We spoke to Marsha Huber, Director of Research at the Institute of Management Accountants (IMA), and a pioneer in this emerging area of study since 2014, about the key findings from her neuroaccounting research.

Understanding the brain & how accounting expertise is developed

In the beginning, a novice learner, such as an accounting student, has a lot of technical knowledge and neurons in the brain that contain bits of knowledge. However, these neurons have not yet developed into neural networks that enable learners to connect the dots and weave concepts together. “A novice auditor can follow checklists, but it takes a few years for the neurons in the brain to form networks to fully grasp the knowledge to the point where they can tie concepts together that they could not have done as a novice,” says Huber.

As accountants build their expertise after 10 years in the profession, the neural pathways expand and grow together. This is why an audit partner has the ability to forecast potential problems and determine mitigating plans and actions before they occur.

Huber’s electroencephalogram (EEG) studies of the brain with accounting students and their ability to identify relevant and irrelevant financial accounting terms provides proof. The novices’ brains did not recognize accounting terms that did not fit within a particular financial accounting schema. The more experienced students’ brains, however, did identify the irrelevant terms despite not being asked to do so.

Key takeaways for team managers & accounting employers

By using the insights from neuroaccounting, accounting team managers and accounting industry employers could maximize team performance and engagement among their professional workers. Some of these key concepts include:

Understand learning is nonlinear and grows in spurts — The basics of learning are irregular and vary among learners. Indeed, it takes time to learn, and the brain also learns in context. A novice may not be able to apply learning to different contexts, whereas an expert can. In addition, a learner’s knowledge grows in spurts. Learners often forget what they initially learned, but as time goes by and the brain makes better sense of things, the learner will level up.

Learning can occur during a class for one person, when working in a group for another, and still, working independently for someone else, according to Huber. As knowledge develops in learners, accountants can experience mini a-ha moments when new knowledge breaks through to the conscious mind from the subconscious mind. Insights tend to come when not actively working on the problem.

Increase the creation of “flow” time — Huber recommends that accounting employers create opportunities for employees to experience flow. “Because of neuroscience, we understand that being ‘in the zone’ or ‘flow’ can produce exceptional output,” Huber explains, adding that this practice and bring amazing feelings of energy and focus to work.

Activities that enable flow are having no-meeting days and taking breaks, such as siestas, in the afternoon. Employers should allow employees to block off uninterrupted time to create time for flow.

Investing in time for rest allows for incubation, where neurons can figure out better solutions and develop the neural networks of expertise. In a study that Huber conducted, she found that accounting students napped more than professionals (and other students), hypothesizing that they needed to replenish the energy they expended while learning complex content.

Learning on the job is a recipe for success for accounting professionals, of course, yet it also makes sense to remove the stigma of napping and allow for incubation and the neural networks in the brain to build expertise from the learned experiences during the day.

Understand the brain science of manipulation on accountants’ ethics and decision-making — Finally, understanding the implications of neuroscience indicates that some accountants are more prone to being manipulated than others. “Mirror neurons” in the brain unconsciously will cause some to mirror or imitate the actions of others.

This has implications for the accounting profession. Researchers studied this phenomenon in controllers. In essence, because of the way the brain thinks and functions, friendlier controllers could be manipulated more easily than unfriendly controllers. Controllers that mirrored other people were more likely to make questionable ethical decisions when pressured by others.

Managers of accountants also benefit from neuroaccounting in team assignments — Huber highlights the key takeaway of her work: That managers need to understand better how their teams are wired and play to each team member’s strengths and preferences through four profiles, which are:

1. 1. 1. Clarifiers ask a lot of good questions to get the group moving in the right direction from the start;
      2. Ideators like to brainstorm and explore new ideas;
      3. Developers identify pros and cons and enjoy developing mitigation plans; and
      4. Implementers prefer to focus on execution.

To put this into practice, managers could give new problems to clarifiers to clarify challenges, then, hand the challenge to ideators to brainstorm solutions, who send potential solutions to developers to analyze pros and cons and recommend a way forward to address the problem, and finally, hand it off to the implementers to execute the plan.

As an advocate and researcher in neuroaccounting, Huber says she hopes that an increased understanding of how the brain learns will enable more efficient training practices and help to close the talent gap in finding employees for current entry-level roles in the tax & accounting profession.

“We aren’t using neuroscience to train our people at all,” Huber says. “And if we used neuroscience and understood it, people would learn better, and we would teach better.”

Yet, what can managers in the federal government expect for future workplace attrition, and what best practices can they adopt to better attract younger workers to the public sector?

The retirement “tsunami” is still to come

The federal government weathered the COVID-19 pandemic with less volatility than state or local government agencies in terms of employee attrition. Indeed, record job vacancies in the public sector were largely seen as the result of the outflow of workers in local government and public education, according to Bureau of Labor Statistics data from the 18-month period between February 2020 and August 2022.

And one 2021 assessment from The Partnership for Public Service, found that attrition rates hovered around 6.1% within federal agencies, with slightly more than half of those leaving left due to retirement. This number was a slight increase from 2020 numbers of around 5%, but in line with pre-pandemic attrition rates.

Of course, these stable numbers may mean that the tsunami of anticipated federal retirements has yet to really hit.

More concerning figures relate to federal workforce age and incoming federal employees. A 2021 White House report, Strengthening the Federal Workforce, reveals that the percentage of federal employees over the age of 60 continues to increase year over year, while employees under the age of 30 continually decrease as a percentage of the federal workforce.

Younger employees simply aren’t joining the federal workforce at the needed pace to provide adequate succession planning for upcoming retirements. A 2022 Qualtrics survey on federal recruitment of more than 1,000 recent college graduates showed that more than half of those surveyed would not consider a career within the federal government.

