“What gets measured gets managed” – Peter Drucker
I had the pleasure of serving as a guest panelist last week at a Managing Partner Forum webinar on “Which KPIs Are Best For Your Law Firm?” The program was a lot of fun and, I hope, beneficial to the participants.
The program was chocked full of insights on the topic. Here are just a few for your consideration.
What makes a good KPI?
My co-presenter, Steve Mabey, suggested that all useful KPIs meet the following criteria:
- Be reflective of firm strategy and goals;
- Be seen as key to firm success; and
- Be quantifiable.
If you’re part of management and seeking to identify your firm’s KPIs, these three points provide an excellent framework for your discussion.
Which KPIs are best?
Well, as is often the case, it depends. The best KPIs for any organization are those associated with the performance criteria most important to that organization. In working with firms, we recommend the development of a KPI to monitor performance associated with each of the firm’s strategic initiatives.
For example — have a growth initiative? The measurement of progress (or lack thereof) should be monitored along the way through carefully constructed KPIs. This allows for course correction before you travel too far down an unproductive path.
Further, the firm should develop metrics associated with any areas of potential risk for the firm.
During the early months of the pandemic, a number of our clients were anxious to monitor their liquidity. During that period, there was a great deal of uncertainty as to what the level of decline in revenues might be. With the potential for falling revenue, firms didn’t want to be caught unaware of their combination of cash on hand and borrowing ability.
KPIs have become a popular topic in recent years. It might be tempting to write the conversations off as a management-flavor-of-the-month. However, smart firm leadership understands the value in establishing ways to measure performance in critical areas in rea- time, allowing for necessary adjustments or even pivots…whether in the midst of a succession debate, a growth initiative, or even economic stress brought on by a pandemic. Well run firms spot issues early, and adjust quickly.