External Environment of Baker Mckenzie

External Environment of baker Mckenzie1. External Environment of Global effectual IndustryTo analyze Baker McKenzie organization in order to provide its authorities with specific recommendation for the successful future instruction of the self-coloured and its employees it is fine to evaluate the principal factors of External Environment of global ratified industry that have implications for the management of peck and organization. To design an elaborate plan and implement it successfully in the firm it is essential to be awarfaree of the wide channel environment in which firm operates and of how this environment is changing over sequence. PEST analysis is used to access Political, Economic, Social and Technological factors of the Global Legal Industry (see Appendix 1).In general, the legal market was luxuriouslyly segmented comprising a a few(prenominal) prestigious justice firms at the top and small practices, consisting roughlytimes of a single attorney at the bo ttom. As a give of the globalization practice session a lot of legal firms became more internationalist. While entering bare-assed markets and opening offices in new areas such(prenominal) political factor as topical anaesthetic licensing laws pushed the firms to employ local lateral hires.If we have a look at the global legal industry on firm-levels we can state that the structure of an clean law firm was common landLAW FIRMEquity PartnersOwnership stake in the firmRevenue generatingResponsibility for attracting new clientsAssociates(law- horizontal surface)No willpower stake in the firmEveryday routine consultancyOpportunity to be promoted to Partner (depending on the process and firm needs)Support StaffParalegals assistance to lawyers (law degree is not required but feasible)Personal Assistants assistance to all levelsIn USA and many another(prenominal) legal jurisdictions the system of regulations was quite strict and law firms were not allowed to generate capital t hough IPO (Initial Public Offering) and the firms lawyers were the save iodines who could held an ownership stake. This was a way to protect the company in term of possible conflicts of interests.By 2004 various industries had to face high turnover trend and legal industry was not an exception. much(prenominal) social factor as a score-life equilibrium tendency added a new criteria which were critical for potential employees sequence entering the company. In law firms associates were changing the employers more often than ever before cod to various factors the primary(prenominal) of which is disaffection ofPoor firms finishing the main reason resulting into long work hours, lack of meaningful assignments and unfriendly work environment. allowance system as a result of war for genius and the practice to attract and retain star attorneys from competing firms (lateral hires) there was a high scatter between match and associate rates (sometimes as much as 201).Promotion s ystem firms expansion dodgingaffected the timeline for reaching the status of equity partner which was extended and a second tier of partner termed junior partner was addedto prevent the growing number of equity partners. In many firms it was understood that high billables were a requirement for advancement but in reality it did not necessarily encourage efficiency and taking into account the global character of some law firms such practice ran the risk of superseding all other metrics when promotion decisions were being made.In the recent years the customers appetites to the quality of legal serve have been changing significantly and the clients expectations have been rising all over the world. The legal market was saturated with the number of law firms with appropriate professional expertness but only a few of such firms could offer a value-added service.Thus, to have a competitive advantage in the industry and to make a client happy a law firm had to accelerate its efforts to reduces associates turnover by focusing on corporative culture and soft skills and emotional intelligence instruction in the organization reviewing the performance management systems, financial patterns as well as each firm is to pay appropriate attention to all aspects of the international character of business and personal rebelment maintaining a good relation with clients to make them satisfied.2. Internal Environment of Baker McKenzieBaker McKenzie was founded in Chicago in 1949 and from the very beginning has intended to be truly global. By 2004 it was the largest law firm in the world by headcount comprising about 9000 employees spread across 70 offices in 38 countries and being among the industry leaders in revenue.Regardless of the fact that the firm has a strong position in the legal industry there are some areas alarming that Baker McKenzie is to review its internal environment particularly focusing on attorneys retention, motivation and improving companys culture.Su ch concepts as firms schema, structure and culture are to be analyzed.2.1. organizational StrategyFor a long period of time the general strategy of Baker McKenzie was global expansion. Due to the increasing competitiveness in global legal market and bearing in mind the fact that some clients became more oriented on not expensive routing legal