Measure Your Effectiveness

Source: Partner Insights

The following includes excerpts, reproduced with permission, from an article by August Aquila. To measure the overall effectiveness of your firm in today's market, Aquila recommends the “Balanced Scorecard” approach:

The Balanced Scorecard

Management uses the balanced scorecard to align the firm's strategy around five key areas – financial, client, marketing, internal business processes, and employee growth/learning.

• Financial Objectives and Measures
  • Most firms today develop annual and monthly budgets. Firms track billable hours, realization, and utilization – all the standard metrics.
• Client Objectives and Measures
  • Firms that measure performance drivers throughout the year have time to make corrections.
• Marketing Objectives 
  • Firms that just measure new clients or the increase in volume may be missing critical information. Individual client profitability is one of the most important marketing measures.
  • Other important marketing objectives:
    • Number of pending proposals.
    • Ratio of proposals won/total proposals made.
    • Number of new clients inside target market segments.
    • Number of cross-selling opportunities created.
• Business Process Objectives and Measures
  • Focus on those [business processes] that have an impact on how the firm delivers its value proposition and how the processes generate profits for the owners:
    • Innovation processes – how you go about identifying the size of your target market, market preferences, creation of new services.
    • Operations processes – how the client is treated and how work is produced and delivered.
    • Post-sale processes – what happens after the service is delivered to the client.
• Employee Growth and Learning Objectives and Measures
  • Your people will differentiate your accounting firm from your competitors'.
    • To make team members productive the proper infrastructure needs to be built.
    • Firms need to measure employee satisfaction, turnover and overall productivity.

For the complete article, read “Don't Kid Yourself – It's a New World Out There.” 

From Partner Insights, Aquila Global Advisors, LLC, July 2014, www.aquilaadvisors.com.