How to retain and motivate key talent

Anne Harnetty, managing director of the legal sector recruitment consultancy Jonson Beaumont, outlines how you can boost motivation and retention of your key talent. (Updated 8 May 2024)

(You may also want to see/hear the recording of the popular webinar 'Winning the talent acquisition and retention battle', with Anne Harnetty and other experts; and to attend our conference 'Embedding culture and taking people with you' on 25 June in London.)

With the most extraordinary recruitment market in 40 years, the competition to attract and retain talent in law firms has become a battle. These individuals are essential for any firm’s success as they play a pivotal role in building relationships and delivering client service, but there simply aren't enough high performers to go around.

Now, more than ever, firms need to understand what it is that staff need in order to retain them in the business. Compensation can be an important part of all this, but the firms that are winning have taken a much more in-depth approach and a real commitment to their people. It's all about developing a culture that people want to be a part of.

The motivation problem

Too often, efforts at motivation revolve around a bonus scheme encouraging fee-earners to maximise utilisation and recovery rates. While this can have some positive effects, there are three big problems.

First, the bonus scheme encourages fee-earners to focus on their own billing targets – to the exclusion of other desirable behaviours. A fee-earner incentivised in this way will be less keen to delegate to colleagues, to introduce clients to other practice areas within the firm, or to spend time on management activities, mentoring juniors and so on.

"There is … a disconnect between the factors that law firm leaders consider most important in driving growth of their firms and the way those same firms remunerate their partners and their employees.”
Methods of Employee Remuneration and Partner Reward (Armstrong Watson)

In some cases, the design of the scheme may even encourage fee-earners to game the system. Once a target (say, quarterly recovery) has been hit, the prudent lawyer may be tempted to keep some easily collected fees in reserve towards achieving the next quarter’s target.

Second, a scheme like this fails to recognise the wider talent community in a modern law firm. While fee-earners may retain primacy, other roles – for example, in marketing, finance and IT – are becoming ever more important. A scheme targeted solely at fee-earners does nothing to motivate these key people. If anything, reinforcing a culture in which non-fee-earners are undervalued pushes them to seek a more congenial working environment elsewhere.

Finally, an approach to motivation based entirely on money is far too narrow. Different individuals want and respond to different things. In many cases, other motivational tools can be much more powerful – and less costly.

“The way you motivate and retain people goes right to the heart of the firm’s culture.”
Kim Carr, partner, FBC Manby Bowdler

Incentive schemes

Incentive scheme planning should start by identifying the kind of behaviours and culture that will support your business strategy. Rather than direct financial goals, your most important aims might be to foster a spirit of collaboration, encourage fee-earners to delegate, and focus on delivering excellent client service and outcomes.

This then translates into clear, measurable objectives for different individuals and different teams, including both fee-earners and employees in supporting roles. The aim should be to create a balanced set of targets that cover all the key elements of the individual’s role.

Imposing targets rarely works well. Instead, individuals should be involved in discussing and agreeing objectives that they can realistically expect to achieve. At the same time, aim to ensure that targets – and rewards – will be seen as fair across the firm rather than causing resentment.

A good system will be open and transparent, backed up by publishing appropriate and accurate management information against which performance is measured. Avoid creating targets that are difficult to understand or measure. Handled sensitively, publishing key information can lead to healthy peer pressure.

Crucially, agreeing targets should only be one half of the process. At the same time, you should be identifying individuals’ learning and support needs to help them achieve their goals. Learning and development is key to performance, as recognised in the Law Society’s Lexcel practice management standard and the SRA’s regulations on continuing competence.

“Financial outcomes may be one part of an individual’s targets – but the firm’s success relies more on ensuring that fee-earners’ behaviours match the long-term strategic objectives of the business.”
Andy Poole, partner, accountants Armstrong Watson

The working environment

Compensation and incentive schemes clearly have a role to play in motivation and retention. Apart from the money itself, people often see compensation as an indicator of status and how highly they are valued. It is difficult to retain and motivate individuals who consider themselves underpaid, by comparison with either their colleagues or their peers at other firms.

But other factors can have an equal – or larger – role to play.

For many people, work-life balance is a priority. Junior lawyers may no longer be content to routinely put in excessive hours in the expectation of a future partnership. And building a culture that values outcomes rather than inputs isn’t just attractive to your people – it also reflects what clients want.

“Don’t assume that junior lawyers value the same things as an older generation – or that everyone has the same priorities. Ask what they care about and how the firm could improve.”
Shaun Jardine, managing director, Big Yellow Penguin

As law firms have seen, flexible working can be hugely appealing as it allows people to fit their work around other, personal commitments. As well as flexibility over working hours and location, firms should consider how to accommodate individuals who may want to take a career break. Many larger firms maintain contact (and the possibility of future re-employment) through an alumni network.

Different individuals will value different opportunities to develop. For some, the priority may be enhancing their legal skills, while others will be interested in management and future succession prospects. The firm’s support for development should promote a competency-based approach that enables individuals to identify the learning needs, engage in learning and then reflect on how they transfer the learning into their day-to-day work.

Perhaps most importantly of all, people want to feel valued and respected. Positive feedback, praise, thanks and involving individuals in decisions that affect them can be the most cost-effective motivational tools. Fundamentally, the firm should strive to create an open and honest culture that truly values everyone.

“Do you want your firm's remuneration and promotion to reflect an individual's contribution and potential, or a lockstep system that rewards time served?"
Martyn Best, chief executive, Document Direct

Retention and motivation top ten

1. Identify your overriding aims and the outcomes you are trying to promote.
2. Look beyond immediate financial goals to the culture and behaviours that will support long-term success.
3. Include everyone in the firm, not just fee-earners.
4. Involve individuals in agreeing their own priorities and targets.
5. Share management information in an open and transparent system.
6. Give individuals the support they need to achieve their goals.
7. Recognise the need for work-life balance.
8. Respond to the desire for flexible work patterns and less linear career paths.
9. Don’t leave feedback to performance reviews – take every opportunity to praise and thank.
10. Build a culture that values each individual’s contribution to the firm fairly.

Why do law firms choose Armstrong Watson?

It’s because this accountancy firm has built an outstanding reputation in the legal sector, working as preferred partner of the Law Society.

See also:

• Effective partner reward and incentive options (2024 webinar recording)
• Managing employees who are working from home
• Using personal development plans – checklist
• Talent in the legal profession (2024 book by Anne Harnetty and others)