ssManaging Metrics for Success

Establishing the required processes for identifying, capturing and analysing relevant
data isn’t necessarily intuitive.

The role of corporate legal departments is evolving rapidly. As the responsibilities of

corporate legal departments become increasingly focused on providing strategic support for
business goals, general counsel and legal operations leaders are relying on data to set
objectives and track performance.

Successful legal departments that establish effective processes for identifying, capturing and
analyzing relevant data are benefiting significantly from an investment in an enterprise legal
management (ELM) solution; however, based on my experience working with hundreds of
CounselLink® clients, I have learned that establishing the required processes isn’t necessarily
intuitive. While every legal department is unique and requires a specific set of metrics, there
are seven characteristics that all successful metrics initiatives share.

1. Metrics are linked to organizational objectives. Although metrics of any kind can be
interesting, the goal should be to identify metrics that help the legal department support the
company’s overall business goals. In doing so, you position yourself as a strategic partner and
demonstrate the department’s value to the organization.

2. Metrics are well balanced across different types of objectives. Generally, a law
department should focus on metrics that provide the information necessary to gain financial
control, better manage legal outcomes and risk, and improve operational efficiency. The most
commonly used metrics are financial, but it is critical to include other types of metrics
programs, as well. You may also be interested in metrics that don’t fall into one of the three
categories. For example, if you have a strong diversity program, the legal department might
choose a metric related to vendor diversity.

3. Metrics include both leading and lagging performance indicators. Some data can be
used to assess your past performance, such as outside counsel spending, while other data is
useful for predictive purposes, such as the number of new matters coming into the
department. Ideally, a metrics tool kit should contain both kinds of data to ensure that the law
department can develop a performance road map that uses historical data to influence future
behaviours.

4. Metrics are limited to a manageable number. When it comes to metrics, the Goldilocks-
inspired, just-right approach is best. Gather too few metrics, and you won’t have enough data
available to draw conclusions. Focus on too many, and the excess “noise” will similarly
obscure useful insights. Limit your metrics to a manageable number, however, and the
analyses that follow will yield an abundance of valuable information you can leverage to
achieve your departmental goals. Between six and 10 key performance indicators per practice
area is a manageable number.
5. Metrics are controllable at the level being measured. Measuring a variable over which
you have little or no control might produce an interesting piece of information, but ultimately,
this practice wastes time.

6. Metrics are comparable to a baseline. A metric requires context so results can be

appropriately interpreted. When considering which metrics to use, make sure that the data
you generate will be compared to an existing data point, such as a relevant benchmark, a prior
time period or a budget.

7. Metrics demonstrate the value added. This final characteristic is closely related to the
first. One of the benefits of linking law department metrics to organizational goals is that the
metrics can then be used to illustrate the department’s contribution to the organization,
proving that it is a valuable partner. Metrics that document cost savings in legal spend or a
reduction in exposure, for example, are especially useful in this endeavor.

Good Data Is Essential to a Metrics Program

Obviously, a metrics program can’t succeed without good data. In this case, “good data”
means data that lends itself to meaningful analysis. There are several things to keep in mind if
you want to capture data that supports rather than hinders analysis.

First of all, it’s important to make sure that your matter classifications are meaningful for
purposes of analysis. A best practice is to establish a matter-type hierarchy that distinguishes
core matters from extraordinary matters and takes varying levels of matter complexity into
consideration. Doing so facilitates an apples-to-apples analysis of similar matters that’s not
skewed by the unusual characteristics of the occasional outlier. Avoid the temptation to make
matter types too granular. Doing so increases the likelihood of misclassified matters and can
result in population sizes that are too small to provide analytic value.

A second best practice for ensuring data integrity is the enforcement of consistent billing. For
example, if the law department and an outside law firm have agreed to a fixed fee to handle a
matter, and the firm submits an invoice for the matter that expresses the agreed-upon fee as
an hourly rate, any future analyses of hourly rates will be compromised by this drastically
skewed calculation. Similarly, it’s important that you insist that a firm accurately
distinguishes between fees and expenses when submitting invoices.

An additional component of consistent billing practices is ensuring that firms establish

meaningful timekeeper titles. Taken together, these data hygiene practices help ensure that
analyses can be performed efficiently and will yield trustworthy insights.

Mining Data to Inform Future Decisions

Once a metrics program has been established, leveraging the analytic capabilities of an ELM
solution such as CounselLink can identify key drivers of metric results. It’s only when the
drivers of negative performance variances are clearly understood that an action plan can be
developed to improve performance in the future.

