Internal disclosure of salaries tends to work best in firms that have the preceding compensation best practices implemented: levels and roles clearly defined, easy-to-understand promotion criteria, and market-based benchmarked salary and compensation packages that are relatively competitive.
Additionally, firms that disclose compensation information internally may elect to avoid partner compensation disclosure or may intentionally obfuscate the information for the higher levels of the firm.
Timing of Compensation Events
A retention technique related to compensation that can be employed by firms is to structure the timing of significant compensation events so that there is always a personnel event on the near horizon. For instance, the firm can have appraisals delivered in Q1, compensation adjustments in Q2, stock option vesting in Q3, and bonus payouts in Q4. With a real event taking place every two to three months, employees have something to look forward to and tend to do less looking for new opportunities.
Benefit Selection
Establishing a benefit package that fits all employees can be tricky. Staff members at different points in their careers and personal lives care about different things. For example, junior staff are usually focused on cash compensation and training opportunities, whereas mid-career staff with families may want more f lexible hours, lower travel expectations, and comprehensive health coverage.
If possible, the firm should accommodate the wants and needs of different constituencies by providing a menu of benefits that employees may purchase
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to suit their specific needs. For smaller firms, this may be difficult; as a firm grows, such programs can improve retention, recruiting, and overall staff satisfaction.
Perquisites
In addition to benefits, the firm may elect to establish specific perquisites due for staff promoted to each level. These perquisites may range from the simple, such as a dedicated executive assistant for all principal levels and above, to more elaborate, such as paid country club memberships. Perquisites serve as incentives for promotion, and they are helpful in improving the productivity of the most senior staff of the firm.
Professional Development
As outlined earlier in this chapter, good professional development programs are a critical contributor to overall staff satisfaction and retention in the services firm. The three main components of professional development for staff are the appraisals, training, and management feedback.
Appraisals: The Keys to Career Tracks
Appraisals are the mile markers along the career track laid out by the firm.
They serve as a forum for helping staff improve by providing a formal feedback mechanism, and a formal venue for promoting staff. A rigorous appraisal process is also a good discipline for the firm as a whole, sending the message that staff performance is important and that there is accountability for performance at all levels.
To get the most value out of the appraisal process, it must be taken seriously by the firm, the appraisers, and the appraisees. The very best firms have well-defined processes for executing staff appraisals and invest immense internal effort at all levels to complete comprehensive reviews every year.
While appraisals within a given firm may take many different forms, in general, they are working to accomplish several things:
• Determine whether professionals being evaluated have the skills, capabilities, and knowledge to do their current job well.
• Determine whether professionals have the skills, capabilities, and knowledge to advance to the next level.
• Identify, inventory, and plan around any gaps that need to be addressed.
• Provide a formal process for documenting and revisiting these issues.
• Celebrate achievement and recognition through a formal process (promotions are usually, but not necessarily, linked to appraisals).
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While each firm should develop its own specific set of appraisals for each level, which emphasize the skills required at that level, issues to consider include:
• Does the individual have the core skills needed to execute the work?
• Has the individual demonstrated the necessary skills, capabilities, and knowledge to advance to the next level?
• Does the individual put forth the appropriate effort (work ethic)?
• Does the individual work to build new knowledge (client-specific, industry, or technical skills)?
• Does the individual contribute to firm intellectual property or help develop new service lines?
• Does the individual develop meaningful, effective relationships with client counterparts?
• Does the individual work to sell new business or expand business with existing clients?
• Is the individual capable of appropriately structuring and managing work independently or working in teams?
• Does the individual manage subordinates and teams well?
• Does the individual establish effective working relationships with peers and managers?
The CD-ROM that accompanies this book provides a sample appraisal
form for a consulting-oriented professional services organization.
Because of the effort for appraisals and most firms’ planning cycles, an annual appraisal cycle is generally most appropriate. Many firms also perform a quarterly or half-year appraisal for new hires to ensure that they get off to a good start. Staff with performance issues may need to have intracycle appraisals completed as well to ensure that they are raising the level of their production appropriately.
The firm must also make a choice about how many appraisals it wants to complete simultaneously. Some firms work on rolling appraisal schedules, which coincide with the anniversary of the individual’s hire date. Other firms complete all staff appraisals during the period of a few weeks, once per year. This schedule is particularly appropriate for firms with seasonal business patterns. A drop-off in billable activity at the end of the year can make the ideal time to complete the appraisal cycle. Usually an annual appraisal cycle is most productive; rolling appraisals can be disruptive and are more difficult to organize.
The appraisal process should also define which professionals should be interviewed for the appraisal. Some firms limit interviews and input to managers or partners for whom the appraisee has worked, and other firms employ
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a “360-degree feedback” process, which interviews peers and subordinates as well. While the 360-degree approach is more time consuming, it often unearths additional useful information for appraiser and appraisee. Another consideration is whether client feedback should be incorporated. While this can be a tricky area, often clients appreciate being made part of the evaluation process and will have insights not found inside the firm. Clients of long-standing relationship to the firm and with direct experience with the appraisee’s work product are the best targets for such data gathering.
To facilitate the appraisal process, professional staff may be asked to complete a self-appraisal as the first step of the overall appraisal. This is a useful practice because it forces appraisees to take a candid look at their performance and improvement needs. It can also reveal any self-awareness issues if there are large gaps between the appraisees’ evaluations and the feedback from the organization. Generally, appraisees fill out the same forms that the appraiser completes.
Administrative staff should be included in the appraisal process as well.
The appraisal areas for administrative staff are, however, different from those of professional staff.
Because of the large amount of effort that goes into each individual appraisal, the workload should be shared across the firm professionals. Thus, the appraiser for a given individual may be someone only one to two levels above that individual (e.g., a principal evaluating a manager or a manager evaluating a consultant). This approach has the added benefit of providing training for the appraiser and provides an additional perspective on the process because most firm professionals will be both appraisers and appraisees in a given cycle.
Creating Performance Plans
While a host of management books with advice and guidance on effectively managing your workforce are available, the effective management of employees can often be overcomplicated by the pundits. The firm managers should pick a management philosophy that matches their personality and capabilities. However, in most cases, creating a high-performance team boils down to four things:
1. Setting (and documenting) clear objectives and expectations of superior performance.
2. Developing a joint plan that lays out execution of those objectives and expectations over a period (usually quarterly or annually).
3. Measuring progress against those objectives and expectations on a monthly or quarterly basis and at annual review time.
4. Providing feedback to employees after analyzing the measures in step 3.
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Feedback can occur in one of four ways, depending on the situation:
1. Good feedback: Give positive reinforcing feedback to the individual.
2. Bad feedback, but employee has potential: The firm manager must assist the individual who has potential to get back on track. This may entail weekly meetings to help mentor the individual.
3. Repeated bad feedback: After repeated attempts to help the person or after concluding the person is not capable, make the employee take responsibility by putting him or her on a performance improvement plan where he or she is accountable to achieve some short-term objectives in a short time (e.g., 45 days) or risk being terminated.