We are doing great – or are we?
Recently, I heard a story about a law firm that had employed a new CFO. The CFO naturally wanted to know how the law firm was performing. According to the managing partner they were doing great, with a nice turnover growth compared to the previous year. However, the further discussion revealed that their personnel costs had grown much more.
In other words, not so great performance unless the cost increase can be explained, for example, with investments in the development. The top line growth is important but one should never forget the bottom line when setting the company’s key metrics.
Key metrics belong to all employees
As competition gets tougher among law firms the management needs to be aware of the key metrics in order to understand, for example, how much they can afford to adjust prices without risking the profitability. To cultivate a business savvy company culture, the management should communicate consistently and via visible metrics the company’s turnover, number of new assignments, biggest clients, strongest legal areas and individual and/or team performance to all employees, too.
By communicating key metrics, a law firm makes all employees involved in the business performance and enables them to see the bigger picture, instead of focusing solely on one’s own personal work. Understanding of the status of different business metrics is crucial in order to be able to take actions to improve the results.
Awareness leading to questions > ideas > solutions
For management, it is important to look closer at the above areas and be able to drill into the data; e.g. to turnover per client or turnover per practice groups. Apart from aiming to improve performance within these areas, this enables them to detect trends earlier and to react proactively to negative trends. To keep an eye on productivity the above key metrics can be complemented with e.g. the following:
Another benefit of measuring and displaying metrics within the company is that it raises the question “what can we do to change/improve within these key areas?” and generates ideas among employees. Management’s job is to cultivate an idea welcoming culture, for among these ideas they will find solutions to any business problems.
One size does not fit all!
The above are just a few of the metrics that CSI believes should be transparently displayed and communicated throughout a business savvy organization. Measuring and reporting of key metrics belong to CSI Lawyer’s core functions.
All user groups from partners to financial assistants require relevant up-to-date information in order to work towards the law firm’s goals and to carry out their duties effectively. However, as their needs for details, skills level and even patience may vary greatly, the key metrics must be served in a format matching individual needs. Besides, you should avoid burdening people with excess or unnecessary information.
We believe in offering a set of different reporting tools from “at a glance” dashboards to quick list views, interactive pivot reports and traditional reports. They complement each other and enable a law firm to define an optimal reporting toolset for each of their user groups.
Key metrics information has very little value if not seen or understood by employees. Therefore, all efforts to making it easily available and readable certainly pay back.