Issue link: https://epubs.iltanet.org/i/30285
SETTING PERFORMANCE MEASUREMENTS FOR SUCCESSFUL BI DESIGNING PERFORMANCE MEASUREMENTS Performance measurements should be designed to move your firm toward your best development opportunities. These are typically identified in your strategic planning process. If you have a current plan, review it, and see how many objectives your firm set which, until now, you had no way to measure. Determine if these opportunities are still current or if they have become less important than objectives that can be more easily measured. For example, if your firm set a goal to improve work product quality, it should also have put a system in place to measure your progress. Without it, it is difficult to determine if quality is improving. As The Conference Board, a global independent business membership and research association, suggests: If you can’t measure it, you can’t manage it. Consider whether the motivation of your lawyers would improve if they knew that the firm measured quality of work and the success of client relationships. Would their improved motivation result in an improved bottom line? Also, would this improved motivation happen just by introducing a client survey, or is it more likely to happen if you are able to tie client satisfaction to an improvement in net income? Many opportunities identified in your strategic plan may use old methods of measurement. For example, if your objective is to improve utilization of timekeepers, consider whether your firm could benefit from a new reporting system that identifies attorneys who expect to have capacity in the coming week, month or quarter. Under today’s reporting metrics, firms often look to lagging indicators, such as attorneys who missed their billable hour targets for the month just ended. Your firm might benefit more from a system where a client attorney looking to delegate new work could review a list of lawyers with specific expertise and who have capacity. If your firm identified practice profitability as key, would a contribution by the department be an adequate analysis, or would you want to look at the five levers identified in the DuPont formula to understand why one practice may be underperforming compared to another? Note: The DuPont formula for a professional services firm is ‘Net Income Per Partner’ = Billing Rate X Realization X Utilization X 1 + Leverage X Margin. See a sample report created on a department/location basis on the following page. Currently, many firms typically evaluate departmental contribution based on two or three revenue-based factors. Net income, in its simplest form, is revenue less expenses. Judging contribution by looking at revenue factors alone is looking at only half the equation and should not be considered conclusive. ESTABLISHING PERFORMANCE TARGETS The key to designing performance measures is not to do what every other firm is doing, but to develop metrics that will lead your firm to breakthrough results consistent with culture and strategic opportunity. Look to existing plans, benchmark surveys and best practices. Some will rely on external www.iltanet.org Financial Management 45