April 13, 2005
Key Results Areas
It is well established that measurement improves performance. But there is a caveat. Meaningless measurement accomplishes little or nothing. Measurement must be accompanied by a target. Almost all firms go through a planning process. But what should they be planning?
There are two certainties in this world - business, like life, involves constant change and we are always judged by others. If we are not changing our business to improve it, natural forces are working to weaken it. Expenses are rising to meet income and non-billable work is expanding to consume revenue generating capabilities. The value of the law firm depends on how others judge us. How clients see the firm will determine if they will continue to use the firm’s services for future needs. Our ability to attract and retain a profitable, professional team depends on how firm employees view the firm. Our standing in the community, and before our peers, determines our ability to attract new clients. Continuity of the law firm business depends on how fairly firm partners judge they are being compensated.
The firm's planning process must look at its business in terms of the various constituents that judge the firm. Key results goals need to be established and then the firm's management reporting and control system should constantly measure actual performance against the key results goals. Measuring and reporting are not enough. Management must instill an expectation that employees and area heads are expected to make changes to move closer and closer to the goal, until it is achieved and then continue to change to maintain the goal. In short, key results indicators should become the GPS by which the business ship of the law firm is steered.
As Peter Drucker observed, excellence is the only sound strategy, anything else is merely competent and that leads to marginal. Competent is an uninspiring goal. Drucker identified the eight areas that every business must address through its objectives and control systems. The eight key result areas are: Customer Satisfaction, Productivity, Innovation, Resources, Management Development and Performance, Employee Attitude and Performance, Public Responsibility and Profitability.
The excellent firm will set key results goals for each of these areas. It will develop strategies and tactics to achieve its goal. And it will develop methods for measuring actual results against the goals with an objective of making additional changes as needed to achieve and maintain its goals.
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Filed under Management, Planning by Tom Collins