The war for talent is funded by partners
Click image to enlarge
As they say, a picture is worth a thousand words ....
Here's a graphic that clearly illustrates an obvious but unpalatable truth (at least for firms on the left and, even more so, those off the graph with PPP of < $500,000 p.a., even further to the left.) It illustrates a piece of ALM Research that shows that while the compensation of third year law firm associates in large commercial US law firms fall into a fairly uniform, market-driven band of between $200,000 and $230,000 p.a., there is considerably more variation in what the partners take home.
It shows one thing for sure: the beneficiaries of a focused, carefully crafted, performance-driving strategy that is relentlessly executed are the partners. Nobody else. Conversely, the partners are the ones that pay the cost when strategy is woolly and unfocused.
The data in the graphic was transposed from a table called The Pain Index published in The American Lawyer.
Rob, the visual differences in your chart are staggering. Thank you for creating the graph that speaks volumes over simply reading the numbers in the chart. There are so many possible lessons in here it's a bit hard to know where to start. I am thinking in particular of those firms not even on your chart...those to the left.
Some that come to mind are...you get what you pay for...as a knowledge business, you must (probably) invest more in people/minds to increase your margins...of course, just hiring the people won't cut it.
I'm feeling fairly confident in an assumption that the larger firms, with greater resources, are investing more in training (many with internally employed trainers) and probably are more effectively delegating work. Would you agree?
You mention "a focused, carefully crafted, performance-driving strategy." Is this a conclusion shown in the other aspects of the survey data? That those firms to the right actually have and implement strategies that the others do not?
Michelle, I wasn't saying that the quality of a firm's strategy could be concluded from the survey; rather that whether one embraces the discipline of a 'focused, carefully crafted, performance driven strategy' (which will almost certainly lead to higher profitability too) or not, one is still going to be paying the same for talent, so the costs of lack of focus is less cash in partners pockets. Nobody else. Rob.