Like all organisations, professional service firms have to compete for their business. They compete for clients, matters, partners, associates and support staff. But, unlike many other businesses, the competition is primarily about one thing; their people.
Of course it is also about fee rates but I’ll assume you know your market and have got this about right. Therefore the main determining factor on whether you win the work or you don’t is the quality and expertise of your partners and the fee earning teams who will conduct the work. But the problem with having all of this tacit knowledge in the heads of your fee earners is that if they become ill, or leave your firm, then all of their knowledge and experience is ‘lost’. Therefore it follows that you will benefit from having a team who are as healthy and resilient as possible enabling them to perform at their best.
What do we mean by ‘resilience’?
Resilience is a term that has recently become used within the field of ‘well-being’. As we know, well-being covers a broad spectrum, including everything from health & safety to on-site fitness classes and it therefore means different things to different people. But resilienceis rather more specific. It has been described as “Supporting the whole employee” by Professor Nick Kemsley of Henley Business School in Stage 4 of his well-being model*. Kemsley says “the step change here is that the organisation has moved beyond physical well-being into the complementary area of mental well-being”.
Therefore in today’s busy world, a resilience programme must, critically, include a component which addresses the mental well-being of employees. But in order to be fully successful it must also include all of the areas in the previous stages of Kemsley’s model. These include physical safety, fitness, diet, sleep, social networks, etc. Somewhat controversially, this involves the firm taking at least an interest in the lifestyles of their employees outside of the office. There are some who feel that this is a step too far, but Charlie Keeling, HR Director of HFW, feels that this interest is justified through the ‘duty of care’ firms have for their staff. The benefits for both employee and employer can also be very significant as we shall see.
What is a resilience programme?
By ‘programme’ in this context, we are not referring to a one-off event like a well-being week, or simply implementing an initiative such as flexible working. Rather it is a set of strategic initiatives conducted and co-ordinated to create a sustainable improvement in the overall resilience (and thereby the performance) of the firm’s greatest asset, its workforce.
This is not a simple thing to achieve. As Professor Kemsley points out, in order to be fully effective it must consider the culture of the organisation where the actions of senior management speak far louder than words. But it can be very rewarding as we shall see.
What are the kind of benefits I will obtain from a resilience programme?
The return on any investment is determined by the benefits derived directly from that investment. And, calling on my many years of managing and assessing IT programmes, benefits generally come in two types; tangible and intangible. Tangible benefits are physical things that can be measured (such as financial benefits) and intangible benefits are things which are not physical and therefore more difficult to measure (such as the motivation of staff). These intangible benefits are just as real but usually require a greater degree of judgement in order to estimate their actual value to the firm. But often this is where the real value is to be found.
So what will be the return on an investment in a resilience programme?
If your resilience programme covers all of the areas described above, then an immediate benefit will be an increase in the employee satisfaction of your workforce. This occurs directly as a consequence of the firm taking an authentic interest in their workforce, not just as employees, but as people. According to Professor Alex Edmans of the London Business School**, companies with high employee satisfaction ratings have higher levels of motivation within their teams. Therefore, it follows that the first benefit to be derived from conducting an effective resilience programme will be increased motivation throughout your organisation. Edmans goes to on explain that organisations with high employee satisfaction also have higher levels of profitability in the long-term. Motivation might be an intangible benefit at this stage, but many other tangible benefits flow directly from it as we shall see.
Less absenteeism, and greater ‘presenteeism’.
It follows that increased motivation of the staff will result in a reduction in absenteeism, both because employees are more healthy (or resilient) and because they are more likely to want to go to work. The likely scale of this benefit depends on the current level of absenteeism and reasons for it, but it is probably sensible to be conservative when estimating the value of this benefit. However, the benefit is tangible and can be measured by the value derived from the work performed on every day of absence saved. This clearly varies by type of employee, especially whether they are fee-earning or not, but there will be a financial gain.
However, more importantly, there will also be a significant intangible benefit of increased ‘presenteeism’. That is, the extent to which employees are focussed and energised whilst at work. This is because of the increased ability to focus brought about by improved fitness (improved circulation and increased oxygen levels in the bloodstream and hence the brain) and increased motivation arising from the firm taking a sincere interest in their well-being. This benefit is difficult to measure accurately but can probably be best estimated as a small but invaluable increase in productivity across all staff. Additionally, according to Edmans, an unintentional consequence of motivating your staff is that they are also more likely to be more engaged and to make valuable suggestions for improvements.