needs in the late 1990th the firm felt that some changes were required not to lose competitive advantage. Baker McKenzie came to decisiveness that their initial strategy which included such learning program as professional management education for partners, key-client account program and four-point strategic plan, was not in force(p) and ambitious enough. Even though the firm did make impressive progress on many fronts a more sophisticated approach was needed to develop further.By 2004 a new strategy was developed the main objectives of which were as followsTo reach market preeminence by building upon unparalleled international capabiliti es by means of deeper penetration of major clients growth of core practice areas greater industry specializationTo develop the firm in a systematic way so each office is able to support multinational clients and global strategy and excel and prosper in its local marketTo align the firms organisational, financial and management structures more effectively with its strategic objectives.Finally, Baker McKenzie realized that people were paramount to the firms successful future and in this updated strategy the focus was shifted from the expansion to peoples qualities prioritizing the HR management.To achieve a competitive advantage in the quality of legal services the following combination of HR and competitive strategies (Armstrong, 2000) were followedCompanys StrategyHR StrategyResourcingHR DevelopmentRewardAchieve competitive advantage through qualityUse sophisticated selection procedures to recruit people who are likely to drive home quality and high levels of customer serviceEnco urage the development of a learning organization and support total quality and customer care initiatives with focus facts of lifeLink rewards to quality performance and the achievement of high standards of customer serviceAchieve competitive advantage by employing people who are wear than those employed by competitorsUse sophisticated selection procedures based on rigorous analysis of the special capabilities required be the organizationDevelop organizational learning processes encourage self-managed learning through the use of personal development plans as part of a performance management processDevelop performance management processes that enable both financial and non-financial rewards to be related to competence and skills ensure that pay levels are competitiveOne of the major improvements in HR strategy was the implementation of Associate Training Program (ATP) which allowed the associates to transfer for the period of a year to 18 months among any Baker McKenzie office in the world. The strategy was a success as it enhanced the lawyers experience by exposing them to different jurisdictions, laws and cross-border terms. Also it was a great tool to embed and develop the relationships across the firm.It is as well as important to mention the rewarding performance which was used in the firm. For many years Baker McKenzie used a compensation system of objective personality called the formula rewarding the following four criteriaWork Credit (personal productivity of a partnerClient Credit (partners ability to delegate and supervise work done not by partners)Associate Profit (work done by non-partners)Tenure with the firm (number of years as an equity partner).As a result of such strategy the partners were not focused on development tasks but principally on generating fees. Such compensation system was suitable in too soon years when the firm opened its first offices in different countries. However, such formula is not efficient today and Baker McKenz ie was to review it bearing in mind the stovepipe interests of the business.In 2002 the firm adopted new rules that facilitated the evolution to discretionary compensation systems based on more subjective criteria. In scandalize of the fact that not all partners were satisfied with such method and it was hotly debated before being approved, the key implication of such approach is growing designation within the firm that changes in the financial structure and compensation system were needed to advance the overall strategy. However, the updated compensation system involving such new subjective elements as development associates and demonstrating leadership used for the evaluation of partners meant that there could be risk for the partner to receive substantially less.To conclude it is to be emphasized that new strategy requires a well-developed framework for its successful implementation.2.2. Organizational StructureAs it was mentioned in the previous chapter the principal strateg y of Baker McKenzie for a long time was global expansion with the local lateral hires which were more steeped in techniques and traditions of their regions law (only few offices were staffed from the main office)3. It resulted to decentralization and spread among continents (see Chart 1).As per Burns and canary (1961) Baker McKenzie could be defined as an Organic structure rather than Mechanistic and can be characterized by the followingHigh decentralization of office staffTasks loosely definedHorizontal communicationsGreater individual authorityFlexible and adaptable.Chart 1. Baker McKenzie organization, 2004The advantages offered in the decentralization are that it+ Increased responsiveness