1 year ago
Employee turnover can be costly and time-consuming for any organisation. But within law firms’ finance teams, staff retention has become an increasingly worrying issue for many practices across the globe. PwC reported in their 2017 Law Firms Study that financial staff have the 4th highest average turnover rate of 9.5%. This has a dramatic impact on a firm’s efficiency, effectiveness, morale and perhaps most significantly, profitability. In this blog, we’ll identify the impact poor staff retention has on your firm, as well as give you tangible advice on how to retain top talent in your teams.
A firms’ lack of innovative technology and poor staff motivation is a significant factor in driving low staff retention.
A recent report by Thomas Reuter and Georgetown University concluded that law firms are currently losing staff due to an institutionalised practice of ‘consensual neglect.’ What they mean by this is that some traditional law firms are hesitant to change their long-term strategies because of the financial and timely investment they’ve put into them, even if they are unprofitable. This means that many practices are unwilling to invest in new technology which can cause individuals to leave firms for more forward-thinking competitors.
Many young professionals in law firms are digital natives; a generation that currently makes up 32% of the legal profession in the UK. This generation have been trained using smart technology, such as cloud collaboration platforms and shared access to data tools , as they make financial processes more efficient. These professionals expect law firms to have such technology available, and not offering these services can impact a firm’s competitiveness during recruitment. For those already working at firms with poor technology, the frustration around dealing with antiquated processes and time-consuming tasks can cause a high-staff turnover as enthusiasm declines.
A recent survey from ‘Investors In People’ revealed that ‘feeling valued’ was a top priority for respondents in staying engaged with their legal practice. With employee disengagement costing the UK economy £340bn annually, it’s clear to see that maintaining positive relationships and strong morale within firms is an important factor in retaining staff.
The impacts of high staff turnover are striking when you analyse how it affects a firm’s ability to remain profitable and keep performance levels within their financial teams high.
Loss of knowledge:
As members of your team leave, so does their expertise. With such high turnover rates, your firm is losing out on valuable experience, skills, and tacit knowledge which can greatly impact the performance of your firm and relationships with clients, in both the short-term and long-term.
Impact on profitability and innovation:
High staff-turnover can impact a firm’s efficiency and profitability as your team’s day-to-day focus shifts to recruitment. According to Graduate Recruitment Bureau, the average cost per hire within the UK legal sector is £6,711, which is a considerable investment when considering such high turnover rates. This, alongside the time consuming and laborious process of recruitment, means there is little time for long-term business investment and innovation.
Damaging company image:
Firms with a high staff turnover rate can create a negative perception of themselves with potential clients and new recruits, especially when the loss of staff can be attributed to the practice’s use of antiquated processes. As technologies like artificial intelligence and predictive analytics become more prominent in the industry, firms need to be able to demonstrate their investment in such technologies to keep a competitive edge.
However, there are many ways that firms can improve staff retention and create a better working environment for their financial teams. Forward-thinking law firms have come to realise the important role both technology and training plays in retaining staff. For example, ensuring that your firm has innovative software services that can automate and streamline processes, such as cash collection and financial forecasting, means you have a competitive advantage for recruiting and retaining both staff and clients.
Once this technology is in place it is crucial for firms to ensure that all staff members within financial teams have access to the relevant software solutions, and have progressive training in their functions, whether this is sourced in-house or with external training courses. This equips team members with the skills needed to maximise the software’s performance and create efficient working processes.
By ensuring that you have a training programme in place that takes your financial officers from basic-level training to expert skills in the software, your firm has a long-term plan to guide and develop your team to success. This can help boost morale within your practice, as it demonstrates leadership investment in the personal progression and value of their staff. It also promotes innovation and development, as manual processes are adopted by your software systems, leaving your team to work on specialist projects and the long-term goals of the firm.
With new specialisms emerging in legal finance teams, such as legal project managers, legal process designers, law technologists and law data scientists, it’s crucial for firms to ensure that they have sufficient training to stay innovative in the field and for future-proofing their practice. This means working with your technology partners and software suppliers to discover the latest platform functionalities and creating a training plan that provides your teams with the most innovative best practices.
As the undisputed market leader in legal credit management solutions, we’ve helped our clients grow and build success for decades. Alongside the world’s best collection system, we also offer law firms complete training packages to get your team up and running to deliver fast and effective cash collection processes.