If you still think retention is mainly about money, find out how much it is costing your competition to get people to leave you. That’s called your “poach rate.” If your poach rate is less than 20 percent, it ain’t the money, honey! People who love their work, love their boss, and love their company don’t leave unless the offer is coming from the Godfather.
– John Putzier
So you’re ready to rethink your associate and staff compensation systems. That’s a good thing. Many law firms give little thought to how their compensation plans are structured. And while everyone wants to be well paid for their work, in terms of compensation, the old saying is true: Money isn’t everything. I’m not saying that monetary compensation isn’t important. It is. What I’m saying is that if you’re focused solely on dollars, you’re not likely to attract and retain the best and brightest.
In his book, Drive, Daniel Pink explains that, based on years of behavioral and motivational research:
When organizations use rewards like money to motivate staff, ‘that’s when they’re most demotivating.’ The better strategy is to get compensation right – and then get it out of sight. Effective organizations compensate people in amounts and ways that allow individuals to mostly forget about compensation and instead focus on the work itself.
While this may sound very counterintuitive, think about it for a moment. Pink isn’t suggesting that you underpay your people. Rather, he suggests that you pay more than average. Paying your people at or above what the market is paying is important to both attracting and retaining great people. But competitive pay is just one part of the compensation equation.
Database research maintained by the Saratoga Institute of 19,700 exit interviews and current employee surveys found that compensation issues represented only 12 percent of all reasons employees leave their jobs. Even in these challenging economic times, compensation is only one of five top reasons people quit. The other four, according to research reported in Forbes magazine in 2013, are: stability, respect, health benefits and work-life balance. See Forbes Magazine online. In The 7 Hidden Reasons Employees Leave: How to Recognize the Subtle Signs and Act Before It’s Too Late, author Leigh Burnham makes clear that money alone will not keep your best people from leaving you.
So when you think about compensation for your staff and associates, you’ve got to think about more than just dollars. Here are just a few of the hidden reasons, other than pay, why employees leave, according to Burnham:
• The workplace was not as expected: Have you ever put on your “best face” for the interview process and hired someone whose expectations of what working at your firm is really like were completely unrealistic?
• Too little coaching and feedback: When was the last time you spent an hour each month with your key people – staff or associates – just to coach and develop them? One hour a month is less than one percent of the typical 160 hours an employee works in a month.
• Feeling devalued and unrecognized: How often do you say “thank you?” How often do you truly acknowledge a job well-done?
• Stress from overwork and work-life balance: Does your firm offer flex time? Are your people stressed out because you’re addicted to the adrenaline rush of working on a deadline?
• Loss of trust and confidence in leadership: Are you really leading your firm? Or are you so caught up in the work that you don’t really have time for your people?
Compensation includes the sum and substance of what it means to work at your firm. So, when you evaluate your compensation systems, be sure to include non-monetary compensation, and don’t leave your firm vulnerable to the poachers.