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The Benefits of Categorisation

25.09.2013

Running a successful business is about far more than the financials and, perhaps even more so than in many other industries, the success of a law firm hinges on successful people management.

Many law firm managers will already be familiar with the ABCD approach to classifying clients. Simply put, clients can be considered to fall into one of four categories, depending on their dealings with the firm:

  • A - Top Clients, by value and influence. Highly profitable and a pleasure to do business with, these clients should be treated as ‘Crown Jewels’.
  • B – Good Clients. These are probably repeat clients, but not as valuable to the firm’s success as the A group.
  • C - Occasional Clients. These may even be one-off transactions, or may be of lower value. They should receive the high levels of service on which the firm should pride itself, but perhaps on a transactional rather than a relationship management basis.
  • D – Delete. These clients cause more problems than they are worth – if indeed they ever pay their bills. 

20 - 60 - 20

A former manager of mine (whose rudimentary analysis has since been supported by detailed research from Harvard Business School) believed that he could run a business more successfully and with 20% fewer people than his competitors, based on categorisation of staff into 3 groups.

The top 20% of the working population are star performers, who are self-motivated and deliver more than can reasonably expected of them.

60% of people do the job for which they are paid. They are conscientious and do their best (neither more nor less) and we have no right to expect more than that.

20% of workers under-deliver, usually in numerous ways, and cause problems that hold back their colleagues and the firm.

His solution was simple – identify the third group, release them before they acquire significant employment rights, and use the savings to help encourage and motivate the others. 

Performance Assessment and Improvement

A similar approach can be taken to performance assessment and improvement with the law firm’s people. In simple terms the firm’s staff can be classified as follows:

  • A - Top Performers, who need support rather than management. The firm should ensure that any barriers to their performance are removed, and that they are nurtured and developed (and that they feel appreciated).
  • B - Solid performers. These people probably needing a little more management, and if they have the potential to deliver more, should again be developed and supported.
  • C – Underperformers, for whom there are two routes – training and, once training has proven unsuccessful, discipline.
  • D – Delete. These people are severe underperformers, who also cost management time and cause disruption. The cost of persevering with them exceeds the disruption caused by removing them.

By removing the lowest performers, the average performance can be improved, and this sends a message to those in Category C that the firm’s management is not afraid to grasp the nettle.

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