By Kristina Schneider, Practice Success Coach
The concept of financial bonuses is not unknown to most people. It is highly used in a lot of sales and marketing industries. Even in the legal world, many lawyers have, at some time or another when working for a firm, received some kind of bonus.
However, the concept of bonusing non-attorneys is relatively new, particularly for the estate planning lawyer world. Attorney and Ultimate Estate Planner President, Philip Kavesh, did not consider or implement the idea of a formal staff bonus system until about 12 years ago. He, as well as the attorneys that we have taught over the years that have implemented this, have seen a direct impact on the financial success of their practice. What this says is that, if done properly, bonusing staff can be a fantastic strategy worth consideration if you are interested in increasing your own firm’s revenue, while also making your staff happy with the opportunity to increase their base compensation.
Conversely, when a staff bonus system is not implemented properly, there can be mistakes made which can actually make things worse and have the opposite effect of what a bonus system should! Here are the top nine staff bonus mistakes that I have seen (and hopefully will help you avoid making yourself!).
Staff Bonus Mistake #1: Not Bonusing at All.
Right out the gate, one of the biggest mistakes that attorneys are making is not bonusing their staff at all. There’s a thought that, “Why should I pay them to do the job that they are hired and already paid for?” While that may be true, the idea of a staff bonus system is to help motivate and incentivize the staff to see the firm as a whole reach financial goals and then reap the rewards. If they are just to come into the office and clock in and clock out and not care or be responsible whatsoever to the financial success of the firm, that’s fine. But, your firm would greatly benefit to get everyone in the firm invested in the financial success of the firm and by sharing with them revenue goals and then rewarding them accordingly, you will begin to see your firm hit revenue numbers you probably have never hit before (we’ve seen this happen!).
Staff Bonus Mistake #2: Not Communicating the Goal or the Bonus Structure.
It is very important when you’re implementing a bonus structure with anyone, not just support staff, that the goal and/or bonus structure is clearly communicated (ideally in writing). It should not be so confusing or unclear to an employee about how to go about accomplishing the goal that you want them to achieve and then how they will be rewarded when they reach the goal. Be sure to set very clear expectations and rewards for when those expectations are met.
Staff Bonus Mistake #3: Setting the Goal Too High.
Another common mistake that we often see is when the goal is set too high. If the goal is set too high, whatever the goal may be (number of appointments on the calendar, revenue of the firm in a given month, etc.), and the staff is unable to hit these goals, then you effectively do not have a staff bonus structure. They will forget about the bonus structure and the benefits of having a bonus structure to begin with are lost. Particularly when you first start out, be sure that the goal is set high enough so that you’re not losing money (see Mistake #8 below) but enough that they’re hitting the goal on a consistent basis and enough that it is keeping the staff motivated and excited about the bonus system.
Staff Bonus Mistake #4: Promising Bonuses and Not Delivering.
Listen, nobody wants to be promised something (particularly money!) and then not be given what they were told they would be. If you put together a bonus system and the staff hits that goal and are due a bonus, you have to follow through. We typically recommend that bonuses are paid on a monthly basis and done so within a week or two of the prior month. As staff are being paid out from the month before, it will show them in the current month what is possible and get them motivated and incentivized to continue, repeat or even do better in the current month! This leads me to…
Staff Bonus Mistake #5: Bonusing Too Infrequently.
Some attorneys like to bonus employees annually (at the anniversary of their hire date or at the end of the year) or even quarterly. While bonusing monthly might seem like a hassle and a lot of tracking and computing, the frequency of a monthly bonus is where the greatest benefit will come when properly implemented. Staff will be invested on a monthly basis on the goals that you’re trying to have them reach and they will directly and immediately get the rewards, which will continue to motivate and incentivize them (which is the whole point!).
Staff Bonus Mistake #6: Just Throwing Out Bonuses with No Rhyme or Reason.
Another practice that we have seen is the distribution of bonuses with no rhyme or reason. From anniversary bonuses to bonuses given to simply make an employee “happy”, these types of bonuses may be appreciated by the employee, but there’s no clearly defined performance or behavior that may be identified for the reason for the bonus. It’s the opposite of being against a staff bonus structure on a monthly basis because of feeling like you’re paying people “for doing their job” to then just bonusing them for no reason or for reasons not even tied to performance or behavior.
Staff Bonus Mistake #7: Distributing a Flat Bonus Amount Across the Board.
A flat bonus structure across the board, where all support staff receive the same amount in their bonus, while it might seem “fair” on its surface, can potentially lead to a lot of problems down the line. First, on a support staff level, there are individuals who “carry more weight”, meaning that they may have certain tasks as part of their job that may be more directly tied to revenue-producing activities. There also may be certain tasks (like managing people, customer service, drafting documents, etc.) that may require a certain level of skills or knowledge that are above that of some of the other positions. A flat bonus across the board for everyone may create some resentment from staff who feel like they are more directly tied to the firm reaching its goals. Second, you may also experience months where you might have some staff members out more than others, whether on vacation or out ill. This then brings in again the same question of “fairness” of a flat bonus structure.
Staff Bonus Mistake #8: Bonusing Staff Based on Revenue Percentages.
To avoid any ethical issues around the compensation of non-attorneys based on a percentage of revenue, you can set up a system of what we call “discretionary” bonuses and done based on a bonus pool. This will prevent you from having any clear percentage split with a non-attorney.
Staff Bonus Mistake #9: Bonusing When the Firm is NOT Profitable.
Last, but certainly not least, it is important that you aren’t bonusing staff (or attorneys, for that matter!) and then the firm is not profitable—and/or you, attorney business owner, aren’t getting paid either! This can be avoided by having both the proper metrics and the right bonus structures in place which are commensurate with the firm also making money! With proper monitoring and supervision, this issue can certainly be avoided.
How’d you do? Have you made one or more of these mistakes? That’s okay. From our experience, we’ve seen many people make these mistakes, which is why attorney Philip Kavesh has put together an in-depth, step-by-step program entitled, “8 Steps to Setting Up Bonuses for Support Staff That Are Legal, Ethical and Motivate Them”.
A bonus system for your staff can really be a win-win for all involved and a way to start reaching goals like never before! The key, as with most things, is in the details and making sure that you take the time to set up a bonus structure properly! Hopefully this list can get you started on you way!
ABOUT THE AUTHOR
Kristina Schneider is a Practice Success Coach here at The Ultimate Estate Planner, Inc. She graduated with a Bachelor’s Degree in Business Administration from Pepperdine University in 2004 and was hired right out of college to work for the Law Firm of Kavesh, Minor & Otis, coordinating and facilitating Philip Kavesh’s “Missing Link” Boot Camps while also providing administrative support to Mr. Kavesh as his Executive Assistant for over seven years. Through her direct hands-on experience in Mr. Kavesh’s law firm, Kristina has been able to assist numerous estate planning professionals through The Ultimate Estate Planner and, equally as important, many of their staff members, in the successful implementation of Ultimate Estate Planner’s products and systems. She is currently pursuing her MBA degree from Pepperdine University Grazadio Business School. You can reach Kristina at (424) 247-9495 or by e-mail at kristina@ultimateestateplanner.com.