Is workplace flexibility the key?

Understanding why a public sector career is unappealing to younger workers is a necessary first step to address the issue. Perceptions surrounding how and where federal work takes place appear to be the culprit.

In the Qualtrics survey, the top three reasons given by respondents on why they wouldn’t consider a career in government included: perceived under-qualification, lack of work/life balance, and experience gaps in their resumés. While many recommendations have been made about enhancing federal recruitment practices to successfully attract a diverse candidate pool, federal agencies would be well-served to highlight the flexibility of work that is already offered within the public sector.

Flexibility in how and where work occurs can be a key factor for attracting and retaining younger members of the workforce within the public sector. Fortunately for recruiting managers, the federal workforce already offers significant flexibility to current and prospective employees.

The federal workforce has adjusted in the current post-pandemic environment to offer remote working options that are either fully remote or in a hybrid fashion. In fact, the Office of Personnel Management’s 2021 Government Wide Management Report found that 57% of federal employee respondents worked remotely at least once a week, up from 23% just two years earlier.

Employee experience matters

Cultivating a culture where employees have the flexibility that they desire to achieve better work/life balance, and where they can feel connected and valued by their managers may seem like a daunting task to many government agency managers. However, managers can ensure that their culture puts people first by implementing several recommend best practices, such as:

Focus on building and maintaining connection with team members through short, regular check-ins — For remote or hybrid employees, managers can pre-schedule intentional meetings with a clear focus area.

Establish “buddy” or mentor programs to link up new and veteran employees within an organization — Programs that match new employees with peers (rather than supervisors) acknowledges the fact that employees may feel more comfortable asking some questions of a peer rather than their direct supervisor. Likewise, the mentor can provide the new employee with valuable insights about organizational culture. Mentorship programs also can be redesigned for remote or hybrid employees.

Offer diverse learning and professional development opportunities — The rise of hybrid and remote work has contributed to “Zoom fatigue” for many. Offering professional development opportunities that are a mix of webinars, in-person, or self-paced learning modules reinforces that employees are valued, while not contributing to the exhaustion that overuse of virtual video conferencing tools can generate.

Understand how your employees learn — Hand-in-hand with the point above, not all humans learn in the same fashion. Four dominant learning styles include aural, visual, kinesthetic, and reading/writing. Implementing learning style assessments into employee pre-boarding can help managers best understand how to most effectively train and on-board new hires.

Remember that team bonding is still important, remotely or in-person — As full-time in-person work continues to decline, some organizations have empowered employees to spend time together outside of work by volunteering, socializing, or even sharing a meal together. A lunch traditionally spent together in-person can be recreated by supplying remote employees with a gift card for food delivery or to a restaurant of their choosing. Managers also can prioritize scheduling a shared meal for hybrid employees when they are in-office.

Finally, it’s important to understand that the federal workforce has not experienced the rapid outflow of workers to the same extent that state and local government organizations have in the post-pandemic era. Yet, that doesn’t mean critical challenges around talent have been avoided for good.

In preparation for the upcoming retirement of aging members of the federal workforce, managers should consider adjusting their management style to be more people-centric and considerate of increasing remote and hybrid work preferences.

Complicating matters, associates are learning, observing, and practicing their skills in remote, in-person, and hybrid workplaces, so more support than ever is needed. Leaving BD skills to organically develop or providing a few sessions to inspire BD, likely won’t be enough to effectively or fully tap the potential of your firm’s associates to build and sustain thriving practices.

For law firms that want to offer more than aspirational platitudes, here are three strategies firms can undertake to better set up their associates for BD success:

1. Revisit learning & development (L&D) programs

Business development skills are akin to training for a marathon — you don’t run 26 miles without training on shorter distances beforehand. Similarly, law firms should be offering stage-specific learning & development training in business development from day one that should include normalizing BD training as early as possible. Even if associates aren’t expected to generate clients until much later in their careers, gradual introduction of BD concepts, service skills, and communication& interpersonal skills will allow associates to learn, practice, and work on these skills internally before turning their attention outward.

Firms should also build BD elements into non-BD sessions, which helps draw connections to the business of the firm and allows more voices to be heard. During a training session on mergers & acquisitions, for example, the presenter should share specific examples of how these transactions come to the firm, the key relationship aspects, and what factors aside from the legal work are important to clients.

It’s important for firms to use examples and stories in this way to bring the nuances of BD to life, while ensuring diverse perspectives (because BD isn’t a one-size-fits-all approach). Encourage associates to be creative and connect in ways that are authentic to them.

Other L&D methods include:

• • • emphasizing the small, consistent, daily BD skills. One-off grandiose efforts rarely win the race.
    • dispelling the extroversion bias. BD isn’t solely the domain of extroverts — in fact, some would suggest that introverts are often more successful with BD.
    • discussing what BD success looks like in all work environments and recognizing that just because some activities benefit from in-person interaction, doesn’t mean ignoring how BD can be done remotely.

2. Invest in firm systems beyond L&D

L&D programs aren’t the only source of support firms can offer. By using existing mentorship and sponsorship programs, firms can empower mentors and sponsors to strategize with associates on BD skills, provide access to networks, and guidance on approaches. This will help decode the unwritten rules around BD efforts that are most valued by the firm, as well as how these efforts are to be undertaken.

Mentors and sponsors should discuss how to build visibility, credibility, brand, and relationships in both remote and in-person settings. Indeed, sharing, strategizing, and supporting BD skill development is not always achieved through formal programs, unfortunately, and rather is often passed through informal channels. Firms need to be alert to this reality and encourage partners to pay closer attention to who benefits from informal mentorships and sponsorships and who doesn’t.

