Best Practice: Year end staff bonuses and raises

Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Our firm is meeting later this month to discuss year end bonuses and raises for our staff personnel. Due to the economy we did not give raises and bonuses last year. While we have been holding our own with the present economy we have been trying to watch our overhead very closely. However, we want to be fair to our staff and we don't want to lose key employees to our competitors. We are a five attorney firm and have four staff members that have been with us for many years. Do you have any ideas for us? A. Your situation sounds quite familiar. Many law firms deferred raises and bonuses last year and are wondering what to do this year. Here is what we are seeing:

• Many firms that deferred raises and bonuses last year are doing something this year - raises, bonuses or both.
• Typically raises are in the 3% range.
• More firms are examining ways to hold the line on base salary and shift a larger component of compensation into variable pay based upon performance based bonuses.

We are recommending to many of our clients that they use 2010 raises and bonuses to launch new performance base systems for 2011. They are awarding traditional raises and holiday bonuses for 2010 to clear-the-deck - and advising staff of new programs going into effect January 1, 2011 consisting of goal achievement bonuses where specific firm and personal goals are established at the beginning of the year for each staff member and annual performance reviews. Click here for our blog archive on compensation Click here for articles on other topics John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.