Performance management in professional firms: a case study

“Performance management is a means of getting better results from the organisation, teams and individuals within an agreed framework of planned goals, objectives and standards.” (Armstrong and Murlis 1994)

Background

Most professional firms are small or medium sized organisations managed by people who have professional qualifications in their specialist area, such as law or accountancy, but have received little in the way of formal managerial training and so may lack the appropriate expertise. There is a constant need to generate fee income so they also frequently lack the time or the inclination to concentrate on human resource management (HRM) issues. Some firms appoint practice managers to deal with some of the operational issues but these may be regarded as fairly junior appointments compared with the partners who actually make the strategic decisions.

There is a growing recognition by such firms that their main resource is the knowledge and skills of their staff, and they neglect the development of these at their peril. Their main source of competitive advantage is to provide a better service than other firms but as increasingly they are being asked to quote fixed fees for their work this better service cannot take increased time. In addition many clients are looking for quality assurance ‘kitemarks’ awarded by external bodies, such as BS5754, or Investors in People status.

The firm

This was the situation faced by Osborne Solicitors who decided they needed help with performance management in order to compete more effectively for business. Their large commercial clients were increasingly appointing firms to ‘panels’ of approved suppliers and the criteria for admission were stringent, relating not just to professional matters but also based on evidence of sound HRM policies and procedures. The firm had in the past operated in a very traditional manner, in which ‘matters were agreed between gentlemen’ but this was no longer sufficient to secure new business. There was a recognition of the need for change at the highest levels.

Structure of the firm

There are 24 partners and 45 other fee earners, plus 68 support staff. They are spread over four locations with between 15 and 60 miles separating the offices. They specialise in litigation for large commercial clients. These clients have themselves been subject to cost cutting in their own industries, and are therefore looking for more transparent pricing from their suppliers and more work on a ‘fixed fee’ rather than ‘hours worked’ basis.

Decision to introduce a performance management scheme

The firm was keen to achieve Investors in People (IiP) status as they felt this would help them to be included on the list of preferred suppliers for their major clients. In order to achieve this a number of criteria must be satisfied, including having a performance appraisal scheme in order to identify training and development needs. The achievement of IiP requires firms to set business objectives, assess the training needs of their staff and implement appropriate training and development.

Design of the scheme

I was invited into the firm by the managing partner to explore what form of appraisal scheme might be appropriate. However it was also important to sell the idea to the other partners, and the staff, in an attempt to convince them of the potential benefits and to try to allay their understandable fears. I drew up a policy document outlining how the scheme would operate and also the necessary documentation. A number of decisions had to be made about the type of scheme which would suit the culture of the firm.

One of the major decisions to be made concerned whether the outcomes of the appraisal would be related to salary increases in any way. This is a typical area of concern. On the one hand it seems fair to pay the better performers more money than the poorer ones. However a scheme which is intended to improve the knowledge and skills of the staff is less likely to be successful if during their appraisal interview they are conscious that their pay increase will be based on how competent they appear to be. If the scheme is intended to improve the knowledge and skills of the staff then it is important that they are honest in terms of identifying areas for further development.

The scheme includes a self -appraisal form as it is felt this helps to encourage the individuals to take responsibility for their own development. The staff who would carry out the appraisal interviews were identified. It was decided that no one appraiser should appraise more than six individuals as this should ensure they were able to devote the necessary time to the process. They were all given a one day training course in order to ensure they were familiar with the aims of the scheme and had an opportunity to practice the skills involved in setting SMART objectives and conducting the interview. SMART objectives are Specific, Measurable, Agreed, Realistic and Time-bound and are easier to apply for some behaviours than others. For example, it is relatively easy to set an objective for a fee earner which says that they should increase their chargeable hours by 5% over the course of the next year. However it may in fact be more important to the firm that they spend time on training some of their junior staff or increase the profile of the firm by becoming more involved with the relevant professional body. These are more difficult to specify in SMART terms so it will be necessary to identify appropriate performance indicators in order to assess the extent to which progress has been made.

