Bonuses and Incentives Mini-Series Wrap-Up

I'm Melissa Shanahan, and this is The Law Firm Owner Podcast Episode #307. 

Welcome to The Law Firm Owner Podcast, powered by Velocity Work, for owners who want to grow a firm that gives them the life they want. Get crystal clear on where you're going, take planning seriously, and honor your plan like a pro. This is the work that creates Velocity.

Hey everyone. Welcome to this week's episode. I'm so glad you're here. We have just come off of a really busy but awesome phase. One, we hosted our very first team member retreats, meaning for clients' team members. We put it out there as a beta to a few people who are already working with us and said, hey, we're going to cover these topics. Would you like to send your team to learn about these topics?

One was Monday Map, but for the team members specifically because it is different and how they look at it than owners. And the second day was a training called Efficiency and Streamlining, which really helps you evaluate your processes and be able to find ways to streamline them so that they are more efficient and in many cases, more effective. And so teaching a process or framework to be able to do that for themselves when they go back into their firms.

And it was an awesome two days. I facilitated the Monday Map portion. Giselle flew in and she facilitated the Efficiency and Streamlining portion. Feedback was really strong on both of those days, and I know that there's already things that Giselle and I have in mind that we want to change or up-level or do differently for the next time around. So, you'll probably see an offer at some point come around for, and this is small group stuff. This is not big audience kind of stuff. So this is really hands-on so we get to work with people. So you'll see some offers probably come through, and we'll start with clients and members. If you are a client or member and you want to send your team members to be trained specifically on a topic that we'll we'll share what we're planning for, then you have the opportunity to send them.

And I'm so excited about this. This helps us help our members and clients even more by aligning their team in certain ways around certain topics so that it's not entirely, the burden isn't entirely on the owner to go back and try to convey what they're learning inside of Velocity Work. So, these are really cool opportunity and we are looking forward to more. And virtually. So when it is virtually, we can open it up to a few more people. We would still keep it small so that we can make sure to be able to work with the attendees, not just have the attendees listening to us as the facilitators, but us be able to get in there, roll up our sleeves and help them with what's in front of them specifically. I'm super stoked. I think this is going to be a really good unlock for members and clients.

So we did that on a Monday and Tuesday. When this airs, it will have been a couple weeks prior to this airing. On a Monday and Tuesday, and then Wednesday, Thursday, Friday, we had a Velocity Work internal team retreat. And man, it was an awesome three days. We got through so much. It was so productive. We really made sure that our calendar is squared away for the next twelve months, but more so even the next three months. Looking at what we have on our plate, making sure that we have time allotted to really honor the work that's in front of us and make sure that we can do the best job as possible.

I'm so thrilled with our team and our team setup. We have, of course, Giselle who does a lot of facilitation. She works directly with private clients and syndicate members. Mastery group members also have the opportunity to book days and time with her for really pointed help. She has a lot of experience. She brings a lot to the table. So we love the work that she's doing there. And she also helps us manage our operations inside of Velocity Work, which is great. That's her background.

We have Mika, who's our client services manager. She's fantastic and just continuing to develop in really great ways. Mika has an assistant named Mitch, and Mitch is an overseas VA who just is also developing so well and really showing up in new and better ways as time moves on. So really strong team there that we've had. And then, in addition to that, we just hired a new core team member here in Denver that's going to be a real asset to the team. So we're very excited. It's a strong position and it's a strong woman stepping into that position, and it's going to be supporting me and some of the operations behind the scenes.

So just feeling so good about it. And we got to dig in and make sure we were really ready for that new hire who starts in May. Her name is Natalie. Making sure that we're really organized with her onboarding, what it's going to look like, and how we're going to divvy up some of the responsibilities and duties inside of Velocity Work. So we just got super organized, made headway on quite a bit and feel very equipped and prepared to deal with the next three months, which are intense for us.

We have travel, we're going to travel to clients, we are traveling for a conference. We are attending and we have a booth set up for ALA, the annual conference for ALA that's set up here in Denver. That's the first time we've ever had a booth anywhere. So that'll be a whole new experience. So we're preparing for that. There's just a lot going on. And I think us coming together as a team to make sure that we feel really good about how we're moving through the next few months was really important. We took the time to do it. So feeling strong there, which is great.

