Articles Posted in Talent

Compensation as that term applies to legal departments has many components. I have assembled below some posts on five of them (See my post of July 21, 2008: compensation accounts for largest portion of a law department’s internal budget; and Feb. 28, 2006: explain the value of compensation and benefits over time.).

Base. Every employee has a cash salary (See my post of March 24, 2005: no cost-of-living differences when comparing compensation levels in an industry; and June 15, 2005: Asian general counsel and their base compensation.).

Spot cash awards. Some law departments give employees checks for outstanding performance on projects (See my post of July 28, 2008: difficulties associated with their dispensation; and Nov. 8, 2007: on-the-spot awards for superior performance.).

Some companies and some general counsel agitate for a workplace that recognizes there are things in people’s lives other than in-boxes, conference calls, and meetings. These enlightened advocates recognize the whole person, and seek a better balance between the demands of the 9-to-5 world and the world of groceries, sick children, kayaking, and aged parents (See my posts of June 10, 2007: Annual Corporate Counsel Work-Life Balance Award sponsored by Constangy Brooks; June 6, 2006: Graham Packaging’s efforts; March 24, 2007: family-friendly as a term; May 10, 2006: less pay for less work; June 10, 2007: Northwestern Mutual policies; May 7, 2006: GE’s diversity tool; Aug. 13, 2008: RFPs that ask about personnel policies; Nov. 30, 2007: whether family-friendliness in firms matters to law departments; and May 11, 2007: Human Capital Management encourages a balance.).

Allied with work-life balance are the initiatives to allow employees to work from home some days (See my post of May 30, 2006: telecommuting with 5 references; and June 22, 2008: means of communicating with them.).

Similarly, flexibility in working hours as well as job sharing aim at a similar end (See my post of April 9, 2006: flexible staffing arrangements; Dec. 4, 2005: various alternatives to 9-to-5; May 16, 2007: flex-time from another company; June 9, 2007: definitions of flextime and compressed time: June 18, 2007: data on prevalence of flex-time arrangements; Jan. 3, 2008: how to make these arrangements successful; and Aug. 13, 2008: RFPs that ask about flexible working arrangements.).

According to Bus. Law Today, July/Aug. 2008 at 7, a recent poll by Blumberg Capital Partners inquired about what “workplace factors dampen employees’ spirits and decrease their productivity most?” The number one complaint related to office conditions, with 47 percent of respondents slamming “extreme office temperatures due to poor heating, air-conditioning, and ventilation systems.”

I recommend fresh air, plenty of oxygen, and working thermostats.

In Corp. Counsel, Vol. 15 Aug. 2008 at 76, Amy Miller reports on the Fortune 500 general counsel who were among their company’s five highest-paid officers in 2007. I assembled the averages of their cash and equity compensation in a previous post (See my post of Aug. 12, 2008: handsome rewards for GCs at huge US companies.). Some other observations come from that same article.

Fewer stock options are being handed out because rules issued by the Financial Accounting Standards Board in 2006 require companies to list the value as expenses, thus making them much less appealing than before (See my post of Nov. 25, 2006: deduction of options and 11 references.).

Of the 100 general counsel highlighted in the report, for 2007 94 percent of them received stock awards, 87 percent of them received stock option grants.

Of the Fortune 500 general counsel who were among their company’s five highest-paid officers in 2007, the 100 with the highest cash compensation had an average salary of $567,195. Twice as high, at $1,039,931 was their average bonus/nonequity incentive cash compensation. On top of that pile of cash, their average stock award (restricted stock grant) was $1,324,232 while their average stock option value was $720,470.

In sum, from Amy Miller’s detailed report in Corp. Counsel, Vol. 15 Aug. 2008 at 76, the four component averages expressed as a percentage of the average total pay package were 15 percent salary, 30 percent bonus, 36 percent stock award, and 19 percent stock options. All of that amounted to a stupendous $3.6 million average total compensation for the 100 general counsel researched

Note that a “bonus” is defined as a discretionary cash distribution. “Nonequity incentive compensation” is tied to the company’s achievement of specific financial metrics, such as profits, revenue or operating income.

Career path, ethnicity, and diversity are each unusual aspects of Gloria Santona, the general counsel of McDonald’s. Santona is the subject of a profile in Corp. Bd. Mbr., Vol. 11, July/Aug. 2008 at 83, where the reader finds out more about these aspects.

Thirty-one years ago, Santona, who became general counsel in 2001, joined the legal department of McDonald’s directly from the University of Michigan Law School. That career path is notable because nearly all lawyers these days join a law department after they spend two or more years in a law firm. It as at least as notable that she has worked three decades for the same company.

As to ethnicity, all four of Santona’s grandparents were born in Spain, so she has deep Hispanic roots. More seems to be written about African-American general counsel in the United States, but that is far from the only ethnic group.

Gradually I am turning away from systems and technology and other impersonal resources of law departments and towards an emphasis on people (See my post of July 20, 2008: resources is the wrong word for humans.). All the best practices in the world falter if your people are incompetent, unmotivated, or poorly led; given ability, engagement and direction, people will overcome almost any dysfunction.

Motivated by this mindset that talent is the most important piece of a successful legal department, I published my most recent article on one aspect of it: core competencies. Click on the following URL for a PDF of my article.

We admire law departments that regularly hive off general counsel to other companies. We recognize that strong talent may have too little head room in one department, but can stand tall elsewhere (See my posts of Dec. 19, 2007: inevitable to lose some talented lawyers; and Jan. 18, 2008: general counsel unconcerned with loss of talent.).

A department that is consistently the farm team for the major league team of another company, that every year or two exports a qualified, strong lawyer to take a senior position elsewhere, is a law department that has hired well, given good managerial and substantive experience, and bred an attractive recruit (See my post of Feb. 7, 2008: more disadvantages of low attrition rates.).

It’s tough to accept the general counsel position from outside the company. Consider imported CEOs. An article in strategy + business, Summer 2008 at 80, looks at the performance of companies that promoted an insider CEO compared to those that hired a CEO from outside the company. For the 10 year period studied, “companies headed by North American outsider CEOs underperformed regional market returns by 1.0 percent on average.”

A similar, relative under-performance by a law department might follow when a company brings in a general counsel from outside. Consider the range of reasons why a newcomer to the company confronts more obstacles to success than does an insider (See my posts of March 26, 2005: choice between new blood and incumbents; and May 1, 2005: outside white knights have more problems.).

1. Passed-over internal candidates may lose effectiveness or leave (See my post of April 16, 2007: when an internal candidate is promoted.).

Every time you hear about “the problem of career paths” for corporate counsel, you hear that the discontent wells up in part because “there is only one GC position.” The implication is that everyone below that level aspires to topple the king or queen and seize the throne. That regicide is untrue; not even close to true, I believe.

Most senior lawyers in legal departments feel good about their achievements and their balance of home and office. That they would like to earn more money is likely, but that to do so they would shoulder increased pressure, longer hours, loneliness at the top, harsher politics, and tethered on call is unlikely. They have come to terms with their abilities, aspirations, and affluence and would decline promotion to the general counsel position (See my post of July 28, 2008: plateaus and lawyers.).