They were encouraged to think of more innovative methods of staff development, such as shadowing, rather than just thinking in terms of attending a training course. Every partner in the firm was appraised by another partner and at the end of this process a review was undertaken to check if any changes to the scheme were required before rolling out the appraisal to other members of the firm.

The appraisees were also given the opportunity to attend a one hour training course during which the aims of the scheme were outlined, the paperwork was reviewed and they were given the chance to voice their concerns and questions. The message was very clear that they would get out of the scheme only what they were prepared to put into it.

The remaining interviews were conducted over the next two month period, and again an evaluation was undertaken to see if any further changes needed to be made. Some revisions were made to the scheme mostly relating to the documentation to ensure that it was absolutely clear how the forms were to be completed and where they were to be sent. All the forms were reviewed by the practice manager in consultation with the managing partner to ensure that the scheme was being operated as intended. As a result of this process some changes were made to the scheme and further refresher training was provided for the appraisers.

Problem areas

The following points were identified as a result of the evaluation of the first round of appraisals:

Need to ensure the documentation is very clear in terms of what information is recorded where and the route the paperwork has to follow.

During the first year of the appraisal the business objectives were still being clarified which made it more difficult to relate an individual’s objectives to the firm’s objectives.

The issue of confidentiality was important to ensure a balance between encouraging openness on the part of the appraise as they knew who would have access to their completed form, but also providing necessary information to team leaders to enable them to plan the work of their teams.

It became clear that some of the original appraisers lacked the necessary interpersonal skills to conduct the interviews.

Some appraisers said they found it difficult to find the time to carry out the necessary preparation.

Some appraisers found it difficult to set SMART objectives.

There was insufficient time spent on monitoring and feedback during the course of the year, particularly in ensuring that identified training and development took place.

It was difficult to set objectives for some more senior staff as there is no clear career progression for them to follow.

Design of scheme

Main issues

Link with pay or not

There has been a long running debate in the literature as to the advantages and disadvantages of linking pay with performance. I was clear that in this situation where the main objective was to improve the knowledge and skills of the staff, linking their appraisal to pay would reduce the acceptability of the scheme. Once the principle of appraisal is well accepted it may be possible to review this situation.

Performance ratings or not

Some schemes use rating forms which rank people on scales from 1 to 5 in terms of their supervisory ability, technical skill etc. These are likely to be particularly important if the final outcome is to be related to a salary increase. There is always a danger with such rating schemes that the central points will be used to the exclusion of the others, and that mangers vary in how they view staff so the same person could get different grading from different managers. There are techniques to try to overcome these tendencies but I feel there should be a sound reason why rating schemes are needed in the first place.

Open or closed

At one time it was relatively common for appraisals to be written privately and for the comments not to be shown to the individual concerned. This has become less common over the years, partly as a result of cultural change and partly in line with legislation such as the Data Protection Act which is bases on the principle that the individual has the right to see the information which is held about them

Measurable objectives

If the scheme is not to include rating scales there is a need for some other method of seeing how the individual has performed over the year. The concept of ‘performance by objectives’ has a long history and is based on the principle that if each individual is set objectives which are in line with business objectives and works hard during the year in an attempt to achieve them, then the business itself should achieve its objectives.

Links with business objectives

It is perhaps the case that many professional firms have not clarified their business objectives, beyond trying to increase the level of profits, in the way that is more common for larger commercial organisations. Although the bottom line will always be important, concentration solely on this aspect may hinder the development of the business in order to help it to react and anticipate changes in the business environment.

Lessons to be learned

Commitment from senior mangers is essential.

However even where this has been achieved there is still a need to convince others of the benefits to be achieved. In the firm under consideration the introduction of performance appraisal was just one initiative of many, including a move to team working and the introduction of greatly increased information technology, and many staff were feeling shell shocked at the pace of change.

Staff may leave the firm.

Any change can be experienced as stressful and some staff may not like the new way in which things are being done. Other staff may realise that their particular skills and interests are no longer as valued by the firm and decide to part ways as a result. This may actually be an advantage as it provides an opportunity to find new staff with the required skills and abilities, so long as only a relatively small number react in this way.

