As I have conversations with, and work with firms a constant theme is frustration with accountability. People unwilling to be accountable and others being unwilling to hold people accountable. It’s not a simple thing to solve. It’s partly a cultural problem, it’s partly a problem of, in many instances, using the wrong performance measures and it’s partly a problem of a lack of an accountability framework and process.
It’s a problem in all professional service firms where the owners, more often than not, are also the business managers as well as primary producers when it comes to professional work and maintaining client relationships. Often these three hats of owner, manager and professional can be in conflict. The professional doesn’t want difficult conversations with clients whereas an owner or manager would see that such difficult conversations are warranted where there are issues with pricing of work or collection of debts.
So the answer lies in the implementation of an accountability framework that should be applied right across the firm. The starting point for the framework is to determine the performance measures that will achieve the desired outcomes.
A key tenant of accountability is that any performance measure set must be something that the person must have a direct ability to influence. For example, in many firms, a key team member performance measure is productivity. Yet in most cases individual team members do not have direct control over their potential productivity capability. Productivity can be influenced by work allocation and non productive time demands. So it is almost impossible to get buy in from team members when much of their productivity results can be outside their control. A better approach is to hold team members accountability for the number of hours they spend on a particular job and meeting job deadlines. Team members can directly control these outcomes. Productivity results can be achieved by loading team members up with work. Within this accountability framework team members are assessed on their performance at the end of the job and given direct feedback. Overruns can’t occur unless team members discuss with their managers before targets have been passed so that issues can be addressed and the individual team member is taking ownership.
At a senior level, accountability around WIP, debtors, billing and write-offs remains an issue within many firms. Ignoring the opportunities to transform WIP, debtor and billing management by changing the basis of how clients are billed by moving to fixed fees and regularly monthly payments, firms need to implement a more rigorous approach to these issues.
WIP and debtors must be subject to an at least monthly review. For all old and/or large balances an action must be agreed with a person held responsible and a deadline agreed for the execution of the action. A practice leader must be nominated to follow-up to ensure agreed actions occur. Should an action not occur, a further action is then agreed. The key is the continual follow-up to ensure actions occur.
The final element of accountability is the lack of consequences where there is continued failure to achieve agreed outcomes. This is where firms struggle the most. However, without consequences accountability can lack teeth. Some larger firms have had some success with withholding draws. Other firms have experimented with differential profit shares based on performance. These systems can work but can also be divisive. For some, peer pressure can be enough to create an improvement in performance but for many applying some consequences may be worthwhile.
So perhaps you need to give this some thought:
- What are the right performance measures for our firm?
- What should be our accountability process and who should manage it?
- What should be the consequences should agreed performance not be achieved?
Consider what help you may need. Sometimes an external chairman or adviser can help bring the needed objectivity to the process. Feel free to ask how we may be able to help your firm at Smithink
David Smith – Smithink.