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Page 4 of 7
4.
Several years ago I saw an estimate that said that the resignation of a
mid-30's mid-range executive, earning, say $150K per year, has a direct
financial impact of $30K on the employer. That statistic is probably
now on the low side, but multiply that $30K by the number of people who
left your firm last year, and then make mental note to self never to
refer to people issues as "soft" issues ever again. There are no soft
issues anymore.
By definition, service firms are people
firms. If you've ever heard yourself saying "All our assets go down in
the lift every night", you might ask yourself does the way you protect
your assets really reflect the value you say you attach to them.
"Our
people are our greatest asset" rings hollow to new recruits if they are
essentially treated as cheap cannon fodder to be shamelessly exploited
until they either leave, or are expensive enough to be charged out.
Reducing
staff churn is a great tactic for improving profitability.
Understanding what creates churn, and eliminating the factors that
generate it, rewarding team leaders who reduce churn rates, and
penalizing team leaders who burn out staff, all send important messages
about culture and performance that go straight to the bottom line.
5.
If your firm is structured as a partnership, ask yourself who benefits
from the maintenance of this structure. If the answer is a bunch of
white, middle-aged blokes from the north shore - congratulations,
you've just articulated the problem - who's working on the solution?
The
globalization of services industries is still playing itself out. In
advertising terms, 60% of the world's advertising is now produced by
five firms, and the rise of procurement departments has meant that,
although there are fewer competitors, the pressure to drive costs down
is relentless and on-going.
I suspect that the partnership
model is at the limits of its adaptability, but unsurprisingly, viable
alternatives are not easy to find - to say nothing of the difficulties
inherent in persuading a bunch of partners to vote themselves out of
one sort of entity, and into another sort of entity.
If
partners are determined to retain the partnership model, then the issue
of pay equity has surely to be put on the table. More money needs to
trickle down the food chain - either, to compensate less senior staff
for the hours they are putting in, or perhaps more sensibly, engaging
more staff so that the hours get shared more equitably - otherwise we
will continue to see the drift of talented people to in-house corporate
services.
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