.
This
is the thinking behind the best practice of holding practice group
leaders accountable if they fail to stem uncontrolled attrition
due to their failure to implement work/life programs in an effective
way. Many companies - including Deloitte & Touche, Ernst &
Young, BP p.l.c., Chubb Corporation, and Safeway-hold managers
accountable for failure to implement diversity measures effectively.
One
increasingly common mechanism is linking managers' compensation
to their ability to meet the organization's diversity goals.
- At
BP, executives are rated on their success in achieving goals
related to diversity and inclusion as well as on other dimensions
of performance; diversity ratings directly impact their bonus
pay.
-
At Chubb, an employee's ability to meet specific diversity goals
affects merit increases as well as bonuses. Chubb's senior managers
must set goals for developing and promoting diverse candidates,
and are required to report their results to the CEO and Board
of Directors.
- At
Safeway, a supervisor's success in meeting the company's diversity
goals is a criterion for advancement and compensation.
- At
Ernst & Young, partners are rated on four different parameters
of success: People, Quality, Markets, and Operational Excellence.
Most of the parameters are self-explanatory; the role that the
"People" parameter plays at E&Y is not. The rating
a partner receives for the year in the People component reflects
his or her effectiveness at leading and managing people. Among
other criteria, this includes the ability to retain the firm's
talent by creating a flexible work environment, as well as the
ability to retain women and minorities. So that rewards match
rhetoric, the business-critical nature of effectively leading
people is reinforced by ensuring that a partner's total score
(which determines compensation) cannot be more than one point
higher than the score received for People - regardless of the
amount of business an individual partner has brought in. Ultimate
message: Bringing in work without being able to keep talented
people on board does neither the client nor the firm any good.
Retention
of women and minority attorneys positively impacts the bottom
line at law firms too. PAR has documented the steep costs of "churn
and burn" attrition of talented lawyers: losing a single
associate can cost a law firm between $200,000 and $500,000. Additionally,
increased retention solidifies client relationships and improves
the quality of the legal representation the firm is able to provide,
both of which are essential to the firm's long-term health. (Click
here for a discussion of the business
case for balanced hours.)
PAR
understands that as part of some law firms' diversity initiatives,
some firms have implemented formal mechanisms to hold individual
and managerial partners financially accountable for their roles
in retaining and advancing women (and minority) attorneys. Whether
it's by dangling a carrot or wielding a stick, these firms often
provide financial incentives to partners to go the extra mile
to attract, retain and advance women (and minority) attorneys.
Check
out the profile of Sidley Austin, below, for an example of a law
firm that is holding partners financially accountable for retention
and advancement of women attorneys. Another national law firm
that PAR interviewed employs similar formal accountability mechanisms
in its partnership evaluation and compensation processes, but
wished to remain anonymous.
Does
your law firm hold partners financially accountable for the retention
and advancement of women attorneys, or for the success of the
firm's balanced hours program? Send us an email
and let us know.
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Sidley
Austin LLP
At Sidley Austin LLP, a partner's compensation is linked
in part to his or her efforts to advance and retain women
and minority attorneys at the firm. PAR discussed the firm's
partnership evaluation and compensation processes with María
Meléndez, New York Chair of the firm's Diversity
Committee, and Kathleen Roach, Chair of the firm's Committee
on the Retention and Promotion of Women.
Every
year the firm's Management Committee meets to determine
individual partnership compensation adjustments for the
following year based on information provided in partner
self-evaluations and personal interviews. As part of the
annual process, each partner completes a self-evaluation.
Of
the dozen or so questions contained in the self-evaluation,
two in particular highlight a partner's efforts to retain
and advance women (and minority) attorneys at the firm.
One question specifically requests the partner to provide
detailed information about the partner's efforts throughout
the year to advance women and diverse lawyers. Another question-asking
what the partner has done to "push down" work-provides
another opportunity to focus attention on efforts to create
opportunities for women and diverse attorneys at the firm,
and to reward partners who mentor more junior women and
minority attorneys.
According
to Ms. Meléndez, "Every single partner must
account for what they've done in these areas," first
in the written self-evaluation, and then in the face-to-face
interviews with the Management Committee. During the interview,
answers to the self-evaluation questions are reviewed and
discussed to afford the Management Committee the opportunity
to question partners further and to hear directly from them
about their efforts. At the end of the process, the Management
Committee meets and determines individual partner's compensation
based upon the information provided in the evaluations and
interviews.
When
asked how much weight these particular factors are given
in compensation decisions, Ms. Roach replied that Sidley's
approach is "not a formula-based compensation system."
Instead, the process "takes into account all factors."
"What's important," she says, is that Sidley's
process "specifically identifies each partner's individual
efforts to recruit, retain, and mentor women and diverse
attorneys an important factor" in compensation. The
fact that the evaluation form requires the partners to detail
efforts to advance women highlights and "formally identifies
this as one of the criteria [the Management Committee] will
use to decide" compensation.
Is
it working? Yes, as part of a larger initiative. Ms. Roach
and Ms. Meléndez note that the Firm's evaluation
process was implemented five years ago when Sidley also
made other changes to increase the retention of women and
diverse attorneys. Ms. Meléndez and Ms. Roach believe
that all of these programs together are responsible for
Sidley's excellent track record of attorney retention and
advancement including that Sidley has closed the gender-gap
in the Firm's attrition rate-that is, it's attrition rate
for men and women across all of their U.S. offices is essentially
the same, a fact of which they are "very proud."
In addition, in 2007, 29% of lawyers promoted to partner
at Sidley were women, and one third of all Firm committee
chairs are women.
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