Too often, affinity bias plays a role in sharing critical development feedback and BD advice. Firm leaders should encourage a broader culture of BD sharing by all partners, For example, the fimr should encourage lawyers to schedule five-minute BD chats after meetings to review the relationship and BD aspects or opportunities with associates.

Mentors and sponsors should also be alert to the BD value of all firm and client opportunities and help advocate for their mentees and protégés. Access is just as important as skill development.

3. Build BD into formal and informal performance and career development conversations

Firms need to be explicit with associates about the expectation to do great work and to develop the foundational BD skills starting now. And this should include nurturing relationships, seizing stretch opportunities, attending networking events, developing client service skills, and more.

Telling junior associates to focus only on doing great work may disproportionately disadvantage marginalized groups. Those with access to networks and mentors will be investing in their relationships and BD skills, and those who didn’t know the unwritten rules and took the firm at its word will look up years later only to discover they’re behind their peers.

Firms need to build BD conversations into all performance and career development conversations while providing transparency and clarity around expectations. Help associates think about their unique strengths and how those might serve BD purposes. Development conversations should focus on actionable advice and hold people accountable for following up.

Firms should remember that remote environments may require more intention and structure — such as regularly scheduled meetings, for example — because there may be less opportunity for serendipitous interactions and informal run-ins with higher-level colleagues.

BD skills for associates should be fostered, developed, and supported from day one. As the legal industry adjusts to remote and hybrid environments, it’s a perfect time for law firms to revisit their BD skills training as well as explore how other firm systems can support associates.

Early, frequent, and intentional BD support has the added benefit of helping associates feel connected to the interests and goals of the firm, which could have associates feeling the firm is more fully invested in them and is seeing them  for their strengths and skills — all of which results in a deeper sense of job satisfaction.

Indeed, in a spot poll of roughly 30 in-house lawyers in the San Francisco Bay Area in September, all of them indicated that their companies and teams were either fully remote or hybrid.

Yet, despite the prevalence of remote or hybrid workplaces, the potential biases that can impact staff members who are working mostly remote or hybrid still remains. The types of biases include: i) implicit bias, which is a form of bias that occurs automatically and unintentionally and affects judgments, decisions, and behaviors; ii) proximity bias, which is the tendency to favor people who are closer in time and space; and iii) affinity bias, an unconscious bias that causes people to gravitate toward others who appear to be like them.

For those employees who are negatively impacted by these biases in a hybrid setting, management’s poor behavior can be experienced as microaggressions. This can be keenly felt during remote of hybrid meetings, especially if those running the meetings ignore remote attendees, don’t invite the more introverted or junior people to contribute, avoid eye contact, or allow extroverts to consistently dominate the conversation.

Management should also be careful not to ignore virtual meeting invites or consistently reschedule remote meetings because ignoring emails, video call invites, recurring meetings, and more — especially when done by key partners — is a form of bias that can prevent people from doing their jobs well in a remote-first world.

Forging partnerships with other corporate functions

Chief legal officers (CLOs) have an influential role to play in mitigating this bias not just within their team as a manager, but more importantly across their company through the creation of policies, norms and behaviors. Here are some of the ways CLOs are attacking bias at the company level:

• • Setting expectations that human resources (HR) need to work closely with the law department — This includes not only forging an organically strong relationship, but establishing a top-down expectation that HR should look to the company’s law department as a key input and decision-maker for company policies and approach. This should be a priority, given the important role of the department in mitigating biases company-wide, suggests Megan Niedermeyer, General Counsel & Corporate Secretary at Fivetran, who joined the software company during the pandemic as its first legal leader.
  • Focusing on policies and practices that can help reduce bias — These exercises include pay equity audits, which analyze median compensation for each level by department, location, function, and team to understand if those employees with underrepresented identities are receiving lower salaries. Niedermeyer says this was one of the first tasks she tackled with outside employment counsel when coming to Fivetran. In addition to pay equity audits, in-house counsel should be adequately involved in the performance review calibration process, reviewing both median timing to promotion and pay increases for each level by team. In this way, the law department can determine if bias is creeping in and can use this information for sensitive conversations if this is occurring, she says.
  • Leveraging technology to build a culture of feedback — Similarly, CLOs as the chief risk officers of their companies by default, can impact how a return-to-office policy is going, especially when some corporations have had a policy that they’ve had to review or roll back. Niedermeyer explains how she used a strong partnership with HR and a technology platform to increase employee feedback on how the return-to-office process was going, as well as allowing anonymous reporting of incidents to obtain better data on potential negative cultural hot spots. Indeed, workplace harassment in the digital realm, which can be as high as 40% of those who experience work-related harassment, is an unfortunate side effect of more remote working.

Modeling inclusion as an aspect of C-level culture

CLOs, through their conduct and leadership style, can be a model cultural promoter for demonstrating inclusion, which proactively can create a feeling of psychological safety and this, mitigate biases. Alexa Summer, CLO of Rho, suggests ways this could be accomplished, such as:

• • Tailoring management style — Summer customizes her engagement approach with each person she works with, including her peers, direct reports, members of the company’s law department. Specifically, Summer says she seeks to understand what the motivations, goals, and preferences for communication are by asking questions to create a give-and-take, flexible atmosphere that offers a joint approach to problem solving.
  • Repeating expectations of work performance — To increase and maintain trust and transparency, Summer says she often reinforces expectations of performance in hybrid work situations through one-on-one meetings with her direct reports. This ensures that she and her employees maintain a consistent understanding of work requirements and performance goals, especially in a dynamic remote working world where everything evolves quickly.

The management behaviors that advance a culture of trust, respect, and inclusion while mitigating bias in remote and hybrid work are pretty much the same as those that comprise a great leader. Most of the time, this just requires adapting these behaviors to a different paradigm — in this case, one of a remote-first mindset.

