Articles Posted in Talent

A thoughtful article in the Harv. Bus. Rev., Vol. 85, March 2007 at 115, describes a framework of 23 human capital management (HCM) practices. A two-page questionnaire asked individuals to rate their organization on a scale of 1 to 5 for each practice. The authors, Laurie Bassi and Daniel McMurrer, include three case studies to buttress their argument that measurement of these practices and efforts to improve them pay off.

The authors explain five broad categories of HCM drivers. This post covers two of the categories, with some rewording to fit law departments, and a second post will cover the final three categories. Each category has a “Systems” practice but the other 18 practices are different from each other.

Leadership Practices encompass five HCM sub-practices.

A journalist, writing for InsideCounsel, June 2006 at 70, ruminates that Charles James, the general counsel of Chevron “might have one of the toughest GC gigs in the nation.” James himself modestly disagrees, as he thinks the general counsel at Microsoft or Merck might deserve that unwanted sobriquet.

The article emphasizes a number of pressures on James: a massive merger, a Supreme Court argument, legal spats in exotic places like the Amazon and Myanmar, ten thousand or so pending cases, and expenditures on outside counsel that near $100 million.

On the other hand, James has at his back some 300 lawyers in his department, a company so huge that virtually no lawsuit can rattle it, a mature and consolidated industry, and probably corporate resources such as professional HR and IT that many general counsel would envy. He also earns a whopping amount and piles equity and perks on top of that.

Every now and then it sneaks into my consciousness how my blog posts are so US-centric. I refer almost entirely to US dollars, assume readers know US law firms, speak naively of “international operations” as self-evidently outside the US, and just generally give short shrift to law departments beyond the 50 states.

It’s not xenophobia on my part or malicious provincialism, it’s what I read about and consult to: mostly US law departments.

To make amends, I wish to point out that a global perspective on legal teams must be fluent in the titles of “Head of legal” and “Legal Director.” While not US terms, where the top lawyer is predominantly the “general counsel” and sometimes the “chief legal officer” (See my post of March 22, 2006 on the differences between these titles.), the LexisNexis Martindale-Hubble 2005 “Study into the European market for legal services” at 8, reminds me that US titles have different counterparts around the world.

Consider a point made by Mike Evers, a recruiter for attorneys, in InsideCounsel, June 2006 at 92. When a general counsel wants to fill “staff attorney” role, which Evers describes as a junior level lawyer, the title may turn off good candidates. “Worse yet, your HR department may fight your desire to use a search firm to fill a staff attorney opening, leaving you at the mercy of Internet job sites if you refuse to wage a turf war.”

Put aside his assumption that only one source remains if a search firm is scotched (See my post of March 26, 2007 on sources of hires.). If the budget of the law department can absorb the fees of an executive search firm, why should HR have any say in whether the department can use such a firm? If the fees hit the budget of HR, then they properly should have some say.

As I run across oddities of in-house careers, I pluck them out and put them on display (See my post of Aug. 7, 2005 on a lawyer who spent 70 years with one law department; of Dec. 22, 2006 #3 on a general counsel who served for more than three decades; of Oct. 2, 2006 #2 on a person who has been the general counsel of four companies; of April 1, 2007 on someone moving straight from a Supreme Court clerkship to a general counsel position; and of March 6, 2007 on a general counsel and his $4,700 wine allowance.

Now, enjoy this unusual story. Chubb Executive Risk (CBER) is a subsidiary of Chubb Corporation. One of CBER’s employees, David Robinson, was a lawyer serving in a non-legal capacity as a practice manager in the company’s professional services division. Robinson took a 10-month leave of absence to clerk for a newly-appointed District Judge. Upon his return to CBER, Robinson was appointed general counsel. He will also oversee the underwriting counsel function. Quite a circuitous career!

This blog has used the phrase full-time equivalent several times, but has not defined it nor delved into its importance (See my posts of June 28, 2006 and July 31, 2006 about how to translate non-lawyer staff into lawyer equivalents.). It’s easier to explain the term by examples than to give a definition.