to the local particulars+ Enables decisions closer to the operational level of work+ Improved level of personal customer service+ More in keeping with developments in flatter and more flexible structures.But there are also some negative aspectsThe same lateral hires results in tough contr ol over offices letting no interferenceFirm becomes inert to new programs and changes or their implementation results are lowLow sociability and interaction between offices caused by rare meetings.2.3. Organizational CultureA key weapon in the war for talent in the 21st century is going to be organizational culture. To analyze the culture of Baker McKenzie it is important to look at it from different perspectives and use various approaches.In general, Baker McKenzies culture was a strong one encompassing several core elements such asInternationalism and multi-culturalismSense of friendshipEquality of employeesStrong sense of independenceConsensus-building based on two-part mindset and highly consultative, transparent and respectful styleAttention to selection process of laterals.According to Goffee Jones (1996) Grid (see Chart 2) Baker McKenzie located in bourgeois area gravitating to Fragmented organization as of its numerous offices around the world which tend to be autonomo us.That results in general low sociability of the employees. This can be supported by the fact that international interaction was quite poor, presented only by annual meetings for equity partners and some star lawyers.Solidarity is high repayable to result-oriented strategy (a lot of billable hours required to be rewarded by bonus) and high compensation for partners level only.Chart 2. Goffee and Jones (1996) GridOrganizational cultures and their associated structures typology of Charles Handy (1986) is another popular model to demonstrate the firm. According to his classification Baker McKenzie is the person culture cluster structure which is described as structure where autonomous experts and professionals pursue their own interests.This type of culture is characterized by high autonomies of partners and associates where management hierarchies are not acceptable and the legal business is operated by mutual consent and influence based on expertise. Having observe that it could be stated that such culture is in balance with the decentralized structure mentioned in the previous chapter.Facing high turnover and war for talent Baker McKenzie has to pay more attention to its employees to shape a firm-friendly culture required not only for personal and professional development of the lawyers but such culture which could have an immediate positive effect on the successful future of the firm.3. The Development FrameworkBy 2000 Baker McKenzie recognized importance of retaining associates as every lawyer who left the firm within the first two years never provided the firm with even a partial return on investment in terms of training, development, and replacement costs. The developed HRM strategy was place in jeopardy.To find the causes of high associates turnover KPDC lunched a survey lead by two outsourced HR specialists which educed the following gaps in performance managementNo or poor feedback on associates performance were provided (no deep review, no exam ples are wedded). This circumstance was complicated by cultural obstacle as many of associates reported that it is not the practice of their offices to conduct reviews or that is a new conceptNo guidelines explaining business and legal skills required for each life step were given to the associates. This resulted in low motivation and lack of self developmentDevelopment opportunities and training programs were not clearly explained or not explained at all to the lawyers.In April 2003 two industrial psychologists were invited to develop new framework to overcome these asperities and meet common performance expectation across different locations of the firm. It was the right choice as it is almost impossible to deal with the different cultures from the position of usual management.The following closing Development Framework qualities were highlighted as the basic criteriaPersonal Qualities (PQ)Key Performance Areas (KPAs) comprising Individual Activities Categories (IACs).By such f ramework associates have been rated on a scurf of 1-3 for each component3 exceeds expectations2 meets expectations1 falls short of expectations.This highly segmented system of evaluation could satisfy everyone and could meet the needs of the multicultural firm. Also it represented an actual approach to talent management.In general, the talent management strategy of Baker McKenzie can be characterized by the following main aspectsRecruitment identifying and selecting right people to met the challenges of the firms strategic goalsDevelopment personal and professional development of the employeesCareer Management train and supporting the employees throughout their careers.Having analyzed the outer and internal environments and the Development Framework it can be concluded the main tool for Baker McKenzie successful recruiting, developing and retaining the chosen talent and to win war for talent is to find a common language within international offices of the firm for discussing excellence in order to facilitate firm activities and find