While it was interesting that efficiency was highlighted once again as a top priority for tax & accounting firm professionals to manage going forward, based on survey respondents’ answers to the other questions, the impact of inefficiencies on other priorities may be equally top of mind.

It’s natural, of course, for tax & accounting firms in a general sense to want improvement in their efficiency level in order drive growth and best serve customers. Yet, as firms close out their year, there may be further opportunities to ponder where inefficiencies lie and how these could be resolved (or at least put on a pathway to resolution) for the new year.

Yet, what is the gold standard of efficiency — the place where firms and tax & accounting professionals may want to work towards? In the survey, respondents identified several of the standout skills and qualities that should make up the core of an ideal and efficient tax advisor, such as someone that:

• • • • has demonstrable knowledge and experience;
      • pays attention to changes in the tax code;
      • knows how to use tax technology to be more productive, accurate, and efficient;
      • is dedicated to serving client needs;
      • has the communication skills to explain tax strategies to clients;
      • can interact productively with colleagues; and
      • delivers high-quality work in a timely manner.

To know where it is going, a firm first must know where it currently is. Thus, reflections on the firms’ current state are required, and that includes a look at inefficiencies around talent, technology, and how clients are served. Failure to take a microscopic, internal look can keep a firm and a tax & accounting professional in the same place — meaning, no growth — or, worse yet, decline.

What’s the cost of inefficiency?

Talent — The lack of efficiency might have a high cost to what is considered firms’ greatest resource: its staff. Without proper and efficient work processes, people often work harder, but not smarter, as the saying goes. Even if there are efficiency processes in place, if those become outdated, it’s almost the same as not having any at all.

For staff that often has to work harder, including working longer hours, the impact can lead to the team feeling overworked. About 80% of those surveyed stated their performance was impacted by illnesses, while one-third said they experienced work-related health issues. When discussing their own well-being and career advancement, many survey respondents said they would consider leaving their current positions because of a lack of opportunities for growth, including training. Inefficiencies and their impact on talent go beyond just retaining talent, but they can and do influence hiring new staff. Perhaps firms should ask themselves the soul-searching question, “Would I work at this firm?” If the response is no, or even maybe, imagine what a prospective employee is thinking when it comes to joining the team.

Clients — Measuring the success of how well clients are served can be subjective. Does a number of clients mean success? Or firm profits? These are a few indicators, but by far not the only ones. Other factors to consider include, How much does the client engage with you? Or, are they asking for additional services?

A tax & accounting firm that has trouble meeting customers’ demands or can only provide the minimum level of service may consider looking at how efficiently it is servicing its clients. There are times, like tax season, when work is excessive; however, if your firm is constantly in this mode, it may be a problem. And if your firm is finding little time to consider and execute acquiring new clients or adding services, especially when being beseeched by clients to offer more, it may be time to re-evaluate priorities.

Recognizing common inefficiencies

There are numerous symptoms of inefficient work processes in tax & accounting firms that need to be identified before being dealt with, including:

• • • • Difficulties finding information — How long does it take your professionals to locate the information they need? How many steps does it take to gather that information into a usable form?
      • Technology — Is your firm’s technology use maximized? Do professionals and staff have the best understanding of how to use it, or are they in need of training? When was the last time the software was updated?
      • Extensive time on tedious tasks — Much like gathering information, the length of time required to do mundane tasks manually can be benchmarked against internal metrics, such as how long the same task took to complete a year ago? Or external metrics, such as how long do other firms or professionals take to do this task?
      • Poor standardization — If there is difficulty duplicating a task and getting the same result each time, then that task isn’t being done efficiently and should be reviewed, updated, or stopped altogether, and then replaced with a more efficient system that gets the same results each time.

Firm leaders should remember that having processes (whether it’s intentional or not) doesn’t mean you are operating at optimal efficiency. Old and outdated processes will let you know it’s time to change by showing themselves to no longer work in the same way. And like people and technology, failure to update processes will result in costly inefficiencies.

As the year draws to a close, this may be an ideal time for tax & accounting firms to reflect on where inefficiencies may lie within their own work processes and create a roadmap to eliminated them and drive further efficiencies forward.

To date, most employers had used a gentle nudge approach for RTO because of the need to retain employees. Even now, flight risk among accountants and lawyers continues to remain at 30% and above and is even higher for those professionals from underrepresented groups. Indeed, the flight risk for lawyers of color in most cases was at least five percentage points higher, according to a survey of 1,500 legal associates, and in the case of Black lawyers, it was 12 percentage points higher.

Further, the process for returning to the office for employees, in particular those from underrepresented backgrounds, also is tricky. Working remotely provided a huge relief and improved mental health to employees with diverse identities because many did not encounter microaggressions as frequently as when they were in the office, pre-pandemic.

This means, however, that many employees are facing a potentially lose-lose situation. They might have to sacrifice their mental health to return to office; or if they seek to continue working remotely, potentially sacrifice their career progression because of management’s tendency to favor those people who are closer to us in time and space. This is known as distance bias or the “out-of-sight, out-of-mind” concept.

Without effective awareness and proactive tactics on the part of management to mitigate distance bias, those professionals who the most vocal, most visible, and present in person may inadvertently be regarded as “high-potential” over others who are more introverted and prefer to work virtually — yet, work just as hard with better results.

Here are some ways to reduce the impact of distance bias:

1. Conduct “stay” interviews regularly

Managers who proactively initiating conversations to get to know team members on a deep level are laying the groundwork for better retention of these employees. Managers may not feel comfortable with doing this at first; so, it is best practice to provide managers with a template and guidance on how to effectively administer these kind of stay interviews.

Bill Bradshaw, head of Diversity & Inclusion at Withum, said managers conducting such interviews with employees should include three questions:

• • • How are you really doing?
    • What can I do to support you?
    • What can I do to ensure you have a rewarding career here?