Applying relevant metrics and powerful analytics to first inform and then achieve
departmental and organizational goals allows legal department managers to make data-
driven decisions that help increase the value of their contributions to the enterprise.
With corporate legal departments under increasing pressure to maximize efficiency
without sacrificing value, the importance of analytics that fuel strategic decision making
cannot be understated. Legal departments that embrace the technology that makes that
possible don’t have difficulty proving their worth.

Concepts:
Before we proceed to explain the concept of job analysis, let us first understand the meaning
of the term ‘job’ itself

Job:
In simple words, a job may be understood as a division of total work into packages/positions.

According to Dale Yoder ‘, “A job is a collection or aggregation of tasks, duties and responsi-

bilities which as a whole, is regarded as a regular assignment to individual employees and

which is different from other assignments”. Thus, a job may be defined as a group of
positions involving some duties, responsibilities, knowledge and skills.

Each job has a definite title based on standard trade specialisations within a job. Each job is

different from other jobs like peon, clerk, supervisor, and accountant, manager, etc. A job

may include many positions. A position is a particular set of duties and responsibilities
regularly assigned to an individual.

Job Analysis:
Job analysis refers to the process of collecting information about a job. In other words, it

refers to the anatomy of the job. Job analysis is performed upon ongoing jobs only. It

contains job contents. For example, what are the duties of a supervisor, grade II, what

minimal knowledge, skills and abilities are necessary to be able to adequately perform this

job? How do the requirements for a supervisor, grade II, compare with those for a supervisor,
grade I? These are the questions that job analysis answers.
Let us consider a few important definitions of job analysis.

According to Jones and Decothis “Job analysis is the process of getting information about

jobs: specially, what the worker does; how he gets it done; why he does it; skill, education

and training required; relationship to other jobs, physical demands; environmental

conditions”.

Edwin B. Flippo has defined job analysis as the process of studying and collecting

information relating to the operations and responsibilities of a specific job. The immediate
products of this analysis are job descriptions and job specifications”.

In the opinion of Herbert G. Hereman III, et. al., “A job is a collection of tasks that can be

performed by a single employee to contribute to the production of some product or service

provided by the organisation. Each job has certain ability requirements (as well as certain

rewards) associated with it. Job analysis is the process used to identify these requirements”.

Now, job analysis can be defined as an assessment that describes jobs and the behaviours
necessary to perform them.

There are two major aspects of job analysis:

1. Job Description

2. Job Specification

A brief description of these follows:

Job Description:
Job description is prepared on the basis of data collected through job analysis. Job description

is a functional description of the contents what the job entails. It is a narration of the contents

of a job. It is a description of the activities and duties to be performed in a job, the

relationship of the job with other jobs, the equipment and tools involved, the nature of
supervision, working conditions and hazards of the job and so on.

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All major categories of jobs need to be spelled out in clear and comprehensive manner to

determine the qualifications and skills required to perform a job. Thus, job description

differentiates one job from the other. In sum, job description is a written statement of what a
job holder does, how it is done, and why it is done.

Purposes of Job Description:

Job description is done for fulfilling the following purposes:

1. Grading and classification of jobs

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2. Placement and Orientation of new employees

3. Promotions and transfers

4. Outlining for career path

5. Developing work standards

6. Counselling of employees

7. Delimitation of authority

The contents of a job description are given in Table 5.1.

Job Specification:
While job description focuses on the job, job specification focuses on the person i.e, the job

holder. Job specification is a statement of the minimum levels of qualifications, skills,

physical and other abilities, experience, judgment and attributes required for performing job
effectively. In other words, it is a statement of the minimum acceptable qualifications that an

incumbent must possess to perform a given job. It sets forth the knowledge, skills and
abilities required to do the job effectively.

Job specification specifies the physical, psychological, personal, social and behavioural
characteristics of the job holders.

Usages of Job Specification: The usages of job specification include:

1. Personnel planning

2. Performance appraisal

3. Hiring

4. Training and development

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5. Job evaluation and compensation

6. Health and safety

7. Employee discipline

8. Work scheduling

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9. Career planning

Contents of Job Description and Job Specification:

The contents of job description and job specification are presented in the following Table 5.1.
Job Evaluation:
Job evaluation is a comparative process of establishing the value of different jobs in a

hierarchical order. It allows one to compare jobs by using common criteria to define the

relationship of one job to another. This serves as basis for grading different jobs and
developing a suitable pay structure for them.

