Employers in the legal sector are currently reviewing their bonus arrangements amid concerns that these are not delivering value for money.
According to research carried out by Deloitte among 43 of the UK’s top law firms, approximately one-third of respondents are currently reviewing such a scheme.
According to Deloitte’s Law Firm Incentives Study, around half of all the firms that responded run an incentive scheme that pays out a set level of reward to all staff based on firm-wide financial objectives. Around two-thirds of firms with this system are looking to†put it under review as this approach is considered to deliver the least value for money and is not highly valued by individual participants.
The remaining participants offer incentive structures for fee-earners which can be used to incentivise outstanding individual contributions. The majority of firms operating fee-earner plans state that they have had ‘quite a lot’ of impact on individual behaviour but the results suggest there is ‘room for improvement’ in recognising that increased changeable hours should not be the only strategic focus for increasing a firm’s success.
Bill Cohen, partner and remuneration specialist at Deloitte, said: “An increasing number of law firms are introducing bonus arrangements which deliver significant levels of reward for outstanding levels of productivity. It is expected that the prevalence of these plans will increase over the next few years. While these arrangements can support the strategic goals of law firms , both in motivating staff to deliver financial objectives and attracting and retaining key talent from the market, it is important to ensure that these are designed to mitigate the risk of encouraging negative behaviours.
“Bonuses are not the only way to motivate and retain staff, and when firms are designing incentive structures it is important that these are considered in the context of other factors such as career progression; training and business development; and the cultural values of the firm.”