Is now the time for Contractual Interregnums?? <br>(Legal)

By Patricia Wheatley Burt (FCIPD)

Radical thinking is required in todayís commercial environment, and what better way than to completely challenge the terms under which we currently employ our staff? Naturally firms are looking at those parts of their organisation where work has dried up and choosing to make redundant staff from those areas.

The problem is, as a result of the last economic downturn back in the 1990s, many practices have never actually got ëback up toí a full complement of staff, let alone have fat in the teams. Working on quality and management systems, (such as Investors In People and Lexcel) I have interviewed a wide range of staff and at all levels: they are already over stretched on time and activity. By losing staff, employers are going to lose any capacity they might have had to attack and build business.

In other publications I have suggested we should repeal or at least suspend some of our Employment Legislation to enable organisations to be more agile, innovative and creative, to keep staff in jobs, to keep money moving through the economy. An alternative or concurrent action could be to find some way to agree a temporary change in terms and conditions of employment, which achieves the cost savings, without losing talented and loyal staff.

Seize the chance for a Contractual Interregnum:

Could now be a time to discuss with staff a Contractual Interregnum to cover a 2 – 3 year period? In essence, you would agree lower salaries: say 50% fixed and then performance related for the balance. In addition staff would have fewer holidays, reduced sickness entitlement, or a shopping basket approach for other insurance-based benefits for the selected period. The agreement would be with all staff, including Partners, Directors, and executives.

Clearly there would have to be a caveat that ensures that should you have to let staff go, the original terms and conditions of employment would still apply and form the basis of calculations for redundancy payments and notice periods.

Keeping the skills – despite thinking the opposite:

For some firms, even talking about a future beyond the next 6 months is impossible, - but this is not the case for everyone. For the sake of your firm and of your staff you should look down the years on into 2012 and ask yourself:

- what skills and abilities will you need in your firm?
- how can you develop multi-talented staff, who could work in a variety of disciplines?
- should you be encouraging all your lawyers to have several strands to their bows, rather than narrowing their skills to one specialism, so that they too can flex with the waft and wane of the commercial and private client world??
- what will happen as we start to rise out of this self-induced crisis, (as we will)?
- will you be able to find the talent and experience you will need – and at what price?

Probably firms will have difficulties re-recruiting talent and certainly the recruitment agencies will charge a premium for these rare people. Are firms really addressing the needs of their younger and more complex staff, those I term: Generation X 1? They are sitting jumpily on the sidelines: they are not ëforgive and forgetí types, after all, they have never really known rejection or failure and they have few survival skills developed: they havenít had to.

Redundancy is not the only financial option:

Several of the legal media have created lists of firms who are making redundancies: a sort of league table. Apart from the fact that this is depressing, non-newsworthy, it fails to report the alternatives firms could and are considering, so very much offering a one sided picture. Redundancies should be absolutely the last resort because:

- it immediately impacts heavily on cash flow – with no return;
- makes remaining staff have survivor guilt and feel jumpy, constantly looking for the next round of hatchet-swinging – and not focussing on servicing your clients;
- gives out all the wrong signals to clients and the market – when it might not be necessary.

Driven by the cumbersome and inhumane Employment legislation, firms should be consulting with staff whom they have put into the ëAt Riskí pool what alternative roles they can think of, but are the firms offering enough ideas? For example:

- unpaid sabbaticals or holidays / time off;
- secondments into the public sector – who are always keen to have private practice expertise in their teams – for a while; and pass/share the cost;
- re-location to offices abroad where there may be undeveloped options;
- flexible hours – so that travel / childcare wouldnít cost as much;
- flexible hours – so that staff can hot desk, or work from home;
- job-shares, to enable staff to do other things with their time, e.g. take other qualifications;
- re-train into another area, especially if those at risk are relatively newly qualified;
- re-negotiating terms and conditions of employment, including pay;
- consider roles that are pro bono, or only for those with a lot of experience, e.g. local judiciaries (in whatever guise)
- developing a shopping basket of benefits or in-kind.

Currently we are providing Outplacement Support to a number of lawyers in Real Estate, Tax, Corporate Finance and M&A teams. What is clear is that your staff will have a number of hidden talents and ideas – you will not find these options until and unless you chose to tap into these, without those individuals becoming vulnerable. It is a subtle balance that firms must find that will result in keeping talent and experienced staff employed in some guise, so that when the up-turn comes, your firm is poised to grab the business.

Action for the New Year – every cloud as a sliver lining

And that is the trick, isnít it? If each part of the economy can keep operating, in some measure, without being greedy, then the house of cards will not completely fall over. Whilst we should be wishing each other a Happy New Year for 2009, it should include an encouragement to get through this economic tribulation, using it to shake out old habits, poor contributors and review practices and so slide into 2010 in different and better shape.

Patricia Wheatley Burt (FCIPD)
Principal Consultant
Trafalgar – The People Business
www.trafalgarpeople.com

For more ideas and details of how to get started on this Revolution and Radical Thinking Shift, please contact Patricia and her team on: 44 (0)20 7565 7547, or email her on: patricia@trafalgarpeople.com