It is important to mention that job evaluation cannot be the sole determining factor for

deciding pay structures because job evaluation is about relationships, and not absolutes. The
techniques used for job evaluation include ranking, job classification, points rating, etc.

Why job analysis? (Uses):

Job analysis is useful for overall management of all personnel activities.

The same is specified as follows:

1. Human Resource Planning:
The estimates the quantity and quality of people will be required in future. How many and

what type of people will be required depends on the jobs to be staffed. Job-related

information available through job analysis is, therefore, necessary for human resource
planning.
2. Recruitment and Selection:
Recruitment succeeds job analysis. Basically, the goal of the human resource planning is to

match the right people with the right job. This is possible only after having adequate

information about the jobs that need to be staffed. It is job analysis that provides job

information. Thus, job analysis serves as basis for recruitment and selection of employees in
the organisation.

3. Training and Development:

Job analysis by providing information about what a job entails i.e., knowledge and skills

required to perform a job, enables the management to design the training and development

programmes to acquire these job requirements. Employee development programmes like job
enlargement, job enrichment, job rotation, etc.

4. Placement and Orientation:

As job analysis provides information about what skills and qualities are required to do a job,

the management can gear orientation programmes towards helping the employees learn the

required skills and qualities. It, thus, helps management place an employee on the job best
suited to him/her.

5. Job Evaluation:
The job evaluation refers to determination of relative worth of different jobs. It, thus, helps in

developing appropriate wage and salary structures. Relative worth is determined mainly on
the basis of information provided by job analysis.

6. Performance Appraisal:
Performance appraisal involves comparing the actual performance of an employee with the

standard one, i.e., what is expected of him/her. Such appraisal or assessment serves as basis

for awarding promotions, effecting transfers, or assessing training needs. Job analysis helps

in establishing job standards which may be compared with the actual

performance/contribution of each employee.
7. Personnel Information:
Increasing number of organisations maintain computerised information about their

employees. This is popularly known as Human Resource Information System (HRIS). HRIS

is useful as it helps improve administrative efficiency and provides decision support^

Information relating to human resources working in the organisation is provided by job

analysis only.

8. Health and Safety:

Job analysis helps in identifying and uncovering hazardous conditions and unhealthy

environmental factors such as heat, noise, fumes, dust, etc. and, thus, facilitates management

to take corrective measures to minimise and avoid the possibility of accidents causing human
injury

Process of job analysis:

Job analysis is as useful is not so easy to make. In fact, it involves a process.

Though there is no fool-proof process of making job analysis, following are the main

steps involved in job analysis:

1. Organisational Job Analysis:

Job analysis begins with obtaining pertinent information about a job’. This, according to

Terry is required to know the makeup of a job, its relation to other jobs, and its contribution
to performance of the organisation.

Such information can be had by dividing background information in various forms such as

organisation charts i.e., how the particular job is related to other jobs; class specifications i.e.,

the general requirement of the job family; job description i.e., starting point to build the
revised job description, and flow charts i.e., flow of activities involved in a particular job.

2. Selecting Representative Jobs for Analysis:

Analysing all jobs of an organisation is both costly and time consuming. Therefore, only a
representative sample of jobs is selected for the purpose of detailed analysis.
3. Collection of Data for Job Analysis:
In this step, job data features of the job and required qualifications of the employee are

collected. Data can be collected either through questionnaire, observation or interviews.

However, due care should be taken to select and use the method of data collection that is the
most reliable in the given situation of the job.

4. Preparing Job Description:

The job information collected in the above ways is now used to prepare a job description. Job

description is a written statement that describes the tasks, duties and responsibilities that need
to be discharged for effective job performance.

5. Preparing Job Specification:

The last step involved in job analysis is to prepare job specification on the basis of collected

information. This is a written statement that specifies the personal qualities, traits, skills,
qualification, aptitude etc. required to effectively perform a job.

PERFORMANCE AND PAY

Pay can be thought of in terms of the “total reward” that includes an individual’s base salary, variable pay, share ownership,

and other benefits. A bonus, for example, is a form of variable play. A bonus is a one-time cash payment, often awarded for

exceptional performance. Providing employees with an annual statement of all these benefits they receive can help them

understand the full value of what they are getting.

