The expression is often misused. Almost every business is a “people business”, but a law firm certainly qualifies. After all, without your people, what do you have?

And yet do you really take care of them and of your relationship with them? I have been too-often amazed by the cavalier attitude of partners to their staff and have frequently seen a real readiness to see them in a bad light, as greedy and not quite to be trusted. I suspect it all stems from the fact that partnerships are so personal. Partners feel, more than perhaps they might in a company, that they are paying their staff out of their own pockets. If profits are not as good as they should be perhaps a slight feeling creeps in that “but for all these people I am paying I would have a far better income”.

Are your staff content? What are the indicators? Well, you can easily run staff satisfaction surveys and these are a good idea, but we should start at the very beginning. What is your rate of turnover?

A high staff turnover is hugely damaging, far more so than many realise. If you are forever recruiting you will see:Heavy distraction for management, talking endlessly to agencies, interviewing, selecting and so on.Heavy cost – most agencies charge from around £2,000 for a secretary to perhaps £10,000, sometimes more, for a senior solicitor. Then there is the cost of training – will you need someone from your legal software supplier (AIM, Videss, Eclipse, etc.)? Add that on too. There will also be the inevitable cost when your own people take time to show the new recruit the ropes.Damage to productivity. Your new staff member will take several months before they are really familiar with your systems and where everything is, and fully up to speed in your firm.Damage to staff morale. Everytime someone hands in their notice a general feeling of unease pervades the office – people do not like change and new colleagues mean change. Will they like the new person? Will they mix in well? It is all unsettling.Damage to staff retention. Whenever someone resigns everyone else begins to wonder whether they are doing the best for themselves by staying. We settle into a groove in our jobs but are suddenly reminded that perhaps we should keep our eyes open for better opportunities. In this way, high staff turnover can be self-fuelling.Damage to reputation. When people leave there is always a slight suspicion that they may have had good reason. In a city this may not matter but in a small community it could unsettle clients.

The true cost, if you estimate all the above, is alarming and it all damages your business. We must, therefore, work hard to achieve a stable, settled and content team in our offices.

There is more on this on the following pages but I will make one or two general points here.

Have a clearly-defined policy. If you have an office manual or a staff handbook make sure it is up to date and then work by it. Never allow exceptions unless you can explain them and they are perfectly logical to everyone, otherwise all you will do is create jealousy and bad feeling among the staff. I have seen partners bend the rules for their own secretaries for example and it always ends in tears.

Be scrupulously fair. Judge everything you put in your policy and every decision you take from the point of view of the staff. The business case must be met but remember that the business case most certainly includes the maintenance of good morale.

Be generous. I don’t mean give 30% pay rises to everyone, but there are several aspects to this.

1) Given the cost of replacing staff it is far more cost-effective to retain that to recruit. If you have
  someone who is really of value to the firm make sure they are content – if it costs you an extra
  £1,000 p.a. it may still be by far the most economical choice.

2) Be generous in spirit. Do the small things that make your people feel appreciated and wanted. Had
  a good year? Throw a party, or give everyone an extra day off. I met an HR manager once who said
  she ran her firm on chocolate cake! She used every excuse, such as a big piece of work
  successfully concluded, or an audit passed, to reward her people in small ways. It cost little but
  made people feel appreciated.

3) Don’t always wait to be asked before giving a pay rise, or wait until someone hands in their notice
  before rushing about in a panic with new offers. This only makes you look mean and who wants to
  work for a mean employer? Personally, whenever I have been offered a rise only after resigning I
  have turned it down on principle. If they think I’m worth the new figure, why is it only now being
  offered, reluctantly and under duress? Do I really want to work for someone like that, who clearly
  tries to get away with it for as long as possible?

4) When it comes to FEs, don’t worry too much about salary – their performance makes the real
  difference. Which would you rather have: a solicitor on £30,000 who struggles to bill more than
  £80,000 or one paid £45,000 who bills £100,000? Neither is performing as they should, neither is
  hitting the rule-of-thumb three times salary and at first glance the second appears to be expensive,
  but in practice you are getting more profit from the second. After employers’ NI the first contributes
  about £47,000 gross profit, less the cost of secretarial support. The second is contributing roughly
  £50,500. This is what matters and what you need to focus on. Give me a FE that gets on with it and
  bills well every time. The chances are that they will be altogether more dynamic and better for the
  firm in every way. (In fact, if you could find FEs that would happily work for one-third of whatever
  revenue they generated you would be in clover. A fixed overhead turned into a variable one?
  Brilliant!)

5) Conduct exit interviews. You want happy staff and so need to understand why someone is leaving.
  Ask them nicely, with genuine respect for their views, and they should tell you and that will provide
  invaluable information.