You all know, you listeners know that when you have a really strong team and a strong plan in place that everybody's rowing in the same direction, that everybody wins when that happens. Your clients win, and it's the same for us. Our clients win when our team is strong and prepared and working together to row in the same direction. Our team wins because it's more fulfilling, it's smoother, our efforts are more effective and efficient. And then the business wins. It's healthy for the business to have this in place. And what an evolution to get here.

I mean, all of us, you listeners and myself, we can look back and see the evolution to where we are now. And it doesn't mean you're done. Some of you may not even be really happy with where you are right now. But there has been an evolution, and you do have a different vantage here and now than you did a year ago, two years ago, three years ago, or longer. And that's something to be thankful for.

You can make different decisions now than you could have made prior. You are a little wiser, a little smarter heading into things, maybe think differently about things now than you used to. And all of this for Velocity Work has come together to really bring together a strong team and that makes me so happy because, again, everybody wins when that is true. And doesn't mean we're not going to have hiccups. Doesn't mean we're not going to have barriers. Of course, we will. But we can handle it. We've got this. So good spot to be in. It feels really great.

And I'll mention this too. I will likely go into this in a different episode, especially for women out there, but there's been some things I've been going through healthwise and having trouble pinpointing exactly what is the root cause of these things. And have some answers there, and that feels really good. But for the last six to eight weeks, I've really been struggling with my energy. I feel like I'm dragging my body through life and maybe chalking it up to the age that I am and hormone cycles. But anyway, I was encouraged by a practitioner to get my thyroid tested and do some additional testing. Anyway, it's been a road. And where we are now is I have figured out that I have Epstein-Barr virus. Many people do. But there are periods where that can reactivate, and that is what has been happening for me.

And it has totally taken the wind out of my sails. It's been a struggle for me to even some days just show up and feel like I can be a great version of myself. And so navigating this has felt tough. But now we have some answers. We know what to point to and feels really good. The sun is shining in Colorado, which it does a lot anyway, but it's getting warmer, getting outside for more sun. And I guess the point of me telling you this is, I think this news and figuring out what to point to is coming at the tail end of what has despite my energy being so zapped, is come at the tail end of a phase of Velocity Work that I'm so proud of. This team is remarkable.

Our clients and members are remarkable. The health of our business is in a really good state. There feels like a great flow. I just am grateful for all of it. And now with maybe some answers around the health things, the amount of appreciation and gratitude I feel internally is even more so through the roof. So, yeah, I'll probably share more about the journey just in case it helps someone, basically. Look into certain things and certain testing that I did, certain things that I've learned along the way. I don't know why I wouldn't share it. So I will probably do that at some point. But feeling especially good today recording this because of everything I've just shared here.

Okay. Well, and more. There's a lot more good stuff going on in life, but those are the big things that felt relevant to share here on this episode.

Okay, well, here's what today is on this episode in terms of the content we're going to dig into. Before we close out this mini series on bonuses and incentives that I've done, there's a few final truths and clarifications I want to leave you with. So there's five things in particular I'm going to cover, and just a note, a few final words at the end. If you haven't listened to the episodes prior to this, I think it starts with #304, #305, #306, and this will be the fourth and final, as of now. Maybe in the future I can do some more, but for this series in particular. And so listening to those will give a lot of context and will help you understand what I'm clarifying here. This episode will make a lot more sense. I would not listen to this episode if you have not listened to the previous episodes. So, please go do that so that this one makes more sense to you.

The first thing I want to clarify is, I mentioned in these episodes, especially in 305, which is where I went into the individual incentives, especially for the producers, I kept saying bring in, like what they bring in. Someone flagged it to me, and I thought it was a really great point that they wanted to know, am I talking about origination, or am I just talking about the production, what they produce at work, like with their work on cases or files?

