Saturday, February 7, 2009

Redundancies - Should They Stay or Should They Go?

So how do the firms facing large scale redundancies select those who are going to get the chop?

According to RollonFriday, the following points system is rumoured to be the key measuring stick for assessing the lawyers at Linklaters. If you score low, then you go. The below however is only for the legal staff, with the support staff selection system not yet known.

30 points - Overall appraisal rating 2008
10 points - Disciplinary/performance improvement plan
20 points - Utilisation
10 points - Investment hours (in non chargeable work)
20 points - Contribution to the future development of the business
30 points - Performance in financial year to date since May 2008 appraisal

The weighting of each category is interesting. At first glance we would see that the "Performance in financial year to date since May 2008 appraisal" weighting may cause some concern given the state of the economy (and with consideration given to the 20 points assigned to Utilisation). One would also hope that you would be graded against peers within your practice area in this category, rather than those working in other (and potentially less impacted by the economic down turn) practice areas.

There have been comments that one would like to see higher points being allocated to both "Contribution to the future development of the business" and "Disciplinary/performance improvement plan", particularly (in relation to the latter) if your performance was questionable enough in good times for you to be subjected to a performance improvement plan.

It should also be pointed out that unfortunately the "Contribution to the future development of the business" is one of the only grading areas which can not necessarily be linked to cold hard statistics or facts, and one which can be open to great interpretation.

Where does the client opinion or feedback fall into this equation?

But what of the support staff? With voluntary redundancy packages and reduced working hour options out of the way, how then should the support personnel who are left (more than 100 at Linklaters) be graded or divided to determine who goes and who stays - particularly given the fact that three of the gradings relate to the billable hour?

Taking secretarial staff to one side and only looking at the areas of core operational support (e.g. knowledge, finance, technology), we would suggest that planned and actual 'capacity' of an individual over the next twelve months is a key criteria. What projects or initiatives that were planned are no longer moving forward, and who were to staff these?

We also suggest that you hit the list if you have been subject to disciplinary or performance improvement plans in the past twelve months. It may sound harsh, but at most firms it takes quite a good deal of stumbling before anyone is placed on a formal performance improvement plan.

And what of the concept of 'value to the firm' when considering support personnel in areas such as operations (not to mention 'future value to the firm')?

All sounding too hard? Well, add the potential for litigation and the required mathematics for calculating the cost to the firm of redundancy packages, and you have the recipe for many late nights and pounding headaches from senior management.

Spare a thought though for the mid-tier firms with small numbers who are also going through the pain.

One mid-tier European firm we know has been taking the opportunity to review the senior management positions within the firm's operational areas to ensure that the partnership is receiving value for money. Tabled as a quick audit or sanity check during a partner meeting, it soon became a very interesting (and subsequently formal) process. One partner's comments caught our ear immediately and it was all that was needed to kick the debate off.

Although not word for word, the comment went as such..."We have close to 500 staff but we have only 250 lawyers in this firm. This director is on $250,000 a year. That is $1,000 of value that they should be visibly providing to each lawyer each year, and that is just for the head of that team - it doesn't take into account all the other related costs of their staff and their projects. If we asked each lawyer, would they agree that they are getting that level of value from [insert name of support department or person here!]. Get this director and their team to come in here and prove it...or we have a problem"

Interesting approach. Crude? Probably. Too simplistic? Possibly. Do we agree with it? No comment, but maybe there is some method in the madness. Just make sure you can answer the question if asked.

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