Top Ten Tips for Assessing Your Departments Alignment to Your Corporate Strategy

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1 Top Ten Tips for Assessing Your Departments Alignment to Your Corporate Strategy Mar 01, 2012 Top Ten By Joshua Box By Joshua Box, Director, Ocean House Professionals I would like to have a dollar for every time I or another in-house counsel that I know has been asked the question so why did I chose to move in-house? Invariably, the answer includes because I wanted to be closer to the business of the company that I am advising. Interesting though, whilst I always felt close in proximity and my advice was always practical and there to try to achieve the business objectives of the deal I was working on, it was not often that I or members of my team stood back and looked at the wider picture and asked ourselves Actually how aligned is what we are doing to the 3-5 year strategy and vision of the company? When we did ask the question and then undertook a series of steps to address the gaps that we identified, we found that a number of the challenges that we all suffered from including the ever increasing demand for our time, the cost of our services and our law firm panel, the motivation of the team, all materially improved. If that is something that resonates with you, the tips that I have simplified and proposed below are aimed at helping you test and hopefully answer that same question for your circumstances. 1. Ask yourself, Can you summarize your company s strategy in 35 words or less? If so, would your colleagues put it in the same way? In my experience, this question as asked by David Collis and Michael Ruckstad in a recent Harvard Business Review article Can you say what your strategy is is a perfect starting point not just for executives of large corporate businesses but for in-house lawyers and particular the General Counsel of that same business. If you cannot articulate the company s strategy, there is a good chance that others in the company are in the same boat which leads to confusion about a company s short term objectives, inconsistency in communications and instructions and questions about whether, for example, new initiatives should be launched, whether pursuing an RFP for a new customer and negotiating hard on a contract aligns with the direction the company is taking and is the type of customers the company wants. To be able to understand and simply, clearly and succinctly summarize the corporate strategy, does 2 things for the legal team. Firstly, it makes testing and aligning the legal department to the strategy far easier. Secondly, you are more likely to be able to internalize it and use it to guide difficult decisions on how you support the business which leads me to my second tip. [For more details see the David Collis and Michael Ruckstad article Can you say what your strategy is in the April 2008 Harvard Business Review.] 2. Ask yourself what does it mean to be in alignment. Academics in this field broadly agree that Alignment means creating organizational practices and structures that

2 simultaneously fit the strategic requirements of a business and the needs of its key employees. The challenge is how to translate this from concept to practice which means assessing cause and affect of all choices that you make in a constantly changing environment. In my experience, the simplest way to start the process is to work through the following steps and capture the outputs in a Legal Business Plan: 3. Don t assume that the resources that you have been using historically are the right ones to deliver the new strategy and identified legal needs. Many corporate in-house teams have evolved over a number of years, and whilst generally being very adaptable, are not use to having their structure tested to see if it is still fit for purpose as the organization around them changes. Equally, a change of leader may mean that you move between a centralized or de-centralized model. I do not believe that there is ever one right model but with each change in long-term strategy, the General Counsel should not be afraid to test and re-align his resources to respond to the predicted legal needs that need to be delivered. In doing so, the General Counsel s armory typically contains 3 things: To realize peak performance, all components must work seamlessly together. Failure to do so just makes the department less effective. Addressing deficiencies in one area is helpful, but unless all the overlapping relationships work together, performance and alignment will likely be less than desirable. The relationship between the internal team and how it is structured and the external suppliers (which now includes law firms, LPO s and other alternate providers) can however be flexed in many different directions depending on the identified needs. Of which, both can then be supported by smart technology and process improvement. There are many resources available on the ACC website that demonstrate how to make the most of these elements.

