Benchmarking for change

Managing change and dealing with its implications may well vary from firm to firm, but objective measurement and benchmarking should be common to all.

By Rosemary Kind

When you make your new year’s resolutions either you, or someone close to you, will have identified an area requiring improvement, and at the stroke of midnight on 31 December you will be fully committed to change. Sadly, by the 3 January, or for some of us 3am on the 1 January, the resolution is broken and the prospect of change is shelved for another year; so too for businesses. A decision to change made in isolation, without evidence for the need grounded in the firm’s strategy and a clear programme of how it is to be achieved, is unlikely to succeed. However, it does not have to be that way. A well-planned change programme can significantly enhance the performance of any business or individual.

Identifying the drivers for change and the obstacles to it

The starting point for the most effective change will be the strategy of the firm. What are you trying to achieve? If this is clear, there is a real opportunity to use benchmarking to identify areas, relevant to those goals, where performance falls short of comparable businesses.

Benchmarking must be objective and draw on comparison with firms whose structure and work is broadly similar to your own. If a ‘niche’ firm tries to draw parallels with ‘high street’ firms or ‘volume’ businesses, inevitably, some of the key indicators will show significantly different results. These do not provide evidence of success or failure by the niche business; they simply reflect genuine differences in the way the businesses operate. The same may be true of different business areas within the same firm and it is important to ensure that the right measures are found to assess what improvements need to be made.

Change should not be made for change’s sake and benchmarking should not be undertaken to seek a pat on the back for current activities. If your own firm is to learn any real lessons, it is necessary to gain a clear and detailed understanding of how other firms have achieved their results. But believing your firm is the best and allowing pride to hamper your progress is often one of the biggest obstacles to change. Equally, it is essential to stay grounded in your own strategy and not set out to become ‘the same’ as another firm.

In law firms, there are a number of factors that derail change programmes. Chief among these is the unrealistic expectation of the likely results. Although it would be unfair to assume all lawyers are the same, it is not uncommon to find a degree of impatience and a demand for results that exceed the norm. In addition, there is often a disinterest in ‘unnecessary detail’ and reluctance to persevere with technology that is not immediately intuitive. To keep any change programme on track, goals must be achievable and behavioural changes realistic. Remember, change programmes should be geared towards the people you are working with rather than assuming you can change their personalities.

Defining the change programme

It is helpful to consider a number of questions in putting together a programme for change.

Whose change is it anyway?

To be successful, change cannot be imposed. Those that need to make the change must have the desire, so the starting point is to gain their support.

Why should the business want to change?

The change programme needs to be driven by an understanding of ‘what’s in it for them’. Staff will need to comprehend what the goal looks like and why achievement is in their interests; they need to be convinced that their additional effort will be worthwhile.

What does the result look like?

There may be many ways of achieving the same end. The culture of the operation may determine the approach required. A firm can achieve a higher average number of chargeable hours in different ways. In a ruthless culture, this may involve driving staff harder and expecting them to undertake non-chargeable projects in their own time. Alternatively, in a culture where work-life balance is important, it may call for additional support staff to undertake non-chargeable tasks or the streamlining of processes to eliminate wasted time.

Will the approach need to vary for different business units?

It is important to recognise different operations both in selecting appropriate benchmark firms and when applying change within the business. A target to improve profitability by increasing chargeable hours will only work within business units that record and bill by time. It may be necessary to vary the metrics and stated objectives to ensure parts of the business are not able to exempt themselves from the process.

Who needs to effect the changes? What level of authority will they need?

The team driving the change must comprise staff at appropriate levels to ensure the change takes place. The project needs to carry enough weight to be credible with all parties, and where more junior staff are tasked with aspects of the programme they must be visibly empowered to undertake their roles with the backing of appropriate senior management.

Case study – Allen & Overy

When embarking on a change-management programme, Allen & Overy was clear on the changes they wanted to achieve and the benefits that would ensue, and over the past two to three years the firm has focussed on building these changes into their partner-review process.