Consistently asking these questions builds trust, helps the employee to feel appreciated, and assists the manager in supporting the employee in exploring career opportunities. Remember, however, it is important to note that employees may have different timescales on trust-building — some may take months, while others just days.

2. Brainstorm “inclusive” norms and behaviors within teams

Another exercise is to crowd-source inclusive ways of behaviors and expectations within the team for those in the office and also for those working remotely. Start with these questions:

• • • What does an inclusive team look like at the firm?
    • What would be some of the observable behaviors to demonstrate inclusivity?
    • What are one or two things that people should be doing to show inclusivity?

For those managers who may be hesitant, Shane Lloyd, Head of Diversity, Inclusion & Belonging at Baker Tilly, recommends posing additional questions to the team that bring in the “client lens” to give more focused insight for managers, partners, and executives.

• • • Start with the question, “If our team were known as the most inclusive in our organization, what behaviors would we observe?”
    • Follow that with, “If we were known as the most inclusive organization among its clients, what would our clients be saying?”
    • Next ask, “What belonging challenges are we likely to encounter?”
    • Finally, engage in a group discussion on the question, “What behaviors resolve these belonging challenges?”

Questions such as these provide direct insights for leaders on how they can effectively foster the conditions that bring to life the responses provided by employees while offering a kaleidoscope approach to viewing efforts of inclusion. “We want to understand these important dynamics from a variety of vantage points — individual contributors, groups, leaders, and clients,” Lloyd adds. Additionally, normalizing conversations about belonging challenges and discussing them openly allows teams to think about how to effectively address those experiences when they arise. Although it seems counterintuitive, openness around discussing belonging challenges is an evidence-based practice that contributes to fostering an inclusive climate.

3. Have an on-call “belonging” coach for executive leaders

This service allows managers to have a resource available to learn more about microaggressions or help them navigate among the different managerial challenges they are facing. These coaches can also help managers shore up their vital personal communication skills. Based on the “warmLine” service implemented by Intel in 2016, Baker Tilly used a similar approach for employees and now plans to do so for managers soon, according to Lloyd.

Withum took a different approach and hired a full-time coaching team to serve the entire organization, which included the option of offering full-time roles from the business teams that sit within the talent management function of the firm. Specifically for managers and senior managers, the coaches helped executives increase their effectiveness in managing a team of people from diverse backgrounds, while delivering superior business outcomes for clients and helping to fulfill outside-of-work commitments.

Remember that different engagement strategies are necessary to manage employees who work in-person, hybrid, or remotely, and for many managers those differing strategies are not intuitive. On way managers could engage remote workers would be, for example, to create the virtual equivalent of “water cooler” chats by hosting open hours for employees to drop in.

4. Enhance performance evaluation documentation requirements

Keeping quality records on performance over the course of the working relationship (not just during performance evaluation time) is also key. Adding and aligning all of the critical work that employees do for leading employee resource groups, or for vital endeavors like coaching, mentoring, and sponsorship are important investments to recognize as part of the overall value that each individual brings to the organization every year.

At the same time, managers should encourage employees to keep track of their own performance successes and other feedback regularly. This is important ingredient when it comes to performance evaluation time. Then, the manager and employee can compare records, and this action helps to reconcile differing recollections of events and mitigate distance bias.

Overall, the best way to retain all employees is to equip leaders with the tools they need to ensure their own accountability for keeping their finger on the pulse of all team members. Following these aforementioned steps can help guarantee that this happens.

In a new blog series, Legal Talent Deep Dives, we will examine the data that points to several strategies that law firms can pursue to increase their bottom line

In today’s legal environment, as law firms try to move through the post-pandemic environment and navigate to something they see as closer to normal, the issue of legal talent remains a hot button topic for firms of all sizes.

Indeed, the number of lawyers considering leaving their current firm is eye-opening. Our research indicates that 21% of those lawyers (mostly partners) that have been nominated as stand-out lawyers by their clients, and 46% of associates are either unsure, somewhat likely, or highly likely to leave their current firm within the next two years.

Not surprisingly, when law firm managing partners get together, the talk is about why their lawyers are leaving — either to competitors, in-house positions, or most troubling, to no position or plan at all. These leaders also discuss how the time and process to replace lawyers that leave has become much longer, more expensive, and more complex.

What is becoming clear in this scenario is that law firms need to find a way to create workplace environments from which lawyers won’t want to leave — an increasingly complex endeavor, that involves addressing issues that are removed from the compensation picture altogether.

To help provide an answer to this dilemma, Thomson Reuters’ recent legal talent research illuminated several pathways that law firms can follow to arrive at a successful talent strategy in the post-pandemic era, including what can be done to retain their stand-out lawyers, and how a focus on engagement and culture — rather than just matching compensation — can make a great deal of difference in firms’ retention efforts.

Our Stellar Performance market research study took an in-depth look at more than 2,400 stand-out lawyers — those nominated as such by clients in Thomson Reuters’ ongoing, randomly sampled global Sharplegal survey — and what can push them to leave their current firms and what can be done about it. Previously in this series, we saw how having just three stand-out lawyers on a firm’s roster can make a great deal of difference to clients and can lead to a four-fold increase in the portion of clients’ legal spend the firm might gain; and what stand-out lawyers see as value within themselves. Now, we turn our attention to the part of our research that detailed how lawyer retention strategies are becoming a much bigger piece of law firms’ profitability puzzle.

Strategies to retain the best lawyers in your firm

During this time of stiff competition for in-demand legal talent, it is more important than ever for firms to guard against high lawyer turnover. Our research underscores the fact that associates are at especially high flight risk right now; and while they themselves told us that compensation is their main concern, our research shows that a host of other factors also contribute to better associate retention. Indeed, these factors are typically cultural, such as flexible working schedules, better communication and engagement, and support for mental well-being — all of which were impacted by the pandemic’s forced pivot to remote working.