And so that was a good point, and I want to clarify, I mean production. I mean what your producers are producing during their days and their weeks. How are they moving the needle forward on cases? That is what I was referring to in these episodes, previous. Origination, that lives in a separate bucket. There's a whole different set of rules. And to be frank, most of the firms that come to me, most, like 98% of the firms that come to me are not at the stage that origination is a concrete agreement.

Now, I have worked with a handful of firms on developing that for themselves and helping them to figure out what is the best, safest path forward with putting an origination incentive into place or bonus. But it's the same principles that I'm laying out with these episodes that you have to approach this deliberately, thoughtfully, slowly. You have to play the math all the way out in different scenarios. And if you're happy with all of that, then you roll that out to the team members that this would apply to. It's just a different beast. I wasn't referring to origination at all in these episodes, but philosophically speaking, principally speaking, you could take what I've shared here and think about those incentives using a similar mental model.

Okay, so that's the first clarification. The second, we didn't really go into payout frequencies for incentives or bonus. And I would like to just touch on this and give you some food for thought when it comes to payout frequency. So, weekly, monthly, or quarterly is typically what I would recommend. Most of the time it's monthly, but there are a few scenarios that might make sense for weekly or quarterly. I'll talk about those in a second. Annually is another option. I don't think annually is a great idea in terms of payouts.

John Grant, his company is called Agile Attorney. He reached out to me to let me know he listened to these and offered some feedback, which I really appreciated. Some of these things that I am sharing with you today, that's because he was wondering, like, did you mean this or did you mean this? So these are really good things for me to have to clarify. So I appreciate him reaching out.

And one of the things he asked was, “Do you recommend annually in terms of a payout?” I do not. I think it's too far removed from the behaviors and the actions that people need to take in order to be on track for whatever it is they're supposed to be on track for. By the time you pay it out, the connection is diluted. So he also agrees, and he shared that with me, but I was like, oh my gosh, yes, I totally agree with that. I didn't say that in the episode. I should totally say that so that people don't think that I am meaning that they should pay out on an annual basis.

Now, when we talk about weekly, monthly, or quarterly, weekly is best for really tactical roles. So that could be anything to do with sales, and you may not use the word sales, but your intake team and conversion, things like that. Those can be really good roles to incentivize weekly. Also, hourly, if you are on an hourly model, then there is supposed to be an average number of hours per week that is met. And so if it happens by week to week, there is an incentive gained for that. That will keep people on track for the bigger picture as well. You do not have to do this, by the way. I don't think that if you have an hourly model and you are incentivizing attorneys and you don't do it weekly, that I think that's wrong. I do not think that's wrong. Monthly's fine. You can decide your own frequency. I'm giving you food for thought.

But weekly can be great if you are tying something to someone, a role that's a very tactical position. There's a number to meet and it was met in that week, and that's what's needed in order to be on track for the month, the quarter, the year, right? So that's something you can do. And I recently saw, for those of you who knew Alex Hormozi, I saw him talk about this somewhere. Basically about if you have a daily or a weekly goal for your team members, then you should incentivize them when they hit that daily or weekly goal. And I thought, oh yeah, of course. So I thought I would share that here, that there is an opportunity where it could make sense for you to set a weekly goal.

And we talk about the connection earlier, I said annual is too far away. By the time you pay it out, the connection is diluted. But it wouldn't be if you have a weekly goal or a daily goal for people, and you pay out, even if you don't pay out, but it's accrued weekly, then that helps them stay very connected. The connection is close. That's how you want to think about this, is the connection close. And shout out to John Grant. I believe that. I believed that before he said it, but he gave me the language of the word connection. I think that is true and that is what we're shooting for here, is to keep the incentive closely connected with the behavior or the actions. It keeps momentum high.

Now monthly, monthly is good for most of the roles in your firm where there is an incentive or a bonus or incentive makes sense for the role. And this is because we track month to month many different stats, many different metrics. And so when you do that and you're able to see, oh, where did they land for the month, then it's easy to know if there should be a payout, where it would be very tough to do week to week with certain kinds of roles.

