Retention – a KPI worth retaining?

by Viv on October 18, 2007

Retention is always seen as an important Key Performance Indicator for professional services firms. Retention’s status is reinforced by The Lawyer publishing a survey showing retention rates amongst the top law firms (15 Oct). The firms may get bragging rights according to whether they’ve gone up or down the league table, but is retention really such a good thing to be measuring?

On the plus side, retention is a straightforward measure to calculate. Potential trainess could be forgiven for thinking that high retention is a good thing (certainly firms seem to trumpet this if they can), but high retention rates could imply that there’s a lack of development opportunities that translate into finding a better job once qualified.

The main drawback of retention is that the measure itself is not particularly meaningful – is retention of 80% good news or bad news? – difficult to tell… If retention is too high, the best people will get frustrated by the lack of promotion opportunities and leave, if retention is too low, staff will get demotivated by the sheer amount of work expected of them.

Time for a dodgy analogy: if you were to think of a firm as a car, retention is analagous to the air pressure of the tyres. If the pressure is right, the car will perform best, if is too low the car may skid (lose ability to get to its intended destination) or if it is too high, do long term damage to the car. Just as the ideal level of air pressure will vary from car to car, driving conditions and the kind of journey that is being planned, the ideal level of retention will vary from firm to firm.

Sometimes Partners will ask L&D departments to justify the value that they add in terms of how your activities actually contribute to retention. For the reasons above, this is almost pointless. Rather than looking at the raw retention data, it is worth asking the more sophisticated question of: “Is the firm retaining the right people?” and hence what L&D is doing to help managers achieve this.

Another case for that golden question: “Ok, so what would success look like?”

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