How much do you pay your employees? And how much should you pay them?
These were questions I discussed during a client session last week. One of the lawyers in my Practice Growth Programme wanted to know whether they were paying the ‘right amount’ to attract the best employees. Another was concerned about paying too much, on the basis they should ‘keep costs down’.
Well, the amount you pay your employees is a direct cost for your business. So, if you pay them less, you’ll save money…. won’t you? Not necessarily.
Sometimes it costs more – in hidden costs – when you pay less.
For example, you might save £5,000 by hiring a less experienced fee-earner. But the hidden cost of that ‘saving’ could be an extra 5 hours a week of your own time supervising or training that person. If your charge-out rate is £200 per hour, that’s £1,000 a week of hidden costs for that employee.
And what if that employee doesn’t just require more supervision, but is less skilled at dealing with clients and, as a result, a good client takes their business elsewhere? The hidden cost of that employee now includes the value of the work you’ve just lost… £5,000? £10,000? Maybe more?
Here are some other examples of hidden costs in your firm:
- Reducing support staff such as secretaries or admin assistants, only to have a drop in productivity of fee-earners and lower fee income.
- Saving money on adverts but seeing a drop in new clients as a result.
- Avoiding spending on external expert help, resulting in the hidden cost of the extra time (and potentially poorer results) of trying to do it yourself.
Take action
The question to ask yourself is this: where are the ‘hidden costs’ in your firm, and how much are they really costing you?
And if you’d like more help from me to increase your clients, fee income, and profits, here are some ways you can get my help:
Watch my free “crash course” video training ‘The Post Pandemic Accelerator Plan For Small Law Firms’. This is the 32 minute ‘crash course’ version of what you need to know and it’s available to watch immediately – perfect if you’re in a hurry to increase your clients, fee income, and profits.
If you prefer a live/interactive session, so you can get your questions answered and more in-depth help from me, then come to my next virtual 1-day workshop ‘Profitable Practice Secrets’ for the owners/senior partners of small law firms who want to grow profitably.