Best Practice #2: Benchmarking
The system is effectively feudal. Compensation is centralized with a very small group of partners. Because voting is weighted, the firm chair knows exactly how many votes he needs to control the firm and he pays the top tier enough to buy their loyalty. The dominant factor is origination credit, but there are virtually no rules or guidelines and so credit is a free for all, with the strongest usually winning. Sadly, the partners compete as much with each other within the firm as with those outside the firm. The women partners approached firm management five years ago and asked the firm to research best practices and do a benchmarking survey on compensation systems....These efforts were entirely rebuffed.
A first step is to establish baseline information on the percentage of revenues/profits generated by, and credited to, women lawyers, and lawyers of color. The second, and perhaps most important step is to implement regular monitoring and analysis of the impact of a given compensation system on out-groups, including women and people of color.
This type of benchmarking is important in order to control the kind of biases that occur even in organizations where good intentions abound. A recent study of a business with an elaborate performance evaluation process, and a strong commitment to merit-based compensation systems, found that women and people of color nonetheless got lower raises when supervisors took the evaluations and awarded raises, without a process to check for bias at that step of the process.
To quote a well-known phrase, what gets measured gets done. To put this differently, “If you‘re not keeping score, you‘re only practicing.” If systematic differentials in compensation by race and/or sex emerge, further steps can be initiated. Given the wide range in different types of compensation systems, probably the best advice is to call in a consultant to analyze where the problems arise, and how best to address them.