3 4. Think about matching the complexity of the tasks not just the matter when allocating work. When trying to decide how to allocate the right resources to the legal needs that have been identified in the strategy review, it is important to think first and foremost about organizational need but as importantly, about the complexity of the tasks involved across the range of the work and within each type of matter,as there are now more options available to in-house teams. As an example, whilst in-house lawyers gain experience in a role and knowledge of the company, it is not unusual to see some of them still doing the same work as when they started in their role which tends to be a waste of their developing skills. To ensure the right skills are applied to the right work, General Counsel should no longer just think about legal specialty, skills, and experience of the individual but also the ability to now call on contract automation tools, web-based decision trees and workflows, internal contract management and paralegal teams, outsourced law firm and LPO contract review, research and discovery support teams, and a range of pricing options from external suppliers that may make more sense. The key is keeping an open mind when assessing the options. 5. Make sure the in-house team have the necessary reward framework, skills and training available to them to deliver the services that align with the strategy. The way a team develops the capabilities of its individuals or the way it puts its teams together and manages the work all play a central role in differentiating the team and the organization from others. When you focus on long-term individual development and training, a culture that facilitates retention and motivation is created and nurtures individual contribution to achieving the strategic ambitions of a business. 6. Think about the behavioral competencies necessary to deliver successfully and the culture in which you operate. To implement a coordinated delivery model aligned to strategy, it is important that the people elements are not forgotten and are balanced with the organizational structures. To be successful, a General Counsel must be able to set a clear direction, set personal examples and secure the commitment of the team. In turn, the department must have a culture of teamwork, strong leadership, communication, and sharing of information and resources supported by a framework that rewards evidence of the right behaviors. A culture of accountability and responsibility is also important in this new way of thinking, as delivery of work to achieve optimal efficiency might mean that the responsibility lies with many inter-connected roles in different locations and not just one individual. By keeping an eye on these competencies and having a simple, systematic way of reviewing performance based upon them, help to ensure that the department and corporate goals can be met. 7. Ask yourself Do I have the right firms and external relationships to support the in-house team? This is always a widely debated topic. Having undertaken and observed many relationship reviews regardless of whether the firms are in a formal panel or not, the critical question is whether what you are getting from the firm supports your corporate objectives and aligns with the strategy of the business. Other than the obvious technical ability and relationship skills, for the firms and other external providers that you choose to work to be an effective partner to support your internal resources, they must have a deep understanding of the strategy, the objectives, the structure, operating philosophy, and culture of the company and the legal department. By working collaboratively with them to build and maintain the necessary knowledge, the in-house team will also build more valuable

4 sustainable relationships for the benefit of the company and the firms and will be more likely to create effective billing structures with those firms over the longer term due to the level of trust that they develop. 8. If you can t measure it, you can t improve it. In a slight variation to a statement originally made by renowned management consultant, Peter Drucker, it is essential when looking to improve the performance of any part of the system, that you find a way to measure the as is state and set goals for what the new legal delivery model will look like and monitor your implementation progress. That way, every incremental change that results in a performance improvement can be recognized, tested and demonstrated. 9. The Legal Department Strategy is as important as any other departments. Make sure that having been through the effort of testing your department s alignment and building a new legal service delivery model that you and your team can articulate the department s strategy, objectives, budget and value proposition so as to leave no room for misinterpretation. Being able to do this, will not only provide defense to challenges of the cost overhead of the provision of legal services but will provide positive endorsement to the level of engagement with the business, the alignment that is crucial to success and the sustainable competitive advantage that the team and the business will benefit from in having a robust legal delivery model. 10. The Legal Department Strategy is as important as any other departments. Make sure that having been through the effort of testing your department s alignment and building a new legal service delivery model, that you and your team can articulate the department s strategy, objectives, budget and value proposition so as to leave no room for misinterpretation. To ensure that what you articulate hits the target with as many of your colleagues as possible, makes sure that you have tested it with a wide audience whilst it is in production. Be very specific with your language and be able to answer one question for each person you talk to what does that mean for me? Being able to do this, will not only provide defense to challenges of the cost overhead of the provision of legal services but will provide positive endorsement to the level of engagement with the business, the alignment that is crucial to success, and the sustainable competitive advantage that the team and the business will benefit from in having a robust legal delivery model. Conclusion Remember, as organizations evolve and change, it is not unusual for the legal department to end up out of alignment with the strategy of the business. In most situations, misalignment does not develop overnight, nor is it corrected overnight. The key step is taking the time and effort to reflect on the organization, its performance level and its alignment. Without proper alignment, a department will run at less than full potential. Written by Joshua Box who is a long time member of ACC Europe, a former head of legal for a FTSE 100 Bank and now experienced management consultant specializing in helping legal teams implement organizational change to align with the needs of their company. Josh can be contacted at Ocean House Professionals or via LinkedIn.

5 The information in this Top Ten should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its authors, its sponsors, and/or the ACC. This Top Ten is not intended as a definitive statement on the subject addressed. Rather, it is intended to serve as a tool providing practical advice and references for the busy in-house practitioner and other readers. Reprinted with permission from the Association of Corporate Counsel (ACC) 2011 All Rights Reserved.