According to Mark Carter, chief-financial officer for A&O in London, the firm wanted to achieve four key objectives with its partners: To ensure that their personal objectives were fully aligned with those of the firm; that they were able to perform at the highest level; that they were able to grow the firm’s profitability; and, above all, that they were able to understand what was expected of them and that performance expectations applied consistently across the partnership. The aim was to bring about a shift in emphasis from short-term to long-term thinking.

This also involved focussing solely on group rather than individual billing, and away from the quantity of client relationships to their quality and profitability. As with all changes, it was essential to ensure widespread acceptance. This was brought about by using a steering group that represented the partners. The group was tasked with communicating the changes to the business and demonstrating that feedback was both listened to and fed into the ongoing process.

Communication was essential to the project’s success and was approached from a number of angles. Webcasts, a popular form of communication at Allen & Overy, were used in conjunction with a leaflet, a newsletter and information posted on the partner areas of the intranet.

Carter is happy that if they undertook the process again they would do it in much the same way. “There is always the possibility of incorporating more feedback and there will be the need to refine the process over time. However, with over 450 partners all with individual views, there is only so far you can go to include every opinion. Overall, the partners have been happy with the changes,” he says.

There is widespread recognition that not every partner will excel in every area measured. What is essential is that all the partners achieve the core standards together with their specific targets.

Communication

At the heart of any successful programme for change lies communication. It is critical to convey the right message, to the right people at the right time and in the right way.

It is never the case with communication that ‘one size fits all’. It is safer to plan a communication programme around the reality of the people with whom you are dealing rather than rail against their foibles. The ‘communication plan’ should cover the lifecycle of the project, considering the use of verbal and written communication, electronic as well as ‘hard copy’, detailed and strategic information, the use of pictures as well as words and cover both individual and group levels. The plan will consider the frequency required for both updates of progress and restating the core message. In all cases, when it comes to communication, the key message is ‘say it, say it again, say it differently’. It is worth looking at this as an advertising campaign with the ‘objective’ being the product advertised. The more the message is heard the more likely it is remembered. Corny as it may seem, give the campaign a ‘strap line’, a hook, to make the message memorable. If the project needs to run over several years, change the campaign to keep it fresh – be innovative, but always keep the core objective and underlying message the same. So be clear and concise and, above everything, repeat the message at every appropriate opportunity.

Measuring the results

It is important to monitor progress. Providing transparency and clarity in the results and using them as part of the communication programme will fuel ongoing improvement. The measures will need to be explained and understood throughout the business. If staff understand how their performance affects those measures and they can monitor their own progress, this will help counter the inertia that can set in. Although it is important to keep the message fresh, it is vital that the measures themselves do not change until the objective is achieved. Changing the key metrics will lead to confusion and result in people switching off from the project. If staff feel their efforts have made a difference they are more likely to continue to support the ultimate goal and continue to work towards it. Spotting those staff that are disinterested in the process and working to involve them, before they disaffect others, is also important.

It may be necessary to repeat the benchmarking exercise at intervals to review progress against peers. Due to market conditions, there may be times when internal KPIs show little progress, but compared to an adverse market this may itself be a success. Conversely, in times of apparently significant improvement the firm may continue to under-perform the market and without this knowledge there is a risk of complacency within the change programme.

To reinforce the objectives and fuel further change the relevant KPIs must be used in the budgeting and appraisal processes. This will provide widespread ownership with the whole team pulling in the same direction. Built into the process there must be opportunities to recognise and reward success as an integral part of reinforcing the desired behaviours. When goals are achieved they should be acknowledged rather than glossed over on the way to the next target. Although a project may have a number of stages, it is important that their completion is recognised and that any further change is in keeping with the strategy and not a continuation of a process that the firm has forgotten to close.

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change,” said Charles Darwin. This is equally true for businesses. A firm that can learn from its peers through benchmarking and that can then manage change and use it to fuel improvement will stand every chance of success in today’s competitive marketplace.

Rosemary Kind was previously finance director of Shoosmiths. She can be contacted at rjk@rjkind.me.uk