Counting What Counts

Identifying, understanding and tracking your business drivers is crucial to long term success. However, many small and mid-sized firms may not have the time. systems or staffing to drill down to develop a reliable set of key performance indicatiors (KPI’s). The default is to rely on top-line figures and for many companies this is sufficient. However, peeling back the proverbial onion and looking for a more in depth understanding of the “why” as well as the “what” in business performance can yield substantial benefit.

I once worked with a professional services firm that wanted to gain insight and visibility into their business. Like many service firms they were tracking performance broadly (in this case total billings, total compensation expense etc.) but felt they might be missing a more nuanced understanding of their performance. The company had historically been profitable but wanted to see if there was opportunity to improve. Working with the relevant teams, we drilled down into available data to analyze the “needle movers”. We were able to isolate and identify items such as average hours per staffer, specific job types, per job profitability and overall staffing capacity and utilization. With the information organized we gleaned that these were the inputs of business performance and the summary billings were merely the output. After further development of the data and as a result of the overall exercise, the firm was in much better position to reallocate resources and improve returns.

Once identified KPI’s can be reported and managed in either simple straightforward reports or the metrics can be built into a more robust set of data visualization or dashboard tools that can provide a snapshot of business performance and trends. The important thing is to interpret and understand the data points which drive your business so you can manage and grow effectively.