The most common use of FTE gives precision to the number of, say, lawyers in a law department over the course of a year. If one lawyer joined at the mid-point of the year, she would represent .5 of a full-time equivalent. Another lawyer, who leaves on Oct. 1, would be represented as a .75 FTE. (One can imagine a similar nomenclature for cases. A 1.0 case lasted throughout the entire year; a .5 case settled mid-year or started mid-year.)

Another use of FTE is to describe workload (See my post of Sept. 14, 2005 on hours spent by lawyers during invoice review.). Instead of hours of paralegal work on a matter, for instance, a law department can describe the effort as “.3 FTE paralegals” (See my post of Nov. 5, 2006 about accounting personnel who handled law firm invoices.). Hours worked has more exactitude whereas FTE is a standard measure (although it does not specify how many hours the equivalent person works).

DDI, the human resources consultancy, surveyed 600 executives and professionals around the world. Nearly 60 percent of them rate the anxiety and stress of the transition to a new leadership role as second only to the trauma of divorce or marital separation. My thoughts turned to the psychological burdens on the newly-promoted general counsel.

One of the biggest of four challenges, according to an article in Fin. Times, April 25, 2007, at 10, is the new leader’s learning different ways of thinking. Among other adjustments, a general counsel has to take a broad view, emphasize fairness, become a role model, and listen (See my post of Feb. 1, 2006 about the chilling effect of a general counsel’s comments.).

A second challenge is learning how to deal with people from the new elevation (See my posts of April 16, 2007 about passed-over lawyers; Jan. 18, 2007 about fear by general counsel of usurpation; and Oct. 10, 2005 on internal competition.). Third, political interference overtakes workload as a new cause of stress for promoted managers. In blunt terms, the knives get sharper in the C-suite. Finally managers are no longer able to get their hands around the entire job; they have to rely on colleagues and reports (See my post of April 17, 2007 on delegation of contracts to the right level.).

At one of the consulting firms where I was a partner, we had a three-partner Executive Committee. The rest of us partners were once asked to complete an online evaluation of those three. The questions on the survey inquired about our views as to their integrity, fairness, creativity, productivity, and other characteristics. An independent group collected the evaluations and provided those partners with individualized, personal and private feedback.

It would be quite easy for a law department to do the same thing. The law department could generate candid evaluations of the general counsel and, for that matter, the general counsel’s direct report.

The most important consideration would be to give assurance to the members of the department that their responses would be kept strictly confidential (See my post of Sept. 27, 2005 on 360° evaluations.).

MIT Sloan Mgt. Rev., Winter 2007 at 8, has a provocative article about how best to allocate base pay, merit raises, and bonuses to motivate employees. Based on research on about 700 employees who worked in the US operations of a large diversified corporation, the author – Michael Sturman of Cornell University – arrived at a number of interesting conclusions.

For example, when the research assessed raises and bonuses and their respective effects on performance, “the effect of a 1% raise was about equal to that of a 3% bonus.” As the article puts it, “the enduring nature of raises makes them, in the long run, more valuable.” Unexpectedly, however, “tying pay to performance for merit raises seemed to have no effect. In other words, making raises more contingent on performance did not appear to spur employees to do better at their jobs.”

Bonuses, by contrast had a strong link to performance. In fact, “[I]f all managers were to tie bonuses strongly to an individual’s performance, the company would theoretically see an overall 16% increase in employee performance.”

Law departments that have lawyers stationed all over the world (See my post of April 17, 2007 about J&J with its 35 lawyer locations; Oct. 19, 2005 on Goldman Sachs and its 90 lawyers out of the US.) sometimes look at the compensation of their lawyers in terms of relative purchasing power parity (See my post of Oct. 10, 2005 on PPP.). In some situations the application of that method has glitches.

The Fin. Times, Jan. 29, 2007 at 15, points out some potential drawbacks of PPP. One is the likely difference between the consumption profile of an average lawyer and that represented by the basket of “standard” consumer goods from which PPP rates are derived. The costs of lawyer-friendly up-market goods in less-developed countries can be extremely high. A second anomaly is that PPP conversions make it appear that the salaries of lawyers in countries with lower costs of labor look much more enticing. The third concern is that most lawyers in foreign countries work in large cities, whereas the PPP calculations are based on the average costs throughout those countries. Caveat payor.