The Data Component
How do you keep your fingers on the pulse of your business? Do you know what KPIs (Key Performance Indicators) indicate strength or potential issues for your firm, and if so, do you know where they currently stand? Or do you base your understanding on something less specific, like whether there is enough money to pay the bills, or by what your managers are telling you?
There is safety in numbers. Basing your knowledge of how your business is doing on the subjective opinion of a manager who may be trying to reassure you regardless of the real picture is dangerous. In order to accurately measure the pulse of your business, you need a scorecard.
A scorecard is an accurate report of 5 to 15 high-level weekly numbers that gives you the ability to predict where you are headed. Everyone in your firm should have a number.
7 Advantages of Everyone Having a Number
Numbers cut through unclear, subjective communication between manager and direct reports. Consider two scenarios where you ask your firm manager how you are doing this month at converting leads to client engagements. (1) Her subjective opinion is “great!” (2) You have a goal of a 50% conversion rate, and she responds that average conversion rate is currently at 20%. You have a much clearer understanding of the true picture with scenario 2.
Numbers create accountability. If you have a goal of no more than 10% of your A/R being over 90 days, you are going to be looking to your billing manager for an explanation when your 90+ day A/R is at 30%. Your billing manager will understand that if the number is exceeding the 10% goal, he had better be studying the issue and looking for a solution.
Accountable people appreciate numbers. When you have the wrong people in the wrong seats, they will usually resist measurables. The right people in the right seats love clarity. Knowing what their specific KPIs are, they like being part of a culture where everyone is working together to be accountable for the firm’s success.
Numbers create clarity and commitment. If an employee knows what their number is and agrees that they can achieve it, you have a commitment. If they have a concern about their ability to hit their number, you have an opportunity to have a meaningful conversation that may bring to light issues you are unaware of.
Numbers produce results. What is measured gets attention.
Numbers create teamwork. When you have a team of individuals who are the right people in the right seats, they will work together to figure out how they can hit their numbers.
You can solve problems faster. When you have well defined numbers and a number is off track, you can take proactive measures to identify the problem and correct it.
Making Meaningful Use of Your Numbers
You have defined numbers for your firm, now what? Your firm should be using a system for tracking those defined goals and what number you are hitting each week, month, and YTD average. Reviewing this report should be part of your regular partner meetings – if you have numbers but no one is paying attention to how you are doing in meeting them, they are meaningless. If everyone knows the numbers are going to be monitored and discussed at partner meetings, they have more incentive to be accountable.
With a little effort in defining what numbers create success for your firm, you can have a clear, objective understanding of how you are doing at any point in time and take meaningful action to correct issues before they become a serious problem.
For assistance with your strategic planning, contact Suzette@LawPracticeEdge.com. For more information on the EOS system, check out Gino Wickman’s book Traction.