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25 March 2002
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Human resources, people management... call it what you will, but one thing is certain: getting the culture of your organisation right and ensuring staff are your greatest asset is boom business in 2002.
Right now, in every corner of the globe, businesses are calling in management consultants and 'soft skills' staff to turn their operations into more people-friendly outfits, and the legal profession is no exception. But while it is true that much of the work being done benefits employees directly, there is little doubt that management will have at least one eye on the bottom line.
A recent survey carried out by the Australian Graduate School of Management and management consultants Hewitt Associates examined the internal workings of 185 businesses across a wide range of industry sectors to come up with a list of the country's top employers. Yet not one law firm made the list.
The study, 'The Best Employers to Work for in Australia', identified four primary factors that distinguish between employers: people leadership; creating a compelling employment offer for staff; accelerated development; and culture and values. Its findings not only highlighted the link between people practices and business performance, but also produced evidence that those which do so will witness an associated rise in revenue and profit.
The study shows that from 1998-2000, the best employers increased revenue by an average of 48 per cent, against the 25 per cent upturn experienced by others. Profits among ranked organisations were boosted by 62 per cent, a dramatic improvement on the 18 per cent increase of those with less-developed performance management systems.
Andrew Bell, the Hewitt practice leader responsible for the study, says the evidence gained from the survey confirmed the view that lead employers outstrip other organisations on many performance indicators.
"Each year we're building stronger evidence to prove that organisations that invest in their people practices deliver better results," says Bell. "Best employers recognise that competitive advantage comes from people and aligning people with the goals of the organisation."
John Denton, chief executive officer at Corrs Chambers Westgarth, says it is likely that the fee-driven nature of legal practice is behind the profession's failure to score staff satisfaction points on a par with its corporate cousins, but he believes firms that continue to ignore emerging business models will hinder their future growth.
"I think law firms still grapple with how to give effect to the rhetoric they use about people leadership," says Denton. "Because of the pressure that's on in terms of generating revenue out of individuals, there's often a different environment in law firms than you have with other employers. There's a danger that this may lead to seeing the individual as a mere commodity.
"It wasn't that long ago that the usual thing was for a partner to stay at the same firm all of their life, and it was common for employees also to stay with one law firm throughout their career. It's really only in the last 10 years that we've seen more employee and partner mobility, and people are realising that retention and the management aspects that go with it are now coming to the fore. For a lot of people, the traditions of a law firm have been hard to shake."
The Hewitt study agrees. This year's top rankings went to corporates rather than to partnerships, supporting the theory that modernising your approach to business works.
For some time now, Australian blue chips have been rewriting the staff handbooks and the groundswell of community support for improved workplace relations has also tipped the scales in favour of doing right by your people. In addition, with the echoes of economic downturn reverberating around the globe, and 11 September serving only to heighten concerns, employers are becoming increasingly aware of the competitive edge to be gained by recruiting and retaining the very best people for their teams.
Blake Dawson Waldron human resources director Marlene Murray admits that she was unsurprised by the prevalence of corporates in the best employer tables, saying that the corporate community has long been addressing people management issues. She believes the legal profession has been stalled in its progress by the lack of hierarchy within the traditional partnership structure, saying partners often take a great deal of time to reach consensus on core values, and that firms "don't really lend themselves to that kind of top-down, structured communication".
"There's no doubt about it, corporates have been doing it for longer and their focus is quite different. They're at a different point in time than we are with the development of systems," she says.
Murray, who put her firm up for analysis to gain a benchmark of its performance against businesses in other industries, admits that Hewitt's focus on people practice may have skewed the results in favour of certain sectors. She says that while it is vital that the legal profession continues to adapt and introduce modern business tools, it is still the case that the markers of a good law firm employer are unique.
"When it comes to law firms, a best employer's really about which are the most successful firms, who's got the best clients, where the best partners are and where I can get the most interesting work," claims Murray. "If you're a young lawyer, you're going to be judging the firm you want to be at by those things." She adds that the very best law firms will not only meet those criteria, but also have in place excellent processes and systems to support staff in building their careers.
Indeed, Minter Ellison national managing partner Phil Clark says he was surprised at the lack of law firm presence in the Hewitt tables, particularly as the profession had ranked highly in similar studies.
In 2000, HarperCollins published two books examining the performance of Australian employers. Carried out by the Corporate Research Foundation, the analysis was conducted by a research team comprising journalists, consultants, human resources professionals and analysts, and was aimed at determining both the best companies to work for and the most promising outfits.
From an initial list of 600 organisations, three law firms - Minter Ellison, Gilbert + Tobin and Freehills - were earmarked as being among the country's best employers, and Clark says he is disappointed that the Hewitt analysis does not appear to support the view that the legal profession is improving its status as an employer.
He says the vast majority of the country's law firms now have in place career development, succession planning, performance management and appraisal systems, and while these systems may still be some way from the rigorous models set out by blue-chip companies, the work currently underway provides definite evidence that the profession is progressing.
"I was disappointed to see these results, not just for Minter Ellison, but also for the legal profession," says Clark. "We took great pride in rating so well in that previous survey, and that encouraged us to make an even stronger commitment and investment in being an excellent employer. All the feedback we've been getting has been very positive. At the risk of being accused of shooting the messenger, I have to say I think they've got it wrong."
However, Hewitt's mandate to talk to a random sample of employees in each of the surveyed organisations, rather than surveying management and processes alone, seems to have offered it increased credibility in the eyes of some.
Avril Henry, national director of human resources at Clayton Utz, believes the latest report adds weight to the call for improved people processes to be put into place for legal professionals.
"There's a big difference in how management sees working for an organisation and how employees in that organisation see it," says Henry. "There's a growing awareness in the legal industry that many of the things employees value about working for those 'best Australian employers' are important, both to employee satisfaction and revenue growth and profit."
Henry marks out leadership, performance management and performance-based rewards and recognition systems as key issues for the current crop of young lawyers, processes she says should be in place in all modern workplaces. In addition, if law firms are to foster a positive and productive environment, she says that they need to focus on the people management and relationships skills of their partners and encourage high levels of employee engagement. Above all, firms must communicate with staff and offer transparency concerning aims and objectives.
"If you look at what motivates Generation X and Y, it's leadership, being rewarded equitably for performance and learning new skills," says Henry. "You can have fantastic policies, you can have great salaries and benefits - although they may only be available to 10 per cent of the workforce - and you can have a great working environment on paper, but if your employees don't believe it, then it doesn't matter - it's not necessarily the best company to work for."