Traditionally, accounting firms use productivity (the proportion of time charged to WIP) as a key measure of staff performance. However, increasingly firms are seeing that a strong focus on production can lead to behaviour which is actually counter-productive and lacking in value for both the firm and for clients.
When there’s an over-riding focus on achieving productivity and billing targets, staff struggle to find the time to actually build client relationships and look for opportunities to add value to clients. What’s the correct balance between focusing on workflow production for today and client relationships for the future?
What should your firm be considering when deciding what really matters in relation to KPIs and performance measurement?
- Most firms are continuing to measure staff productivity in the background, as it’s still a reliable background indicator of production and efficiency of workflow. However, any measurement of productivity should be offset against recoverability (the percentage of WIP actually billed to the client).
- To encourage client managers to develop client relationships, consider allocating a percentage of productive time to ‘relationship development’ activities that don’t necessarily attract a time cost to WIP. For example, you might decide to introduce a workcode ‘Client Discovery Meeting’ which has $0 value per unit, but still contributes to productive time.
- A balanced scorecard approach to performance management implies that we’re not only looking at financial indicators (billings, productivity, recoverability, WIP and Debtors), but also non-financial indicators including the efficiency of workflow, the level of client satisfaction, time spent on professional development activities and business development activities. You should include both quantitative and qualitative measures that incorporate all of these performance indicators.
When looking at what’s important to measure for your firm, go back to core values of the firm. Then identify the behaviours associated with these core values and come up with objective KPIs linked to these behaviours.
For example, a core value may be to ‘Exceed business client expectations’
Key behaviours associated with this core value may include
- Ensure that business clients are re-engaged annually, with clear outline of scope of work, fees, value of service and mutual expectations
- Arrange 4 face to face meetings with clients every month
- Contact all business clients proactively at least 4 times a year
- Ask each client for written feedback at least once a year
- Identify at least 10 new business advisory opportunities with existing clients
Now you can set up systems and processes to measure and review these key outcomes. It’s worth the effort if it results in a stronger focus on what really matters.
Learn more about how to set up measurement and reporting systems that are relevant to your firm’s culture and objectives.
Register for TBA’s Upcoming 4 part online PEOPLE POWER program
Session 1 – Culture and Behaviour – How to create a stronger link between firm culture, objectives and staff behaviour through team feedback
Session 2 – Salaries, Bonuses and Incentives – How to motivate staff financially through effective remuneration strategies
Session 3 – KPIs and Reporting – How to set up measurement and reporting systems that are relevant to your firm’s culture and objectives
Session 4 – Performance review and management – How to really motivate your star performers and effectively manage underperformers
Dale Crosby, Director, Training Beyond Accounting | www.trainingbeyondaccounting.com.au