We are strong believers in the saying measure what matters. So, what matters to your firm? And how do you best link this to every employee on your team to ensure they measure what matters to the firm, and more importantly, what matters to them individually.
The intersect between both of these is the place to be, we want to help you get there (or help you validate that you are there already). Whether you call them KPIs, metrics, key results, or measures, it doesn't matter. It is a quantifiable number. And this number is what often is seen above the waterline of that metaphorical iceberg.
This is the scoreboard that everyone is striving to achieve a target. What is really important is that the right scoreboard matches your business model and the motivation you would like to energise your team.
Another key learning for us has been that the scoreboard (not the scores) need to be reviewed at least every 12 months. This is particularly important for firms who are transforming or experiencing growth. If there have been significant changes in your business, it is unlikely that the same scoreboard will reflect the right focus for your firm.
"Our KPIs are completely different to what they were 12 months ago, and I expect to say the same in 12 months from now. This is a great indication that our business is growing and ou r transformation programs are being embedded into our firm" - Amanda Kenafake, CEO, Power Tynan
A fixed fee service firm to place billable hours at the top of their scoreboard when their employees have no meaningful or direct way of influencing that score is an example of poor design. The critical design thinking needs to be done at the start to ensure that every member in the team, including your support team, is aligned to the common goal. A Victorian-based professional services firm we worked with found that they were also able to provide the non-client facing team members with meaningful and quantifiable targets.
Here are some thought-provoking use cases that might help with your own thinking or validate you have the right set of scores in place.
If you don't have any KPIs at all, this is a great place to start. Understanding the utilisation of time for your team on a daily basis will at least start to uncover insights on their workload. Some examples of these scores are Total Hours and Leave Hours. Some common trends across our customer base, particularly in service firms where the operating cycle is monthly, was that there is a huge spike in workload in the last week of the month, and this led to proactively managing this workload throughout the month to combat this.
A large percentage of service-based firms are here, or were here a few years ago and have since moved to the value-driven category. Understanding the utilisation of production time for your team on a daily basis will uncover insights on how much of each day is being spent on client-related versus non-client related activities. Some examples of these scores are Productive Hours / Productive % and Leave Hours. This can also be expanded to include scores that relate to the flow of work, the switching 'cost' and job/task efficiency such as Turnaround Time, Current Active Jobs, and Overdue Tasks. The combination of these scores is really powerful when you can compare Productive Hours with Current Active Jobs for an individual and embed that in the day to day decision making for allocating work amongst your team.
As mentioned above, we are seeing more firms moving to value-driven scoreboards. The advantage of value-driven over purely production-driven scores is that as an individual masters the ability to deliver the same work in a shorter period of time, this is reflected accurately using the value-driven approach. These scores often include financial elements which add further dimensions for more informed decision making. Some examples of these scores are Billable Hours, Value Generated, Margin and Write Off %. One of the key insights from working closely with a professional services customer based in Queensland was that these value-driven metrics gave a very different view of performance for individuals as it changes the mindset from just doing the work to 'delivering a quality outcome'.
The evolution of customer-centric businesses and the growing adoption of ESG (Environment, Social, Governance) metrics has led to a relatively new category of impact-driven scores. These scores are often harder to measure and finding enough data or numerical evidence to support these scores is a battle faced at the start. However, firms are starting to look outside of their own 'walls' to measure the true impact of their work. NPS (Net Promoter Score) and customer satisfaction, along with eNPS (Employee Net Promoter Score) were the early ones, however now companies are introducing measures such as strategic client contact points and volunteer hours to understand better the impact their brand is having on customers and the broader community.
So depending on where your firm fits in the categories above, there is always room to move and new ways to personalise the alignment for every team member to a meaningful set of scores that help clarify what they need to focus on in order to perform and grow. The great news is that much of this data already exists in WorkFlowMax/Xero Practice Manager, and with the integration with Everperform, the performance of your people and your firm is always known wherever you are.
The next step
Once you have these scores in place, that takes care of the tip of the iceberg. However, what lies beneath that are what we refer to as the lead indicators/inputs to performance. The tip of the iceberg is far easier to define in comparison to beneath the waterline.
Look out for our next chapter in which we start to discuss what these indicators look like!
The team to help
Together with our Partners we have worked with hundreds of service firms and understand the best set of scores to match where your firm sits on the curve. You can get in contact with us here to see how your firm sits.