The average pay increase for U.S. workers in 2007 was 3.9 percent higher than 2006, and 2006 was 3.8 percent greater than 2005. Projections indicate that the increases in the coming 12 month period will be in the same range. We tested this by calling a dozen large law firms around the country and heard a very consistent 3 ½ to 4 ½ percent projection for the next round of increases for staff. 

But as good as these numbers sound to law firm CFOs as they prepare the budget, they are causing some real problems for COOs and HR Directors. We are hearing from our clients that the highly publicized increases in Associate starting salaries, together with the hallway conversations among partners complaining about associate pay hikes, are causing higher than normal expectations among staff members, particularly the most valuable assistants and paralegals. According to one executive director, “The staff hears about the firm having a record year and then paying starting associates $160,000 a year…they expect big pay increases, too. Four percent doesn’t cut it.” One CHRO sent us a Dilbert cartoon in which Catbert, the evil HR Director, says to the pointy haired boss, “Bad news, the employees aren’t buying the intangible benefits story any more.”

The result is turnover and more of it. Secretaries who are looking at $2000 representing a “best in class” pay raise are finding that the firm across the street is offering a $5000 increase as the starting salary. Law firms are reacting in two ways. Some believe that the intangible and cultural benefits do count and the answer is in alternative workstyles and professional development opportunities. Others suggest that high attrition is a fact of life and the answer is to use technology and procedures to minimize the impact of turnover. 

What’s your take on this issue? Drop us a reply email and we’ll pass along the reactions next month.

The woes of the housing market, a bearish stock market and huge associate increases are causing some HR Directors to begin planning for another professional recession like the one that followed the tech bust five years ago. One of the concerns is that the layoffs of staff, associates and, then, some partners, came in waves and the severance benefits changed from wave to wave. Generally they were more generous for the earlier rounds of layoffs than those that came later. 

While most firms do not have a stated severance policy, a survey of corporate policies can provide some insights into what are the business standards. The median number of weeks of severance pay based on years of service and position equivalents were:

 

It has become common wisdom that different generations view their careers and workplaces differently based largely on the influencing factors that occurred during their lives. But new research suggests that a person’s age may be as influencing a factor as when they were born. That is, some behavior transcends generational values and can be better explained in terms of life stages. For example, it is not surprising that people of any generation think that their 20’s is a time to establish independence, a career and a family. This seems to be true if someone was born in 1980 or 1940. The research, done by Janet Polach, identifies five life stages that affect attitude, performance and goals. They are (1) Youth (age 0-21) – a period of learning and growth; (2) Raising Adulthood (22-35) – priority is placed on establishing career and family and there is significant pressure to balance a burgeoning career with family needs; (3) Midlife (35-50) – when most desire more leadership opportunities, a fuller desire to parent and mentor and there is pressure to “have it all”; (4) Legacy (50-70) – a period of reaffirming values, and layoffs and buyouts create strong pressures to keep what has been earned; (5) Elderhood (70+) – priority is placed on giving back and passing on values and methods. The suggestion is that combining this image of workers with generational images provides a better understanding of the workplace issues. (Source: MIT Sloan Management Review, Summer 2007)