For example, remote work meant that mentoring had to be addressed differently and became much more challenging. Without the chance for partners to more regularly have those difficult questions and conversations that can help shape a younger lawyer’s career, law firm leaders had to struggle to sell the idea of becoming a partner more than ever before. There may be two main reasons for this. First, given the lessons of the pandemic, many lawyers (of all ages and status) are more circumspect in how they spend their working hours, whether they’re willing to endure long commutes, and how they balance their work with their life outside of work. And second, the rise and growing reputation of new roles within many law firms involving technology, legal operations, talent management, and more have offered side steps off the partnership ladder that now also can provide different kinds of rewards and recognition.

The power of firm culture

As we looked more widely at stand-out lawyer retention in our research, it appears that many law firms overlook the role their own leadership and strategy-setting plays in either pushing lawyers away or keeping them within their firms. Firms need to genuinely engage and communicate with lawyers at all levels to ensure firms don’t leak great talent.

As the research shows, those lawyers that regarded themselves as most satisfied in their current roles at the firm felt that cultural issues were much more important than did those lawyers who considered themselves least satisfied with their jobs. In fact, the most satisfied lawyers cited people and colleagues, workplace culture, and the quality of work they’re given as the top three areas that give them the most satisfaction.

Least satisfied lawyers, on the other hand, cited people and colleagues, independence or freedom, flexibility, and quality of their team or practice as top areas of satisfaction.

Building toward an inclusive culture

Given that firms’ efforts toward creating this more accommodating work culture for their lawyers can pay dividends in retention and — just as importantly — curb the hiring cost of recruiting, hiring, and on-boarding new talent, the key question becomes one of how can firms create an atmosphere in which their top lawyers want to remain?

Focusing on several aspects of culture — such as enhancing the overall tenor of working life, making all lawyers feel included and visible, and ensuring that all lawyers and staff are being treated in a manner that’s friendly and respectful — is a great place to begin. Couple that effort with clearly articulated opportunities for career progression, advancement, and professional growth, and firms will have significantly contributed to higher employee engagement among stand-out lawyers and others.

These efforts will require, of course, a dedicated initiative that enlists management, offers management training, and instills more flexibility than firms may be used to offering. However, firms must ensure these foundations are in place to maintain an engaged workforce and defend against other firms poaching their stand-out talent. Indeed, our findings indicate that, almost one-half of lateral moves of top lawyers are instigated by the hiring firm — and this figure is even higher among recruits who were not actively considering a move.

Today, no law firm can pursue strategies to enhance profitability or ensure stability if they do not have a strategy in place to retain their best lawyers and avoid the cost and disruption of new hires and constant turnover. Keeping their best lawyers satisfied and engaged within a welcoming workplace culture is the surest way law firms can keep that talent at the firm.

You can learn more about how your firm can better understand the value of its stand-out lawyers as part of its overall talent and client service strategies, here.

To tap into the collective ingenuity and creativity of its hundreds of attorneys, tax advisors, and staff in its offices across Europe, North America, and Asia, Julien Cayet, the firm’s director of technology and innovation, helped the firm launch an internal Innovation Challenge to stimulate innovation engagement firmwide.

The Innovation Challenge was intentionally set up to encourage cross-function and cross-border collaboration, requiring each team to have at least six people from at least two practice groups and two jurisdictions.

“We wanted to encourage our colleagues to rise above their natural silos and bubbles,” says Cayet. “It made people open up and think creatively, not just about how to form their teams, but also how to sell their idea to colleagues, identify specific expertise within the firm, and find ways to work effectively together.

“It also made it fresh and exciting by working with colleagues that they don’t normally bump into. ‘We need someone in a specific practice in Belgium? Fine, we’ll call someone in Brussels.’ It created these wonderful mixed teams that also reflected the tremendous diversity of the firm.”

Hitting the road & getting the challenge off the ground

Cayet says the firm didn’t want the challenge to be seen as just another memo or directive from management. So he applied a bit of innovation himself to get people involved.

“How do we get them excited about this?” he asks. “I knew that we had to elevate our communication efforts to enthuse our colleagues to apply. With our colleagues having busy schedules and innovation not being top of mind yet, this wouldn’t be the first item that they would naturally gravitate towards.”

So, on top of drawing upon existing corporate communication channels, Cayet virtually criss-crossed the firm’s far-flung global offices with a roadshow in a bid to stir up excitement. He joined dozens of practice group and staff meetings. And buy-in from partners who introduced Cayet and the Innovation Challenge in each meeting helped establish that the firm was serious about wanting people to get involved.

Still, Cayet and firm management were unsure how many employees would actually convert their interest into participation. Cayet says he would have been pleased if a dozen entries had resulted. Yet, in the end, 42 entries were submitted, representing almost 200 attorneys, tax advisors, and staff members who were willing to devote the time and effort needed to form teams, brainstorm ideas, and develop proposals to present to the panel of judges.

One challenge, two products

After carefully evaluating the entries, the judges selected an idea for a client contract management tool that would extend the firm’s involvement in client contracts through their implementation and beyond. The tool captures and tracks the main data points of a transaction, such as a corporate or real estate deal, helping to ensure that deadlines are met, and commitments honored.

As a result, the client sees successful long-term results from the contract, and the firm stays engaged beyond simply negotiating and reviewing the contract. “It’s typically an area where a transactional practice may not be tapping into all aspects of the contract lifecycle,” Cayet notes. “This tool helps our colleagues to do exactly that. It provides better, value-added services to our clients for the long-run.”

