Competency-based Performance Management

A Remedy for Eroding Firm Culture

University of St. Thomas Law Journal Symposium

October 28, 2013

Agenda

• Setting the scene

• Primer on competencies

• External cultural influences

• Internal cultural influences

• Competency-based management as a tool for

change

• Affecting change

Setting the Scene

• In the last 25 years, lawyers grew in number and

wealth

• Law firms – largest employer of lawyers – expanded

and contracted multiple times

• Competency-based performance management

was introduced mid-1990’s and caught on

• Boom periods drive firm cultures toward

individualism, but bust periods require collectivism

• Competency models can assist in bringing about

needed the cultural change needed

3

A Brief Primer on Competency-based Performance Management

4

The 30-Second Definition

Begins with McClelland and “the professional”

• Why do people with equal IQ perform differently?

• Behaviors, Traits, and Values differentiate

successful performers

• and can be isolated, defined, and taught

Advantages of a competency development

model:

• Clarity of expectations, experience-appropriate

milestones, aligned reward systems

5

A Look at External Cultural Influences

6

The Boom

7

1986 – 2012:*

AmLaw 100 firms

increased from $7

billion $71 billion

PPP increased from

$324,500 to $1.4 mil

NY Associate

salaries from $53K

to $160K

* The American Lawyer

The Last Few Years . . .

8

A Look at Internal Cultural Influences

9

The Way it Was

• Manageable number of equity partners

• Few offices, mostly domestic

• Compensation lockstep

• Firm clients

• Partner for life

• Up or out associate leverage model (pyramid)

And the culture?

10

Collectivism

Individualism

11

The Way it is

• Large lawyer populations in firms

• Far flung offices

• Origination rules

• Partners have portable “books of business”

• Partner promotion flat, wide swaths of non-partner

senior lawyers

And the culture?

12

Individualism

Collectivism

13

Attaining the Right Cultural Balance for the Times

14

What is Culture?

Two layers

• Visible patterns of behavior – what you do and

what is acceptable

• Shared belief system and values passed from one

generation to another – what you show others is

important

15

Time to Balance Collectivism and Individualism

Flat market, increasing

competition creates a . . .

• Need to collaborate, but also

support break out performance

• Need to solidify client

relationships by letting others in

• Need to take personal

accountability, but also share

resources and opportunities

16

Using Competencies to Affect Cultural Change

Moving beyond associates and staff:

• Time to extend the development model to partners

• Create a natural developmental trajectory

• Describe the desired behaviors, traits, and values

for all firm members

• Balance a focus on breakout performance and

collaboration

• Create a shared language of success

17

18

Competencies – Performance Factors - Levels

Core Competency - Drive Performance Factor - Entrepreneurship

Associate Level Counsel Level Partner Level

Understands the strategic plan for the practice and firm; has a positive reputation with internal/external clients; contributes to business development activities; is actively building a professional profile in/outside of the firm; is establishing and maintaining a professional network.

Supports more senior lawyers’ strategic plans and efforts; exhibits drive to be indispensable to others; supports business development activities willingly; looks for opportunities to expand visibility through writing, speaking, and organizational membership.

Develops and executes an annual strategic plan for growing revenues and profits in alignment with firm strategy; demonstrates consistent ability to obtain additional work from existing internal/external clients; looks for opportunities for new work within existing projects; engages in strategic business development planning.

Core Competency - Leadership Performance Factor - Collegiality

Associate Level Counsel Level Partner Level

Commits time to building and maintaining relationships with colleagues; pitches in to help colleagues as needed; volunteers to participate in firm activities; looks for ways to build the firm’s reputation through professional activities outside the firm; actively seeks mentoring from more experienced lawyers in the firm.

Uses strong internal and external professional networks to connect colleagues with one another; demonstrates a willingness to advance the business goals of colleagues; seeks opportunities to promote the firm in the community; mentors and trains more junior lawyers.

Devotes significant time to nurturing collegial relationships; exhibits a record of sharing business opportunities with a diverse group of colleagues; models a firm and community service ethos; is building a talent pipeline for succession.

How it Works

• Consistent, positive reinforcement

• Aligned rewards

• Rewards for breakout performers, but not to the

detriment of the collective

• Not swayed by demands for special treatment

• Clarity of expectations allow for free choice

• Know what it takes to succeed

• Meaning derives from achieving mastery

19

Why it Works

Affect both layers

of culture:

• Enforce adherence

to visible behaviors

in framework

• Grow the behaviors,

traits, values in

lawyers over time as

they develop

20

Last Thoughts

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