The quickest way to damage your firm? Carry on rewarding the slackers

Firms that don’t stop rewarding bad behaviour will eventually fail, says Peter Scott…

Do you know someone at work – a senior partner maybe – who appears to lead a charmed life? Whatever they do (or don’t do), they seem to earn top dollar. Colleagues take up the slack but end up with equal, or less, financial reward.

If so, it’s probably a great source of frustration. However, I’d suggest it’s far more serious than that. I’d say the scenario risks making your firm uncompetitive and, if left unchecked, will ultimately cause the business to fail.

Is it really that damaging? Yes. For the simple reason it leaves your best people feeling undervalued. And when that happens for long enough, they leave.

For professional firms where talent is the main asset, that’s suicidal.

Avoiding such a scenario is crucial and the best way to do that is to build – and relentlessly implement – a logical reward structure aligned to performance that motivates rather than alienates. To achieve that it’s important to first understand and agree what ‘performing well’ actually means.

Do you know someone at work – a senior partner maybe – who appears to lead a charmed life?

On paper that’s straightforward for professional firms. Performing well means giving clients exactly what they want.

So, to create an effective performance-related reward structure, you need – first and foremost – to listen to your clients. What do they want? How do they want to be looked after? Are there any gaps in your service? What issues are they going to have in the future?

It follows, then, that client-perception surveys should be of huge importance. Unfortunately they’re not for many firms, and the main reason is that people don’t like hearing difficult messages. If that’s true of your firm, my advice is to listen, meet challenging messages head on, and act upon them. If you don’t, you’re in dangerous territory.

Once you’ve listened to your clients and understood the kind of performance you’re aiming for, it’s critical that the right behaviour is rewarded. It’s fine for a handful of exceptional performers to earn considerably more than others – as long as everyone recognises that those high flyers do a truly fantastic job. Performance-related remuneration should be about rewarding exceptional performance, not about rewarding people exceptionally for average performance.

It comes back yet again to that simple truth: if good people don’t feel valued, they walk.

If good people don’t feel valued, they walk

To avoid that, reward must be fairly aligned to performance. But how do you measure performance? How do you answer people who say: “The idea of ‘performance’ is all subjective. The only truly objective measure is personal billings.”

For me, the best answer is confidential 360-degree feedback, which within partnerships means peer-on-peer review. If several people say the same thing about one colleague – that they’re fantastic, or that they need help in a specific area for example – they can’t all be wrong. That’s how you reduce subjectivity.

Here’s an example of using 360-degree feedback to create a wonderful reward structure…

At a US firm, for 30 years a small group of senior partners have been going round all their offices, every year, interviewing every partner. Based on the answers to their questions, they work out who should earn what. The key question that carries the most brownie points is: “Which partner or partners have passed you the most work in the last 12 months?” That’s a brilliant question. It allows them to build up a complete picture of who’s managing relationships, who’s getting the business in, and who’s splashing the work around to others. And the people who hand out the most work are among the highest paid.

“Which partner or partners have passed you the most work in the last 12 months?”

That’s an example of using reward to build a positive culture – in this case a culture of sharing.

The polar opposite is aligning reward to poor behaviour. Which brings us back to the partner who coasts along, living their charmed life, being rewarded for not pulling their weight. Such a situation creates a negative culture and one that is not viable for firms in the long term. Keep that up and the best talent will walk straight out the door to your competitor. And we all know what happens to firms that lose their most talented people.


Peter Scott was for eight years the Managing Partner of Eversheds’ London and European offices. Today he acts as a BDLN advisor, trainer and coach to many law firms and other professional firms in the UK and abroad. He is regularly asked to act as a ‘discreet mentor’ to managing partners and CEOs.