A working prototype of the client contract management tool has been developed, and implementation is now underway, less than a year after the challenge.

In addition to the client contract management tool, the firm invited about 500 colleagues to select a second winning entry, which they termed the Public Award. They chose a data visualization tool that could provide a 360-degree graphical view of a client, giving all the teams working with a specific client the same view in regard to the client’s documents, compliance status, and more.

Besides giving the firm a second innovation product to develop and implement, the Public Award initiative also helped extend participation in the Innovation Challenge throughout the firm. “It provided an important sense of ownership and participation,” says Cayet. “That we value our people, their ideas, and their input. Everyone can contribute to making the firm better and more effective, and we each can play a role in supporting every one of our colleagues.”

Expanding the challenge

Following the success of the first Innovation Challenge last year, Cayet and firm management immediately began planning how to continue the initiative. Even after the selection of the two winning ideas, they realized that they were still impressed with many of the 40 other entries.

This year’s Innovation Challenge will be akin to a hackathon format, where the teams will build rapid prototype solutions to solve real business challenges, some of which are based on ideas from last year. Cayet hopes to channel the enthusiasm and competitive energy demonstrated in the first phase of the challenge to develop other products that the firm can quickly put to use across its offices, and to capitalize on the feeling of ownership of both the projects and the firm at-large that the team members have embraced.

In one format or another, the Innovation Challenge is likely to become an annual staple for the firm, Cayet adds.

More than just the ideas

The Innovation Challenge brought tremendous benefits to the firm and its culture even beyond the specific ideas that are identified, cultivated, and ultimately implemented. “I’ve always viewed a large part of my job as achieving cultural activation,” says Cayet. “It isn’t just about the innovations themselves, but really about making innovation part of our everyday discussions. Whether it’s a practice group meeting or a decision about the firm as a business, innovation should be something that’s naturally a part of any discussion.”

Cayet notes that while lawyers are often viewed as being innovation-shy or even sometimes technology-averse, he strongly feels that the challenge didn’t necessarily spur innovation, so much as it tapped into the potential that had been there all along. Many in the profession, he thinks, may be underestimating the drive for innovation that’s taking hold at many firms, particularly among the younger generation of lawyers.

“We’re not there yet, but hopefully the Innovation Challenge is an important first step in making innovation a natural part of our firm culture,” he adds.

Effects of the pandemic have further exacerbated the trend within the industry. For example, the average associate attrition rate in Am Law 100 firms was reported at 16% per year, pre-pandemic. Figures recently reported by Leopard Solutions put that figure at 27% in 2021.

Let’s assume a firm starts with an associate class of 60 new hires. A decade later, only four or five attorneys are likely to remain at the firm. Using $200,000 to $500,000 as an average cost of attrition per associate based on original recruiting costs, training and development investments, replacement costs, etc., a firm could be losing anywhere from $13 million to $28 million per class. Consider those figures across multiple associate classes and the cost of the problem becomes quite sobering.

There is no doubt law firms have enormous difficulty getting (and keeping) enough talent to deliver on client needs. Attrition continues to persist, specifically at the staff and associate levels, resulting in more senior staff and partners working down a level or two just to complete work. This not only risks disengagement of more senior resources operating at levels below their current capabilities, but also will eventually resurface as an air gap in the partner pipeline that will dramatically slow growth. Firm leadership would be remiss to ignore these looming challenges while basking in recent financial successes created by temporary operational savings.

Last year saw many Am Law 100 firms raise salaries above $200,000 for the first time, reflecting record-breaking profits and the desperate efforts to fend off competition for talent.

Most firms have tried to solve the attrition problem by a) funneling a significant portion of their free cash into raising associate and staff salaries, and b) giving larger bonuses as a sweetener for associates at all levels to stay with the firm. Last year saw many Am Law 100 firms raise salaries above $200,000 for the first time, reflecting record-breaking profits and the desperate efforts to fend off competition for talent. Money often surfaces as the reason professionals give for leaving, but more often there is a mix of reasons why people go (or stay).

While talent movement over the last 18 months has been significant, and some professionals are moving out of the industry entirely, most are unlikely to exit permanently. Consider this recent stat from Firm Prospects, an intelligence company that analyzes law firm hiring – Big Law kept 17.71% more of its attorneys in 2021 than in 2019. Instead, lawyers are re-examining the conditions, culture and type of firm they want to be a part of going forward. They’ve harbored these thoughts and desires for a long time, and now they have the leverage to choose – or even reshape – the type of firm that best matches their goals, lifestyle and values.

There are dozens of situations and aspects over time which influence a lawyer’s decision to re-examine or leave a firm, most of which aren’t as easy to see in the moment. Moreover, the set of reasons that keep people at a firm, while putting forth maximum effort, does not always follow traditional age, title, tenure or other segmentations we naturally want to ascribe to them. This is precisely why periodic surveys and exit interviews have limited effectiveness – done as they are at a point-in-time and segmented along traditional lines – they instead spin off expensive initiatives and actions that ultimately don’t yield results. Further, these inquiries often aren’t attached to the sometimes complex and nuanced value proposition to which talent is responding. Nonetheless, a vast majority of firms will stick with this ineffective and costly approach because it seems a visible sign of caring and action, and a better approach is anything but clear.

Firms could truly crack the code by creating an early warning system for attrition. Firm data, already at leadership’s fingertips, contains much of the answer, and data science can connect the dots as to what matters most to which cohorts, even when it isn’t intuitive to consider who is in the cohort.

Consider a few paradoxical personae:

• • • A 40-something technology expert who just started a family may actually be elated to work longer hours for current pay if he or she is afforded the ability to work with certain people or on certain types of projects.
    • A newly minted partner who is otherwise successful but works with a narrow group, mainly non-diverse teams, and is rarely brought in by other partners on pitches despite industry-leading expertise: This partner is unsurprisingly likely to leave.
    • Someone who otherwise has all the reasons in the world to stay, except there have been a few too many matters on which she was staffed below her capability and with colleagues who are not of the same caliber: This situation pushes her out.