Need for clarity about where business is trying to go.

There will always be a number of directions in which the firm can go in terms of entering new markets or winning new clients. The danger is that no clear priorities are allocated and if everything is a priority then in practice nothing may be a priority.

Staff must be clear about what the scheme is trying to achieve.

Both appraisers and appraisees must be clear about the objectives, and in particular not using the appraisal interview to deal with issues which should have been dealt with by a disciplinary interviews at the time an incident occurred. It is a two way process with the two individuals working together to achieve the identified objectives.

Appraisers need training in order to win their commitment.

Busy people need convincing that the time they spend on an activity will bring them benefits. If a busy manager spends no time on preparation and carries out a perfunctory interview then it is hardly surprising that they can see no real improvement in the performance of the staff they appraise.

Give them an opportunity to practice the necessary skills

Not everybody possesses the skills likely to lead to a productive appraisal interview, but it is the same skills of feedback, coaching and leadership that are likely to determine their performance as a manger over the year. If appraisers can see the links between the way in which they conduct the interview and the way they communicate with their staff throughout out the year, they are more likely to consider it worthwhile to spend time developing their skills in this area.

Paperwork must be monitored

One of the most damaging outcomes of an appraisal interview is when nothing at all happens as a result as then it can be truly said to have been a waste of time! If training and development needs are identified then action should be taken to ensure this is carried out, or feedback given as to why this will not be possible at the present time. One of the objectives that the appraisers themselves are set should involve whether they are developing the staff who work for them and the report s of the appraisal interviews are one way of monitoring this.

Review and evaluation with necessary changes made

Any scheme will need to change over time in line with other developments in the business environment and changing views as to what is considered to be best practice. A balance needs to be struck between constantly making changes without allowing previous changes to bed in, and allowing a scheme to become stale and out of line with current needs. 

Grant H.

What to Do and Say After a Tough Reorganization

Rebecca Knight

Surviving a corporate reorg can be tough. There is often a lot of confusion and uncertainty, and if colleagues were laid off, people might also be sad or angry. How can you make the situation easier for yourself and your colleagues? What steps should you take to protect your job? How do you stay positive? And how do you know when it’s time to move on?

What the Experts SayRestructurings may be an inevitable part of organizational life but living through them—even when you’re one of the lucky ones still standing—is challenging and stressful. On a personal level, “you have genuinely lost some friends” from the organization, says Kevin Coyne, the co-founder and managing director of strategy consulting firm Coyne Partners and a professor at Emory’s Goizueta Business School. And on a professional level, you’re likely to feel unsettled because it’s “unclear what life will be like under the new regime.” Reactions are typically varied, says Gretchen Spreitzer, a professor at Michigan’s Ross School of Business and coauthor of How to be a Positive Leader. “Some people are cynical—there’s this sense of ‘You fired my friends’ and ‘This reorganization is never going to work.’” Then there are: “the walking wounded who are fearful about the future and worried for those who were let go.” Even stars may have trouble staying positive. “If you’re a high performer, you may feel a loss of control and start to question your options.” But Spreitzer says it’s important to approach the changes with an “optimistic” mindset. “You want to be one of the active advocates who take initiative to make the reorganization work,” she says. Here are some pointers on how to do that.

Listen…Before you react to the news, Spreitzer suggests you “listen carefully to what senior leadership is saying about what’s happening, why it’s happening, and what’s the hoped-for outcome.” Management probably had good intentions for the restructuring—it believes the changes will cut costs, increase revenues, or improve efficiency. That said,  “don’t just take the party line and run. Ask lots of questions.” Do your best to ignore the office rumor mill. Don’t listen to the chatter and certainly don’t contribute to it. “The information in the gossip network is probably inaccurate; it will be highly emotional; and there will be lots of venting,” she says.