One example is if every month there is a certain number of filings to be done, and that's the goal. Well, week to week, it could be lumpy, especially if you do not have control over some things, if you're waiting on an outside agency or government to be able to file, then you don't have total control week to week. But over the course of the month, because of the lumpiness, you may be able to get and meet the goals that were set for the firm. So that's one example. It also, when you set a monthly, it ties directly to monthly revenue cycles, which can be helpful depending on your cash position.

Quarterly can be best for longer-term or long-cycle work. Sometimes it's more strategic, it's higher level. It's not the direct production in the firm. So this could be rainmakers, for example. So origination could live here. You could think about it on a quarterly basis instead of just monthly. Quarterly allows enough time for big goals to materialize and to smooth out the ups and downs of a bigger, longer-term goal.

Another example is acquisition cost. So you have a marketing spend generally for the firm. Of course, campaign by campaign, you should be tracking what the acquisition cost is. But generally for the firm, you have X amount you're spending towards marketing, and you have X number of clients that came through the door, and you get an acquisition cost by dividing the spend, divided by the number of people that came through the door because of your spend.

Listen, there's nuances to this. This is not what this episode is about, but you can calculate acquisition costs. Well, that month-to-month is a little more volatile. It's better to look at quarter by quarter or even year by year what the acquisition cost is, and getting it to a range. So having a longer-term view of this and incentive structure for something like that, because month to month it doesn't really matter. It matters where we're going, where we end up ultimately. So hopefully that helps give you an idea.

Another one, I guess I could say is if there is something to do with client services, it could be your retention rate, if your model even makes sense for people to return to you. That should be longer term, not monthly. Like some firms do an NPS score of some sort. So that should not be month to month. It in a very healthy way could be a longer look. So quarterly, what the NPS score is and incentives around that. Now, this is not something you have to do at all. I'm just trying to give you examples of the kinds of things that you would shift your brain towards thinking more quarterly instead of monthly.

I guess another way to say this is that quarterly can be great for these bigger results that you're going for, that you know there's going to be experimentation, you know that it's going to require a little bit of time for you to actually get that result solidly underneath you, then that is when you can look to quarterly.

Now, the third thing I wanted to make sure to mention on this is tied with frequency, but we're going to talk about this a little bit differently. We're going to talk about not the frequency that you pay out, but when you pay it out. You know, there's regular paychecks, and those are hopefully for you, they are twice a month. For many people, it's the 1st and the 15th or the 15th and the 30th, but twice a month, not biweekly, because that will help with cash flow throughout the year.

I'm going to get my accountants come on here and talk about that with you all at some point, and talk about if you don't do that, how do you switch? What are the barriers to switching, etc. But let's just say twice a month, there's a paycheck going out. It's a regular paycheck, and that's all fine and good. What a lot of people do is just put the bonus inside of that paycheck. So it's on the pay stub. Yes, it's taxed differently. Yes, it's in there as a separate line item, but it just comes with their normal paycheck.

And what I would recommend is to have a special day where bonuses are paid out. So, for example, every month, you could choose a date that the bonus payroll, the off-cycle payroll, would be run and the incentives would be put in that way. It's a special incentive check or special bonus check. For example, it could be on the 20th of every month is when that off-cycle payroll, the bonus payroll, the incentive check is issued. And this builds excitement and it makes it feel genuinely extra. It prevents entitlement. There's a lot of times people just get their bonuses in their regular paychecks, and they almost don't even see them. It is just a part of what they get, and so it doesn't flag their brain that like, hey, this is what you're getting for going above and beyond and doing what you were going to do. And the growth that you're exhibiting in your day-to-day.

And so when you do separate it out, it treats these bonuses or these incentives as a special event and it reinforces that they are rewards. They are not expectations. It keeps it top of mind also knowing that the bonus day is coming. It generates buzz. It reminds everybody exactly when they'll see the results of their effort. There's literally no downside to pulling it out of the regular paychecks and making a special date for it. Operationally speaking, it's just an off-cycle payroll. So, whatever payroll provider you use, they can process an off-cycle payroll for just bonus amounts. And that will ensure that correct tax withholding is handled properly. It makes it easy for reporting when you're trying to look back to run reports for certain things. So it's a great way to go.

