I wrote yesterday about how some law firms reportedly handled layoff or pay cut announcements. Some readers asked me how I'd handle the situation differently. Here are a few ideas:

  1. Don't cut employee compensation. Cutting associate pay makes no sense. Morale will plunge: some will leave, others will become discouraged. To achieve savings, develop a compensation package that replaces salary by a bonus if measurable targets are met. Partners need to explain how they too are cutting base compensation.
  2. Don't pay people not to work. The media report some prominent firms paying first-year associates to defer their start date or experienced associates to take a year off. But what about their skills? The media reports suggest that they don't matter, which is unproductive for either firms or individuals. If idled or under-occupied, associates should be assigned to projects that:
    • have been identified by the firm as worthwhile;
    • will develop associates' skills in measurable ways; and
    • will develop the kind or quality of services the firm offers.
  3. Dissociate performance review from retention or compensation decisions. Firms need to be up-front about their motivations to preserve morale and to stand a chance of future business from an alumnus. They should not confuse individual (under-)performance with general economic constraints. Performance should include a broader metric than just hours billed; otherwise, associates risk passing on problems to billing partners.
  4. Make management accountable, with targets or standards that are disclosed and that must be met.
  5. All office communications should pass two tests:
    • What would clients say if they read this?
    • What would our competitors say if they read this?