Better retention, better performance – it’s time for bosses to take the lead

Law firms that can solve the puzzle of recruitment and retention will also benefit from improved business performance, writes Keegan Luiters.

In short:

• Research makes it clear that leaders’ actions can influence employee retention rates.
• A culture that supports psychological safety and employee resilience is crucial to keeping the best talent.
• Regular and meaningful conversations with employees help develop high-performance relationships and superior retention results.

Growing evidence suggests that creating an experience which allows firms to retain and attract the best people will, in turn, drive organisational performance. This finding is perhaps not surprising, but more significantly the research also indicates that leaders within organisations are able to influence – but not directly control – rates of retention.

For leaders, applying reliable evidence-informed approaches will allow them to create an environment that drives not only retention, but also high performance. A 2013 meta-analysis of 309,245 employees across organisations and industries examined the relationship between turnover rates and organisational performance. It found that “the relationship between total turnover rates and organisational performance is significant and negative”.

The findings also reveal that voluntary turnover (when employees choose to leave an organisation) is significantly more negative for an organisation’s performance than involuntary turnover.

Staff turnover, particularly voluntary turnover, also disrupts a firm’s performance. A 2023 report by Job Skills Australia highlights the three most commonly cited impacts of turnover: costs rise for the recruitment and training of new employees; there is a negative impact on existing staff; and productivity decreases.

In a 2024 article, McKinsey identified that the experience of employees is highly predictive of what the firm has coined Organisational Health – a measure of an organisation’s ability “to achieve sustained improvements in performance”. This means that positive retention and attraction of talent can have a dual benefit to organisations – that is, it has the potential to increase performance and reduce negative outcomes of turnover.

Further, the McKinsey article notes that organisations which create conditions that support employees to perform at their best are the organisations best placed to retain and attract talent.

Why retention matters

Attracting and retaining talent is something that many law firms have identified as being important to their performance. In a 2023 report, Thomson Reuters found that talent retention and attraction is the most frequent challenge for legal professionals, with 60% of survey respondents identifying this as a major challenge.

Staff retention is multi-faceted and complex. Every individual lawyer’s context will be specific and influence their decisions to stay or leave a firm. While there is no panacea for retaining staff that will work with all staff in all contexts, there are strong indicators about the way that leaders can impact the experience of staff and, therefore, increase the likelihood of retaining key staff.

In highly relevant recent research, a 2025 paper by Emma Clarke and others explored the role that law firm leaders in New Zealand play in employees’ decisions to leave or stay. Not all of the findings could be linked to the impact of individual leaders because some cultural and systemic factors were at play. These included high competition for legal services in the market and the way in which work was measured – specifically cited were billable units of time.

However, a number of findings were informative and applicable for individual leaders within law firms across Australia and New Zealand. The two broadest applicable themes were psychological safety and what was termed “resilience supporting factors”. Each of these will be briefly discussed here.

Psychological safety

It is unsurprising that psychological safety emerged as being important for the retention of lawyers. Psychological safety has turned up consistent and robust results in many team settings (healthcare, education, military, business).

Findings from Clarke’s research point to specific elements of psychological safety that are very relevant and worthy of consideration for leaders. The ability of leaders to create an environment of psychological safety – where employees are able to speak up, own up to mistakes and learn from colleagues – is central to retaining key staff.

The good news is that these same approaches have been correlated with higher performance, meaning that leaders can adopt these strategies as a dual pathway of both driving performance and retaining staff – and not assume a false dichotomy that it is a choice between either one or the other of these.

Resilience-supporting factors

The second theme that emerged from Clarke’s research is “resilience supporting factors”. As Adam Grant says in his book, Give and Take, “three decades of research show that receiving support from colleagues is a robust antidote to burnout”. The paper’s reference to “resilience supporting factors” is indicative of a leader’s ability to contribute to an environment that supports resilience – and, in turn, retention and performance.

Specific approaches that are cited in the research include the level of autonomy that employees experience, and the degree to which employees feel supported by their leaders. While these can feel conceptual, there are concrete actions that leaders can take that can support the resilience of their employees.

It can feel like an inherent contradiction that leaders can increase the sense that employees feel both support and autonomy. A 2024 review of the application of Self Determination Theory in workplaces found that not only is it possible, but providing support for autonomy is beneficial. The paper found that leader behaviours that support autonomy include “providing employees with choice in task engagement, giving a rationale for assigned work-related tasks, and allowing employees to voice their opinions and have a say in how tasks are performed”.

High-quality leadership conversations

As is often the case, the ability of leaders to have high-quality conversations is central to high performance.

These practices support recommendations from global consultancies, Gallup and Gartner. Gallup has found that “a manager having one meaningful conversation per week with each team member develops high-performance relationships more than any other leadership activity”. Gartner has recommended what it refers to as “stay conversations”. These semi-structured conversations reduce turnover and increase engagement.

Bringing it all together

Retaining and attracting key staff will continue to remain a priority across law firms in Australia and New Zealand. While there are factors beyond the control of individual leaders and even organisations, there are many reliable evidence-informed approaches that leaders can adopt in order to improve employee experience and contribute to the many benefits of increased retention. Given the importance of people in law firms, there is no time to waste.

Keegan Luiters is an independent consultant who works with leaders, teams and organisations to lift their performance. Visit www.keeganluiters.com for more information or connect with him on LinkedIn.

References

Clarke, E., Malinen, S., Näswall, K. and Masselot, A., 2025. Safe to stay: The role of leader behaviors and psychological safety in employee retention in high-demand workplaces. German Journal of Human Resource Management, p.23970022251337643.

Grant, A.M. and Ebsco Publishing (Firm (2014). Give and take: Why helping others drives our success. New York: Penguin Books.

https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/healthy-organizations-keep-winning-but-the-rules-are-changing-fast

https://www.mckinsey.com/solutions/orgsolutions/overview/organizational-health-index/how-ohi-works

https://www.jobsandskills.gov.au/sites/default/files/2024-03/reos_spotlight_-_employers_retention_issues.pdf

McAnally, K. and Hagger, M.S., 2024. Self-determination theory and workplace outcomes: A conceptual review and future research directions. Behavioral sciences, 14(6), p.428.

Park TY, Shaw JD. Turnover rates and organizational performance: a meta-analysis. J Appl Psychol. 2013 Mar;98(2):268-309. doi: 10.1037/a0030723. Epub 2012 Dec 17. PMID: 23244224.