Each of these individuals belongs to a cohort – one that is not necessarily obvious, with signals that are unclear or noisy without digging into the data. There might be 5, 10 or 15 of these individuals within a firm, but unlikely dozens. So, it is a manageable issue to solve.

Data science, coupled with a deep understanding of law firms and talent development, reveals not only the surprising cohorts that act on the same elements, but also what those elements are, when they happen with the most impact in a career, and how to intervene before someone is inclined to leave. Using standard people data, we can complete a cohort cluster analysis to understand like-groups that care about the same things.

Once we’ve established cohorts, we can set thresholds on critical parameters (hours, team characteristics or dynamics, communication responsiveness, compensation, etc.) and monitor employees within cohorts to identify those at risk.

Having data alone about what causes attrition is not enough. Data must be driven to divulge insights that go beyond intuition and must be driven into the business processes of a firm to have real impact.

Doing so can have significant and immediate impact to the business that could result in gains of millions of dollars (or eliminated losses) per year for a major firm. Isn’t it worth it to find out what your data can tell you?

In fact, increased coaching/mentoring was among the top-three factors law firm associates gave for staying at their current firm. Also, improved clarity for promotion to partner and alternative career options other than partner were tied for third most cited factor among senior associates in their decision to stay at their firms. Similarly, the recommendation to “ensure staff see a future with your organization” was among the top strategies to retain tax & accounting professionals.

Forward-thinking employers will gain an edge in retention by investing in next generation corporate learning platforms. Fortunately, artificial intelligence (AI), virtual or augmented reality evolution, and custom and individualized learning platforms that are based on employees’ goals and job requirements are increasingly available.

For example, the total number of hours that employees within the accounting and legal industries spent learning new skills increased by 86% year-over-year between 2020 and 2021, according to Apratim Purakayastha, the chief technology officer of Skillsoft. The number of unique learners increased by 44% year-over-year with the most popular skill areas of interest including professional improvement, data analysis, productivity and collaboration tools, project management, and digital transformation.

Technology-driven learning-enhanced employee performance

The technology skills and tools allow learners to move beyond basic skill development and toward improving their employee performance, benefiting employees by adding context, relevance, and personalization to the learning experience. More specifically:

• • • Using machine learning and AI embedded within corporate enterprise systems enables firms to track how employees use these systems. As a result, cognitive, behavioral preferences and engagement are better understood for each employee. As an increased understanding of how learners are engaging in the content occurs, chief learning officers can demonstrate knowledge transfer and measure the learners’ impact. The technology also allows for personalization of content based on individual goals and gaps in skills.
    • Virtual or augmented reality offer enhanced experiential learning methods through physically and mentally immersive environments. Feedback on how to improve in job performance in sales training, for example, occurs in the moment.

Evolution in tying objective assessment to learning

Objective-based assessments for learning in corporate training is relatively new. Academia has long used the instructional design model of learning objectives and measuring the mastery of them through the use of objective assessments.

Purakayastha elaborates on how this works at Skillsoft:

• • • To help individuals learn a new coding language, for example, there are a multitude of skills to learn, which often show up in the form of a course syllabus. Each topic in the syllabus is tied to learning objectives. Within each topic, there will be several skills to learn, and each skill is tied to a discrete learning objective. Each discrete course being aligned with a learning objective enables the opportunity to test mastery of knowledge.
    • The assessment of skills mastery within a topic is achieved through a 20-question test. If a learner gets 17 right and 3 wrong, Skillsoft offers a custom pathway of “discrete” ways as follow-up steps based on the questions that were answered incorrectly.
    • Student can gain efficiency within the skill mastery journey through a personalized path that can close any temporary skill gap they may face.

The efficiency of a learner demonstrating command of the material is essential for professional learning. This is because learners dedicate an average of only 10% to 20% of their time to learning, spending the remaining majority of their time performing daily job responsibilities.

Impact on enhancement of “power skills”

Perhaps the greatest impact of the combination of using technology and the objective assessment learning model is the expanded opportunity to enhance power skills — sometimes referred to as soft skills (which should be rebranded) — especially of managers. Indeed, the hybrid work environment demands greater leadership, emotional intelligence, and communications skills.

With the advancement of technology already taking over routine tasks, some believe this will free up more time and mental bandwidth to allow employees and managers to devote to creative problem solving and people management. This mixture of increased mental capacity and effective people development skills can create the opportunity to expand the positive impact of employee engagement and experience.

Challenges could slow down progress

While these technologies offer a multitude of opportunity, the current technical skill gap could slow down progress. Indeed, according to Skillsoft’s Purakayastha, the most in-demand skills include system and solution architecture, cloud computing, AI and machine learning, all of which are necessary to maximize the return on investment that these technologies offer.

At the same time, instructional designers and learning leaders are playing catch-up. They need to understand the economics involved and the potential value for both workers and the business. For now, the potential for transformation in the corporate learning & development space is massive now, even with the challenges. Right now, personalized recommendations that include microlearning lessons, hands-on practice labs, instructor-led training, and longer-form curricula are available to enhance and deepen employees’ skillsets.

It’s very similar to learning how to work more effectively in an agile way, explains Purakayastha. To learn this skill, knowledge is delivered through exercises, cohort-based learning, and virtual live instructional training. These instruction-led training programs can blend into a cohort-based learning journey that includes courses, articles, and videos. Group learning through seamless integration with already existing collaboration tools — such as MS Teams and Slack — enable internal colleagues to learn together. This is monumental progress.