Staff loyalty lowers turnover and recruitment costs.
Evidence also shows us that when employees feel looked after and valued as a person, they are less likely to start looking for another job. This has a very direct effect on turnover and therefore a tangible benefit of reducing recruitment costs. It has been estimated that on average each recruitment campaign costs £30k to conduct, so this can be very significant. It can however be difficult to estimate in advance but you can expect a reduction in your recruitment costs in comparison to what they would otherwise have been.
Lower turnover helps to retain your top talent.
It is unfortunately true that your best people, if dissatisfied, tend to be the ones who are most likely to leave your firm. This is because they are more marketable than other employees and they also know their value in the marketplace. And when they leave, they take all of their experience with them which represents a significant intangible cost. This can also have a further knock-on cost through the demoralising effect on those left in their team.
But conversely, if you are able to retain your best talent, and motivate them still further by investing positively in them, it has an energising effect on those around them. It will be intangible since it is difficult to measure and you will probably never know who would otherwise have left (but you will be very glad they didn’t!).
Higher employee satisfaction will attract the best talent, both fee earning and support staff.
When assessing a new job opportunity, most people will look at the ‘culture’ of an organisation. An organisation that has a culture and reputation for really looking after its people will be a more attractive proposition than one that does not. Therefore such an organisation is likely to be able to choose the best people when recruiting. Not only does this mean that you can recruit the best talent, but over time this will gradually improve the overall quality of your workforce as you are also retaining your best people and enabling them to perform at their highest level. This is therefore intangible but a significant benefit.
Partner loyalty retains their business, and their clients.
In a professional services organisation, partners literally are the face of the firm as it is they who will win and conduct (or at least oversee) the services provided by the firm. Partners can be tempted to move firms by many things but one major reason for this is that they do not feel sufficiently valued by their current employer. It follows then that partners are less likely to leave your firm if they feel that the firm cares about them not just as a generator of fee income, but also as a person. This benefit is again intangible as you will not know which partners would otherwise have left. But should it happen, it will bring with it a very significant tangible cost, not only in fees lost (both directly to that partner and in referrals for other work) but also in the inevitable long-term loss of some clients, even if they don’t follow the departed partner to their new firm. And departing partners have been known to entice associates to follow them. Avoiding the cost and disruption of the loss of a partner is therefore a very significant benefit to the firm.
Improved Partner health and greater tolerance to stress results in fewer ‘unplanned’ absences.
One of the biggest risks to a professional services firm is the unplanned loss of a partner. This can be a temporary loss (for example an enforced break due to stress) or a permanent one, either because they are too unwell to return to their place of work, or sadly because they die prematurely. Unfortunately these sorts of absences are happening with increased regularity within professional service organisations, at all levels, due mainly to unhealthy lifestyle choices and increased levels of stress.
When this happens the disruption to the smooth operation of the firm can be very costly, both in terms of potentially lost revenue (especially if it is long-term) but also in the loss of clients and potential future work. There might also be a reputational cost, depending on the circumstances. Unless the illness is obvious (which they rarely are) such unplanned absences are difficult to anticipate. However, they are statistically quite easy to estimate. This can be calculated by the probability of such an absence (insert your own percentage, or see below) multiplied by the average fee income per partner for say 3 months, multiplied again by the number of partners in your firm. This figure will be quite significant. And of course if the absence is permanent, the figure will be even higher.
Unlike most other businesses there is no legally enforceable retirement age for senior management, or partners, in professional service firms (unless your partner agreement specifies one). Therefore as we increase the health and resilience of each partner, we could also prolong their working life if they and you choose to do so. This can be particularly valuable if you have very experienced partners in a particular niche who are keen to continue working past the normal retirement age. And if they are particularly experienced, or have very close relationships with some clients, this can be particularly valuable. This can be a very significant tangible benefit, especially as these ‘rain maker’ partners tend to be able to charge higher fees. Whilst again it is difficult to predict in advance, this can be of significant benefit to your firm both financially and for your reputation.
