By Cheryl J. Leone
Part of high performance principles in measuring work delivery abilities always brings to mind the timing of monetary raises for employees, even in a recovering economy. We have heard every reason in the world for giving raises, but our favorites and probably best ones from lawyers are: (1) If I don’t give a raise he or she will leave; (2) He or She isn’t the best but has been with me a long time; (3) He or She has slacked off lately and I am not going give a raise now.
Let’s start first with Law Firm Profitability 101. Be fair with your salary ranges. Every region, area, city, or locale has a high and low on what is fair in your area. Big Cities demand bigger salaries than small towns. Doesn’t make it fair, just is true. In today’s recovering economy there are many talented people out there that are willing to work below these wages. There are some who want more than this broad range because they believe they are more skilled. Only you can decide the range of high and low that is not only competitive with your area but is within the range of what the firm can pay. What you can do is stay within the range but consider one time merit bonuses for the year.
Never ever hire someone at a lower salary because they will take the job. Pay what you can afford. Employees learn quickly about the first. They respect the second.
Learn the true cost of employees. Let’s take an example of a law firm in a small town. Administrative personnel are making $9.00 to $12.00 per hour. Taking 2080 work hours in a year (no overtime) the cost of an employee at these rates (including employer taxes and benefits) are approximately $13.50 to $18.00 per hour cost to the firm. At the total cost (including taxes and benefits) a full time employee will be costing you $28,080.00 to $37,440.00. Now that you are properly shocked, let’s talk about raises.
The recession made us look long and hard at what companies can afford (and law firms also). There were many hard decisions on who to retain and who to let go. We were pleased to see law firms make every effort to keep people even if it meant stopping some benefits or being creative with what people got paid. Employees appreciated it. As we are getting the balance back, employees are looking for pay increases.
As long as you are competitive in your area your people will see you as being fair and they have a broad range to work within. Someone making $9.00 per hour will know they can reach the $12.00 per hour range and that if they have learned new skills or can work at a higher level can be raised beyond that. They will also know they can receive a merit bonus that puts them beyond the highest level.
You must implement a plan that allows a very fair evaluation of an employee’s worth to the firm, whether tangible or intangible. We are not fans of the formal evaluation. Rather with high performance you plan with the employee for the forthcoming year benchmarks of where you want them to be and if they reach those goals they will be considered for a merit raise or bonus. This can be improvement in areas or new needs. This puts the employee’s destiny into their own hands.
In yesteryear’s thought process, hard skills were crucial. The world is changing. Today’s work force is judged on not only hard skills but soft skills. Someone may be an average administrative assistant but have such great people skills the firm benefits with new clients or happy clients. In today’s work force this person is more important than the person who is technically superior. Your evaluation of the position must include rating soft skills and hard skills.
Once you have an employee with a plan you must fairly and constantly be monitoring the employees worth and growth to your firm. Throughout the year you should be making course corrections. You must become the trainer and the leader to make sure you are getting your financial worth out of the employee. Meet with them quarterly to keep everyone, including yourself on track.
Let’s presume that halfway through the year your employee has been exceptional in what they have done. Instead of a raise, provide a merit bonus that allows them to see you are taking note of what they have done. Most lawyers think in such big numbers but I have seen many an employee be ecstatic over $250.00 to $500.00 as $1500.00. Just know if you give them $1500.00 they may expect that in the future. And of course if an employee is faltering you need to talk with them and explain where they simply are not meeting the goals.
At the end of the evaluation process and assuming an employee has exceed your expectations, you can decide to raise the hourly (or annual) salary, or provide a strong merit bonus, or both. And if the employee has not improved you are very frank with them as you should have been all along and let them know you cannot provide a raise without improvement. If you provide a raise for a mediocre employee you will always have a mediocre employee.
Everyone has an opinion on raises, bonuses and benefits. Here are ours:
NEVER ever give raises or bonuses just before Christmas. They tie too much expectation on this. Money at Christmas should be a Christmas present. The best time to give raises or bonuses is when the firm has audited its book for the preceding year and you are able to have a good look at what you have done and who contributed to it.
Never exceed the salary range for the position over-all. If a person exceeds the expectations for that position they should be reclassified and told or given a strong bonus and told frankly they exceed the budgeted amount for the position but they are worth a good bonus. Keep up the good work and get more.
If money is tight, tell your staff and offer an alternative short term benefit; i.e. One afternoon off a month, a tank of gas a month, etc. At least your employees can see the reasoning. Frankly employees need money so anything that benefits their standard of living helps them. Having a day off for appointments saves their vacation time. When you announce it always show the monetary value of what you have given.
Finally if you provide a raise or bonus for an underperforming employee you will create a toxic situation. I haven’t seen a law firm yet that the employees did not resent this. If you are fair all year long and you try to work with the worst employee in the firm there never is resentment if there is no raise or the employee leaves. They will think you are unfair if you reward them.
Teaching high performance management of employees requires a shift in the thinking of the leadership of the firm. When we help implement this type of work force, it is something that requires a buy-in with the people who control the purse strings. It also is something that requires training with the staff on expectations and how to deliver high performance work.
We find in most laws firms that employees are like birds kept in cages for control. Yet when you open the door and let those same birds learn to fly on their own you have soaring eagles. Questions? Contact me via email.
About the Authors
Principals Dave Favor and Cheryl Leone are the founders of Catalyst Group, Inc. with its corporate offices in Raleigh, North Carolina. Rounding out the Coaches is Attorney Carl Solomon of Columbia, South Carolina. They share a common value and belief system that everyone deserves a chance to work for themselves and do it in such a way that it is profitable, enjoyable and respected by others. For more information email our Head Coach.
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