Pay System Elements

As summarized in the following table, pay can take the form of direct or indirect compensation. Nonmonetary pay can

include any benefit an employee receives from an employer or job that does not involve tangible value. This includes career

and social rewards, such as job security, flexible hours and opportunity for growth, praise and recognition, task enjoyment,

and friendships. Direct pay is an employee’s base wage. It can be an annual salary, hourly wage, or any performance-based

pay that an employee receives, such as profit-sharing bonuses

Nonmonetary pay Includes benefits that do not involve tangible value.

Direct pay Employee’s base wage

Indirect pay Everything from legally required programs to health insurance, retirement, housing, etc.

Cash wage paid to the employee. Because paying a wage is a standard practice, the competitive
Basic pay
advantage can only come by paying a higher amount.

A bonus paid when specified performance objectives are met. May inspire employees to set and achieve
Incentive pay
a higher performance level and is an excellent motivator to accomplish goals.

A right to buy a piece of the business that may be given to an employee to reward excellent service. An
Stock options
employee who owns a share of the business is far more likely to go the extra mile for the operation.

A gift given occasionally to reward exceptional performance or for special occasions. Bonuses can show
Bonuses an employer appreciates his or her employees and ensures that good performance or special events are
rewarded.

Indirect compensation is far more varied, including everything from legally required public protection programs such as

social security to health insurance, retirement programs, paid leave, child care, or housing. Some indirect compensation

elements are required by law: social security, unemployment, and disability payments. Other indirect elements are up to the

employer and can offer excellent ways to provide benefits to the employees and the employer as well. For example, a

working parent may take a lower-paying job with flexible hours that will allow him or her to be home when the children get

home from school. A recent graduate may be looking for stable work and an affordable place to live. Both of these

individuals have different needs and, therefore, would appreciate different compensation elements.

Setting Pay Levels

When setting pay levels for positions, managers should make sure that the pay level is fair relative to what other employees

in the position are being paid. Part of the pay level is determined by the pay level at other companies. If your company pays

substantially less than others, it’s going to be the last choice of employment unless it offers something overwhelmingly

positive to offset the low pay, such as flexible hours or a fun, congenial work atmosphere. Besides these external factors,

companies conduct a job evaluation to determine the internal value of the job—the more vital the job to the company’s

success, the higher the pay level. Jobs are often ranked alphabetically—“A” positions are those on which the company’s

value depends, “B” positions are somewhat less important in that they don’t deliver as much upside to the company, and “C”

positions are those of least importance—in some cases, these are outsourced.

The most vital jobs to one company’s success may not be the same as in other companies. For example, information

technology companies may put top priority on their software developers and programmers, whereas for retailers such as

Nordstrom, the “A” positions are those frontline employees who provide personalized service. For an airline, pilots would be
a “B” job because, although they need to be well trained, investing further in their training is unlikely to increase the airline’s

profits. “C” positions for a retailer might include back office bill processing, while an information technology company

might classify customer service as a “C” job.

When setting reward systems, it’s important to pay for what the company actually hopes to achieve. Steve Kerr, vice

president of corporate management at General Electric, talks about the common mistakes that companies make with their

reward systems, such as saying they value teamwork but only rewarding individual effort. Similarly, companies say they

want innovative thinking or risk taking, but they reward people who “make the numbers

Pay for Performance

As its name implies, pay for performance ties pay directly to an individual’s performance in meeting specific business goals

or objectives. Managers (often together with the employees themselves) design performance targets to which the employee

will be held accountable. The targets have accompanying metrics that enable employees and managers to track performance.

The metrics can be financial indicators, or they can be indirect indicators such as customer satisfaction or speed of

development. Pay-for-performance schemes often combine a fixed base salary with a variable pay component (such as

bonuses or stock options) that vary with the individual’s performance.

Innovative Employee Recognition Programs

In addition to regular pay structures and systems, companies often create special programs that reward exceptional employee

performance. For example, the financial software company Intuit, Inc., instituted a program called Spotlight. The purpose of

Spotlight is to “spotlight performance, innovation and service dedication.” Unlike regular salaries or year-end bonuses,

spotlight awards can be given on the spot for specific behavior that meets the reward criteria, such as filing a patent,

inventing a new product, or meeting a milestone for years of service. Rewards can be cash awards of $500 to $3,000 and can

be made by managers without high-level approval. In addition to cash and noncash awards, two Intuit awards feature a trip

with $500 in spending money. Intuit spotlights strategic importance of global employee recognition.

Pay Structures for Groups and Teams

So far, we have discussed pay in terms of individual compensation, but many employers also use compensation systems that

reward all of the organization’s employees as a group or various groups and teams within the organization. Let’s examine

some of these less traditional pay structures.

