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May 22, 2009

Telling Employees To Take A Hike- For A Year

Marc Tracy

bizbox.slate.com

Summary

Skadden, Arps, Slate, Meagher & Flom LLP is, if not the single most profitable law firm, then among them. So from their perspective i

Skadden, Arps, Slate, Meagher & Flom LLP is, if not the single most profitable law firm, then among them. So from their perspective it makes sense for them to pay a rising associate in their banking division $80,000 to take a year off. They don't lose the attorney to a rival firm, which is what would happen in the event of a layoff or even, likely, a pay cut. But they also don't sink their normal salary plus overtime plus perks--which, annually, probably comes out to several times that 80k (which represents one-third of just her base pay)--into someone who, especially given the industry she works in, probably (and through no fault of her own) isn't going to produce the type of output that would justify the compensation to which she otherwise would be contractually obliged.

Now, your business isn't Skadden (well, unless it is, in which case: thanks for reading!), and you probably can't pay any of your employees $80,000, or even whatever one-third of their base pay is, to take the year off. However, there is a broader lesson to be gleaned that could apply to your business just as much as it applies to Skadden. You may need to cut payroll expenses in order to make ends meet, but that does not mean you shouldn't do everything in your power to hold on to your best talent. Does that mean offering shortened workweeks? Does that mean something more along the lines of the Skadden model, in which more generous time off is offered (or even compelled) at a discounted compensation rate? That's for you to decide, according to what best fits your business and its balance sheet. But now is very much the time to be flexible, as even the biggest law firm is showing us.


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