…And assessOnce you’ve absorbed the planned changes, you need to think about what they mean for your day-to-day responsibilities and your potential job satisfaction, according to Coyne. “After learning what the new game is, you must try to picture what your new job will look like in six to 12 months,” he says. “Then ask yourself some hard questions, such as, ‘Once I get beyond the temporary pain of this, will I still be proud of what this company stands for? Is my new role something I am equally happy and satisfied with?’” Even if you conclude that things have fundamentally changed, Coyne advises resisting the urge to quit immediately. “Don’t pull the trigger just yet,” he says. “You need more information,” and you can use the next several months to evaluate the situation.

Reach outIn circumstances like these, it’s important to show concern and empathy for the people  directly impacted by the reorg.  “Reach out,” Spreitzer says. “Express sorrow that you’ll no longer be working together.” Whether you call, email, or drop by their house with a bottle of wine depends on how close you are to them, she adds. “Put yourself in their shoes and think about how you would want someone to react if it happened to you.” When it comes to the right sentiment, less is more. “Say, ‘I’m sorry. This caught me off guard too. What can I do to help?’” Showing compassion is not only kind it’s also a smart career move, according to Coyne. You should stay in touch with departed colleagues “because those people are your advance warning” on what the job market is like and how you’ll fare should you decide it’s time to leave.

Help outIf you support the new direction your company is taking, it’s worth  letting your boss know, says Coyne. “To the degree that it’s true, tell your manager that you’re on board and that you want to see this reorganization succeed,” he says. That way, he “knows he can count on you—and that you’re not just being a good soldier.” Then follow up with actions that demonstrate your support. Spreitzer recommends seeking ways to “help the organization become more resilient” during the transition. Think about your skills and expertise in addition to your professional passions. Is there perhaps a new position you could grow into? Are there new responsibilities you’d like to add to your current role?

Align prioritiesReorgs are an opportunity for you to “take control of your career” says Spreitzer, but you must also make sure you and your manager agree on where you should be focusing. Priorities have no doubt shifted and if the restructuring means that you’re supposed to take on tasks previously done by others, Coyne recommends you “quickly get on the same page” with your boss about “which parts of your combined workload can be reduced” or gotten rid of altogether. “You need to figure out the most important and least important parts of your new job.” Remember your boss is likely to be stretched thin too so you should “go to her with a proposal” about how you ought to allocate your attention and time. “Be constructive,” he says.

Manage your stressIn the midst of change and uncertainty, “you need to look for things that help you manage your stress,” says Spreitzer. “Be sure to make time for the things you love.” Spend time with family and friends; keep at hobbies and volunteer activities; and of course make sure you’re eating well, exercising, and getting plenty of sleep. You might also try to “inject some levity” at the office to  “raise people’s spirits and getting them out of the moroseness they may be feeling,” she adds. Introduce a daily music break, bring in some fresh flowers, or start a cookie-baking contest every other Friday. “The goal is to create fun and reduce the seriousness of the situation.”

Look for purposeIn addition to offering momentary mood-lifters, you can also work to boost long-term morale among your co-workers by focusing on your shared mission. ”Remind people why they are there in the first place,” Coyne says. If you’re a manager, this is even more critical. Have one-on-one conversations with your people to communicate that “what they do matters,” he says. “Help them see the nobility and purpose of their jobs of their jobs” and convey to them that “they are part of something they can be proud of.” Whenever you feel yourself struggling, Spreitzer suggests “looking for the little rays of light in your workday that give you meaning,” whether they are helping a colleague or interacting with a customer.

Give it time, but don’t hang on too longIt’s fair to “give management the benefit of the doubt” in the weeks and months after the reorg is announced, but if you remain skeptical of the changes after some time has passed, treat it as a sign. “Keep the periscope up,” says Spreitzer. “It you’ve tried to see the light at the end of the tunnel and it’s been 60 to 90 days, it’s time to ask yourself,  ‘Is this an organization I want to stay in?’ If not, you might need to start looking at your options,” she says. “You don’t want to be hanging on if you feel the company is moving in the wrong direction.” Coyne concurs: Once you’ve lived through “the short-term misery” of the restructuring and “gained perspective” about where the company is headed, you are in a better position to make a decision. “If the company is not doing something you feel proud of, you need to go to your contingency plan,” he says.

