Culhane Meadows’ co-founder and managing partner, Jim Meadows, was recently featured in StrategicCFO360’s Q&A series to discuss financial transparency and meeting DEI goals.
Here is Jim’s interview:
Without transparency, there is no accountability for achieving those goals, says Culhane Meadows CFO James Meadows.
If an organization is truly committed to its diversity, equity and inclusion goals, then it will be as financially transparent as possible, including letting everyone know how everyone else in the organization is compensated.
So says James Meadows, CFO and co-founder of Dallas-based virtual firm Culhane Meadows PLLC , the largest woman-owned, national law firm in the country. James shares how his firm accomplishes its DEI goals, as well as other priorities that impact the finance function.
Why is financial transparency essential for meeting DEI goals?
Creating true diversity and a culture of inclusivity in the workplace is a problem facing most organizations. One of the keys to solving any problem—or avoiding the problem in the first place, especially one involving people—is communication.
An essential element of communication is transparency, as a discussion based on a hidden agenda or without all of the facts will not result in an effective communication, or it will merely serve to kick the can down the road as more information is revealed. Transparency in the context of diversity and inclusion in the workplace centers on the availability of two types of financial information: “group” finances, including budgeting, and compensation details.
You can tell a lot about an organization—or any individual—by seeing how they spend their money. “Group” financial information is a fuzzy concept intended to focus on information that is relevant to a group of people in an organization. For a small organization, the aggregate financial picture of the company as a whole might provide the relevant details. For a larger organization, the budget for a division or group within the company might be necessary.
How the group allocates its budget will inform the priorities of that group, revealing among other things, where the advancement of diversity and inclusion initiatives ranks. Without financial transparency, there is no accountability for the group as a whole for achieving the entire spectrum of challenges the group is tasked with solving, nor can remedial steps be explored to remedy failures.
Second only to complete objectivity (with meaningful criteria) in setting compensation, financial transparency is an obvious key to achieving diversity, equity and inclusion. Even where objective criteria are established, transparency around the factors employed, and their importance are key. For example, we set compensation for our attorneys by formula, using originations, like the amount of clients and/or work brought to the firm by the attorney, regardless of who performs the work; and collections from work performed by the attorney, whether for their own clients, or another attorney’s clients. There are no subjective factors or meaningless “objective” factors, like seniority.
The result is that our women attorneys have made more, on average, than our male attorneys; this past year, female attorneys at our firm made 8 percent more than their male counterparts. There is also no ceiling to what any of our attorneys can make, as long as the objective productivity numbers support higher compensation.
We’re transparent—our attorneys know the formula and control the inputs. Since it is a formula, and is tracked through our time and billing, as well as our collection systems, an attorney can calculate their compensation before they are paid. Additionally, they can also track the compensation of their colleagues.
When everyone knows how compensation decisions are reached, and also how the factors are applied to their colleagues, a sense of comfort among the personnel is achieved. I don’t think our lawyers are scrutinizing each other’s compensation, but they could, and that knowledge sets them free to focus on their work and other important aspects of their lives, and not fairness.
Often, however, compensation is not objective. In those circumstances, financial transparency is even more important, both as a check and balance that can be monitored by outside observers—and the employees themselves—and to apply pressure on the individuals involved in the compensation decisions to do the right thing.
How can financial transparency help to create a collaborative culture, especially in a remote workplace?
I mentioned the objective formula that Culhane Meadows uses to determine our lawyers’ compensation. Since that same formula rewards those who “share” work with others, and those who “support” their colleagues by doing work for those colleagues’ clients, an additional benefit results: collaboration and cooperation. Our lawyers are not in competition with each other. The rising tide truly floats all boats.
How is technology helping to make remote companies more resilient and flexible in a challenging world?
Since data and information can generally be easily shared, work can be performed remotely, whether by employees or by contractors. The benefit of using employees is that they presumably understand the company’s business. The benefit of using a contractor, particularly an outsourcing vendor, is that they may better understand the tasks to be performed, as many tasks required to operate a company do not require unique knowledge of the company’s core business. In fact, the customer may benefit from the contractor performing the same or similar tasks for a wide range of businesses. For those tasks, the contractor is the expert.
On the heels of Covid, most companies have experienced the benefit of technology in keeping their businesses afloat, often through employees working from home where possible and/or placing more heavy reliance on vendors who were able to continue the support of their customer base. Since these companies were already providing support from a wide range of locations, they were able to backstop their customers’ operations by allowing those customers to focus on their core business.
Companies that had these arrangements in place prove more resilient and flexible, whether in response to a pandemic or any other “force majeure” event. That is the reason most companies focus on business continuity planning and disaster recovery services with respect to key aspects of their business, and require the same from their trading partners.
Almost all of our primary systems, ranging from our document management system to our time and billing system to our communication/collaboration systems, are in the “cloud,” and accessed by all of our attorneys remotely. All of those systems had been subjected to rigorous scrutiny over the years leading up to the pandemic, as we do work for a number of Fortune 100 clients and regulated financial institutions. We did not miss a beat when Covid curtailed the ability of our attorneys to travel and/or meet with clients or conduct negotiations in person.
How do you build in options with your technology outsourcing?
Outsourcing provides a way in which companies can focus on their core business while allowing the “experts” to perform non-core, albeit important, functions. One way in which companies can build in options, increase competition and also enhance their business continuity, is through multi-sourcing.
In a multi-sourcing arrangement, the customer outsources several closely-related functions to multiple providers by entering into a separate contract with each provider for different aspects of related functions. This approach is in contrast to single-source outsourcing, where a customer engages a single provider to provide a panoply of related functions.
Multi-sourcing transactions are not for the faint of heart, however, because they require the customer to take on a more active role in managing multiple interdependent providers for delivering increasingly complex functions and they require additional planning to anticipate critical issues and minimize risks. But the benefits of increased resilience and enhanced flexibility may be worth the effort.
The complete article can be found here.
About Culhane Meadows – Big Law for the New Economy®
The largest woman-owned national full-service business law firm in the U.S., Culhane Meadows fields over 70 partners in eleven major markets across the country. Uniquely structured, the firm’s Disruptive Law® business model gives attorneys greater work-life flexibility while delivering outstanding, partner-level legal services to major corporations and emerging companies across industry sectors more efficiently and cost-effectively than conventional law firms. Clients enjoy exceptional and highly-efficient legal services provided exclusively by partner-level attorneys with significant experience and training from large law firms or in-house legal departments of respected corporations. U.S. News & World Report has named Culhane Meadows among the country’s “Best Law Firms” in its 2014 through 2022 rankings and many of the firm’s partners are regularly recognized in Chambers, Super Lawyers, Best Lawyers and Martindale-Hubbell Peer Reviews.
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