Okay. This next thing is something that I didn't say, and I wish I would have said because I know that it's true, but we didn't talk about it. And so this is the place where we're going to talk about it. The fact that not everyone is motivated by money can make it so that these incentives aren't actually motivating or as motivating as they should be, as the intention is for them to be. So checking in with your team and really understanding your team and understanding what they value is very important.

And there's ways to put these incentives into place where maybe it's not a financial payout, it's not money. They could be alternative rewards, so to speak. It could be extra time off or flexible hours. It could be a professional development stipend to be able to go to some conference or take a trip that they've been wanting to take that will help them develop professionally. It could be recognition, public recognition in front of the team.

It could be a gift, like something that they would love to receive. You know, something that we do internally and we encourage our clients to do is to have your employees fill out a form that helps you get to know them. And it'll ask them, what are their preferences? Where do they love to go out to eat? What is their favorite place to get a coffee or a tea? What are their favorite sports teams? You know, it really gets to know them. Ask, you know, if you were to get a $500 gift, would you prefer that it was X, Y, or Z? 

And you start to glean from people, oh, this is what they care about. This lights them up. This is the way to say thank you to this person. And so you can start to figure out a path for each individual. Now, this is difficult to do in a group incentive. If it's a group incentive, it's a group incentive. The payouts need to be the same reward. It's not going to make sense otherwise. I'm actually, I'm probably wrong about that. There's probably a way you could do that with a group incentive. I don't know. But that feels very difficult. But individually, you could absolutely tune into the person and they can have an incentive plan that speaks to them.

The thing I would say is that you want to make sure that the value of the reward remains fair and sustainable for the firm. So often times what I like to do is to play it all the way out to the end and figure out what that would mean. Like, what would be a win-win financially in terms of a payout for the firm and for where there's still stability in the firm and it's still feels really fair to the employee, etc. Once you figure out that dollar amount, then you can start to figure out different types of rewards that isn't money, but that doesn't exceed what you would pay out if you were paying cash.

And so just find the value first and then work backwards to figure out how can you speak their workplace love language, so to speak, where you are meeting them with what matters to them and the value doesn't go over what you would have given in terms of money. So just be thoughtful. You don't want to overextend because it's not money. Some people, especially if your value is money, you would value financial rewards. Sometimes you will overinflate the alternative reward type because you just can't see the same value. It's like, oh man, I need to give five extra days off instead of this payout. It's like, no, no, no. Back it down. What's the same value? Figure that out, offer that as days instead of money. You just want to make sure to back into it, not just offer a number of days, for example, if the day is off or hours, or a professional stipend, or a gift. You don't want to just offer something up without making sure that the value matches what is appropriate for that role and its incentive.

And as we round out this episode, the final point that I want to make sure to reiterate. I know I have said it on every episode, but I'm going to say it here again because it's so important. You have to design these with care. You have to math it out, every scenario, before you roll it out. Deliberate and slow is what will win in these cases when you're setting up incentives. It really matters that it's a well-thought-out plan and that it feels healthy and inspiring from every angle. It takes work, but it's worth the effort when everyone wins.

Now, along with this point, just please remember that everything I've shared with you, this is not the end-all be-all. These episodes are meant to kickstart your thinking, not be the last word. There are countless creative ways to build incentives. Many I haven't even mentioned here, but what unites them all is the same principle. To align rewards to the behaviors you want, make it fair, and create a genuine win-win-win for your people, for your clients, and for your firm.

Thank you so much for tuning into these. It means the world. And I can't wait to see what some of you do with it and how you make shifts, positive shifts in your worlds with some of the information that we've shared here. Thanks everybody.

Hey, you may not know this, but there's a free guide for a process I teach called Monday Map Friday Wrap. If you go to velocitywork.com, it's all yours. It's about how to plan your time and honor your plans so that week over week, more work that moves the needle is getting done in less time. Go to velocitywork.com to get your free copy.

Thank you for listening to The Law Firm Owner Podcast. If you're ready to get clearer on your vision, data, and mindset, then head over to VelocityWork.com where you can plug in to quarterly Strategic Planning, with accountability and coaching in between. This is the work that creates Velocity.