Principles to Remember

Do

• Listen to and absorb what senior leadership says about why the reorg is happening
• Show compassion for colleagues directly affected
• Seek opportunities to use your skills and expertise to help your organization through the transition

Don’t

• Give in to the doom and gloom—remind yourself (and others) of the nobility and purpose of your work
• Neglect your wellbeing—make sure you’re eating well, exercising, and getting enough rest
• Hang on too long—if you don’t believe your organization is moving in the right direction, look elsewhere

Case Study #1: Reframe your new responsibilities as an opportunity for growthKarin Hurt had been working as an HR director at Verizon in Baltimore for more than a decade when a confluence of circumstances—including the company’s imminent merger with Bell Atlantic, her coworker getting fired, and her boss retiring—led to an enormous leap in the scope and scale of her job. The solution, according to management, was to reorganize the $6 billion business unit and give her HR responsibility for it.

The catch: She would not get an official promotion because she was unable to relocate to corporate headquarters in New York. “At first I was mad,” she says.  “I thought, ‘Wait, I’m not going to get the job, but I’m going to do the job?’”

But it didn’t take her long to rethink that initial assessment. “This was a really good opportunity to sit at the strategic table and get exposure to senior leadership, and I decided I should embrace it,” she says. “I needed to trust the process.”

In her new role, Karin reported to the president of the business unit so one of her first moves was to ask him where he wanted her to focus. “A lot of priorities were changing and so we would talk on a regular basis about which ones were most important,” she says. “We often spoke on the phone at 7AM when it was quiet for both of us.”

The office environment was stressful both for Karin and for her team. She buffered her direct reports from the “politics and commotion” related to the merger by reminding them that their work had meaning. “I told them we were a part of something big, something historic,” she says. “With this merger we had the opportunity to put the right policies in place” to make sure the company was on solid footing.

Her good work caught the eye of the senior vice president of customer service. “He took me aside and said, ‘You’re young in your career to focus on only HR. Are you interested in doing other things?’ As a result, I took on a series of field assignments and that led to promotions. It catapulted my career.”

It also gave her the confidence and contacts to start her own firm. She left Verizon in 2014, and today she is the CEO of Let’s Grow Leaders, a consulting company. “When I look back on my time there, I feel grateful,” she says.

Case Study #2: Understand your organization’s new goals and align your prioritiesSid Savara was six months into his job as a lead engineer at a Department of Defense contractor in Hawaii when he started hearing rumors that funding for his project would soon be cut. “I tried not to take part in [the gossip] and just do the best job I could,” he says.

The uncertainty continued for another six months until a VP from the company’s Virginia headquarters showed up unexpectedly at his office one day to announce strategic changes. “He said, ‘Finish what you’re doing. This project is ending. We’re going to restructure and move people around,’” Sid recalls.

Sid’s fate was unclear at that point, so he asked the VP a lot of questions: What is the timeline of the restructuring? What is the new direction of the company? What is the business model for other projects?

He was unnerved by the answers he received. “I wasn’t sure I would enjoy the new projects. Some customers are nicer to deal with than others, some projects are more interesting than others,” he says. “I started to look for a new job and even had some telephone interviews.”

A week later Sid found out he was being reassigned as a team leader for a new project. Half of his prior team was let go. “I decided I was going to give it a chance. I didn’t want make a rash decision to leave,” he says.

On the first day of his new job, Sid had a “proper sit-down” with his new boss to learn about his role in relation to the business. “He explained to me what was going on, how the division works, how we make money, and that helped me align our team’s efforts with those goals.”

This helped him to understand his boss’s most important goals and think about new business opportunities and potential partnerships. “I changed our priorities as I learned more about the business. I understood the roadmap better, and I developed a stronger sense of where developers should be spending their time.”

Sid ended up staying at the company for another four years. Today he is a technical manager at the University of Hawaii.