Gainsharing

Sometimes called profit sharing, gainsharing is a form of pay for performance. In gainsharing, the organization shares the

financial gains with employees. Employees receive a portion of the profit achieved from their efforts. How much they

receive is determined by their performance against the plan. Here’s how gainsharing works: First, the organization must

measure the historical (baseline) performance. Then, if employees help improve the organization’s performance on those

measures, they share in the financial rewards achieved. This sharing is typically determined by a formula.

The effectiveness of a gainsharing plan depends on employees seeing a relationship between what they do and how well the

organization performs. The larger the size of the organization, the harder it is for employees to see the effect of their work.

Therefore, gainsharing plans are more effective in companies with fewer than 1,000 people. Gainsharing success also

requires the company to have good performance metrics in place so that employees can track their process. The gainsharing

plan can only be successful if employees believe and see that if they perform better, they will be paid more. The pay should

be given as soon as possible after the performance so that the tie between the two is established.

When designing systems to measure performance, realize that performance appraisals need to focus on quantifiable

measures. Designing these measures with input from the employees helps make the measures clear and understandable to

employees and increases their buy-in that the measures are reasonable.

Team-Based Pay

Many managers seek to build teams, but face the question of how to motivate all the members to achieve the team’s goals.

As a result, team-based pay is becoming increasingly accepted. In 1992, only 3% of companies had team-based pay. By

1996, 9% did, and another 39% were planning such systems. With increasing acceptance and adoption come different

choices and options of how to structure team-based pay. One way to structure the pay is to first identify the type of team you

have—parallel, work, project, or partnership—and then choose the pay option that is most appropriate to that team type.

Let’s look at each team type in turn and the pay structures best suited for each.

Parallel teams are teams that exist alongside (parallel to) an individual’s daily job. For example, a person may be working in

the accounting department but also be asked to join a team on productivity. Parallel teams are often interdepartmental, meet

part time, and are formed to deal with a specific issue. The reward for performance on this team would typically be a merit

increase or a recognition award (cash or noncash) for performance on the team.

 A project team is likewise a temporary team, but it meets full time for the life of the project. For example, a team may be

formed to develop a new project and then disband when the new product is completed. The pay schemes appropriate for this

type of team include profit sharing, recognition rewards, and stock options. Team members evaluate each other’s

performance.

A partnership team is formed around a joint venture or strategic alliance. Here, profit sharing in the venture is the most

common pay structure. Finally, with the work team, all individuals work together daily to accomplish their jobs. Here, skill-

based pay and gainsharing are the payment schemes of choice, with team members evaluating one another’s performance.

While Pay-for-Performance may seem like a challenging model to implement for some
organizations, there are a number of ways to do it effectively. For most organizations,
employee performance falls into one of two categories:

1. Qualitative Performance – Activities directly related to customer experience and

outcomes such as sales, customer satisfaction, customer retention, employee
engagement/productivity, etc. Most of your sales, HR, and support personnel would fall
into this category.
2. Quantitative Performance – Activities related to the operations side of the organization
such as programming, accounting, administrative, etc.

Once performance is quantified, it can be linked to rewards to create a fair and flexible
Pay-for-Performance Model. Some best practices of this process are:

 Identify the triggers for top performers. What can truly drive motivation with these
high-performing individuals? Not all employees view higher base pay (or even cash
bonuses) as the ultimate form of reward. It is important for management to recognize
what drives engagement and productivity for these employees so that some of the comp
dollars can be allocated to these triggers appropriately.
 Identify clear cut objectives for employees. Pay-for-Performance demands that the
‘what’ of performance be very clearly articulated so employees know what they are
working towards.
The following is a summarized checklist of what is needed to set up Pay-for-
Performance that works:

 Clearly outlined performance category segmentation

 Clearly defined job descriptions and goals
 Clearly defined department and organizational goals (aligned with the employee goals)
 Performance management system for tracking manager feedback/evaluations
 Transparent goal tracking system for employees (view current results vs. goals)
Popular Short-Term Pay-for-Performance Plans:

 Merit Pay
 Lump-sum Bonuses
 Individual Spot Awards
 Individual Incentives
 Some compensation components that you may choose to experiment with when
structuring Pay-for-Performance models:

 Base Compensation
 Merit Pay
 Equity
 Special Recognition
 Paid Time Off (PTO)
 Opportunity Income (tuition, paid development)