Winning more work.
Retaining your best fee-earning talent, both partners and associates, means that you will increase the capabilities and expertise of your firm. As described previously, this is the primary areas of competition within a professional services industry, and it therefore follows that statistically, you will increase the likelihood of winning more bids in the long-run with a higher quality, highly performant team. And as your expertise increases, so can your fee rates, and with them your margins. This might not happen overnight but this investment will lay solid foundations for a potentially significant increase in fee income, which is obviously a key metric for every firm and so important in this increasingly competitive world.
What evidence is there to support these benefits?
As stated above, ‘resilience’ is a relatively new term in the well-being industry. But very few concepts are truly new. In the 1980s, PwC established a ‘Partner Survival Programme’ which provided its 1500 partners with expert advice on diet, fitness, exercise, stress management, etc. Charlie Keeling (now HR Director for HFW) set-up the programme and when I asked him what the benefits were, Charlie told me “we saved at least 6 lives and significantly improved the health of about half of the participants”. And they know they saved 6 lives because the results of the medical checks they performed on the fortunate 6 before the programme commenced were so bad that they confidently predicted an early demise. Admittedly it was a while ago, before we knew so much about healthy diets and the real value of exercise. But it was also (arguably) a less stressful era and since that time we have seen a significant increase in cardio-vascular disease, type-2 diabetes, cancer and workplace stress. Sadly, you are now more likely to have a serious career-ending disease that you are to die prematurely.
Just consider these statistics for a moment. Saving 6 lives out of 1500 partners represents a ‘hit rate’ of just under half of one percent. This doesn’t sound very high. But given the increase in these other conditions, including burnouts and breakdowns, then suddenly the percentages seem a bit more significant, especially for a firm with large numbers of partners and fee earners. And presumably these were just the 6 that were likely to die at that time. Once they had departed (which thankfully was avoided) there would presumably have been 6 more who would have declined sufficiently to take their place. And your partners don’t have to die to become unable to work. Many of these other diseases can render them unable (or unwilling) to carry on working.
Now let’s turn to the 750 or so whose health was significantly improved. Significantly improving the health of this proportion of your partners, associates and support staff, is very significant. Just imagine the benefits (both tangible and intangible) arising from an improvement like this in your organisation. Unfortunately PwC probably didn’t measure the actual benefits achieved, but they will have been very significant for all of the reasons described above. And that still leaves the remaining 50% whose health was improved only less than ‘significantly’.
It has to be said that estimates of the total benefits of resilience programmes are difficult to measure. This is primarily due to the newness of these sorts of programmes, and because of the intangible nature of many of the benefits. But by applying your own judgement within the context of your own organisation, the benefits can be seen to be potentially very significant, especially in the long term.
But of course we shouldn’t only be doing this for financial benefit. We should also want to do it for very human reasons, because we care about our friends and colleagues, and for the ultimate embodiment of the ‘duty of care’ that Charlie Keeling referred to earlier.
Why choose Halcyon Life?
Halcyon Life programmes have been developed specifically for today’s demanding corporate world and provide expert advice in areas such as nutrition, exercise, stress management, sleep, relaxation, and complementary therapies. Our team of experts will individually assess the diet, fitness and stressors of every delegate and give them personalised advice for making positive changes in their lifestyle. By using these personal assessments, education and guidance we inspire every delegate to self-select a number of lifestyle changes in the areas where they need them most to bring about sustainable improvements in their overall physical and mental resilience. We will also support them in the weeks following the programme to ensure that their goals are achieved.
The resulting benefits will improve not only the health and resilience of each delegate, both in and out of the office, but also the overall health, resilience and performance of your organisation. We therefore think it might be one of the best investments you ever make.
Paul Heywood, Founder, Halcyon Life
Paul was IT Director at 3i, a FTSE100 Private Equity firm, and previously was IT Director at the law firm Fieldfisher. He has also held senior positions at Allen & Overy, WHSmith, L’Oréal, EY and Ford Motor Company.
* “Employee Well-being and Resilience”, Professor Nick Kemsley, Henley Business School.
** “Employee Satisfaction, Labor Market Flexibility, and Stock Returns Around The World” Edmans, A., Li, L., and Zhang, C., February 2017