the best fit between a lawyer and Baker McKenzies operation and culture.4. RecommendationsUndoubtedly, the New Development Framework is a well-designed foundation ready to be implemented and in a flash it fully depends on how much effort the Executive and KPD Committees will contribute to convince each partner of its implementation importance.Based on the analysis of the Baker McKenzies organization, culture and strategy, including New Development Framework aimed on successful recruiting, developing, and retaining the talent it is recommended to pay more attention to the following aspectsRecruitment and Selection ProcessOrganizational performance depends considerably on the quality of its workers. It is required to continue generating a pool of skilled and qualified associates, which have some of the necessary attributes to enable a suitable candidate to be selected. Appropriate range of selection methods of evaluation w hich can be partly taken from the Development Framework (IACs and PQs) are to be applied to cover such gaps as lack of soft skills for the potential employees. This will facilitate the candidates to integrate into Baker McKenzies culture and to meet the expectations of the firm.It is worth recommending while selection and recruiting process to bear in mind the fact that firm is working on standardizing its processes on international level. It means that there should be given more attention to the ability of the candidate to be a good team member. Such characteristic feature of the human being can be measured by some psychological testing as well the firm could several steps of selection process one of which could be a simulation or role-playing within the number of candidates. Such simulation should be observed by a number of specialists and assessed accordingly. Also it can be added that due the nature of globalization the preference is to be given to those candidates who have int ernational experience or willing to obtain it.Developing Competent EmployeesIn injure of the fact that the firm is focused on the highly qualified attorneys recruitment we should not underestimate the role of work-based learning. This is particularly important for paralegals being loyal to the firm and associates whose target is to become partners. Such methods can be divided into following groups discipline from another person consists of coaching and mentoring. Mentors provide two functions 1) career advice and support, 2) psychological function. As we could see from the analysis of Baker McKenzies performance management the lack of career development advice was one of the main drawbacks in the firm. It is important to note that coaching does not come naturally to all managers and it requires a number of skills which can be developed by sending the responsible managers to special management coursesLearning from tasks consists of job rotation and delegation. This involves movin g lawyers into different limitrophe groups (e.g. associates from the Major Project and Project Finance group may broaden their expertise by being placed into International Commercial or Corporate group, etc.) Delegation is also a way of developing of employee as it can offer new challenge and responsibilities.Retaining AssociatesAs the final point Baker McKenzie have to be focused on staff retention as high turnover damages not only performance, service quality and financial side but also a corporate image. First of all, Motivation is directly expressed by how to make people contribute to organizational goals while satisfying their personal needs. A good balance between extrinsic and intrinsic motivation is the key to success. In terms of extrinsic motivation can be applied such tangible rewards asimproved salary, the firm is to develop a more reasonable and equilibrate compensation system between partners and associates which can result to comfortable work-life balancePerks like corporate transport or enhanced workplace.Performance Management is the other aspect which is extremely important for the firm to develop particularly in providing associates withConstant and detailed feedback with clear explanations of their performance. Exposing their strengths and weaknessesGuidelines explaining business and legal skills required for each career step. That will result in high loyalty and motivation as well.All these recommendations will result in successful Talent Management and firms prosperity in the future. Detailed Implementation Plan provided in Appendix 2. Also it is important to control and shape the implementation of current Development Framework. The future researches on the results of implementation have to be carried on as well.BibliographyCase study. Baker McKenzie (A) A New Framework for Talent Management.MPO lectures.Goffee, R. and Jones G. (1996). What holds the modern company together? Harvard business review, November-December.Mullins, Laurie J . (2005), Management and Organisational Behaviour. 7th ed. Pearson Education Limited, Essex, England.Green, Richard, (2003), Business Environment An MBA Study Guide. University of Hull, Hull, UK.Palmer, Adrian and Hartely, Bob (2002), The Business Environment. McGraw-Hill, New York, USA.Graeme Martin (2006), Managing People and Organizations in Changing Contexts. Butterworth Heinemann, Oxford, UK.