July 22, 2005
Exception Measures
Exception measures are those measurements that the firm puts in place to detect or prevent events that will have a negative impact on the firm's ability to achieve its strategic objectives. These measures, commonly identified as exception reporting, are a call to action and serve as an automated mechanism to ensure that firm activities are in line with the strategic plan. An effective and automated exception reporting and compliance system can be one of the firm’s most powerful measurement tools to achieve its strategic objectives. Examples of exception measures include:
- Individuals or groups failing to meet targeted levels of hours worked or billed for a given time frame;
- Clients with outstanding receivables above a target level;
- Clients with profitability levels below firm targets;
- Individual client complaints;
- New client alerts.
As previously noted, you can design an exception measurement for just about anything. So the key here is to put in an exception reporting system that will focus on the most important decisions or events that will affect the firm’s goals. For example, a firm that is struggling to maintain market share as competitors are aggressively after their clients might put in a system of exception reports to highlight problematic client situations, late payments, and client demands for write-offs or client losses. You may also implement a client survey system with a scoring mechanism and if any clients rate the firm’s services below a target level the managing partner is immediately notified. Whatever exception measures are implemented, also focus on whom at the firm will be notified of the exception. In general, try to avoid informational communications where no action is required as that simply creates noise. Instead, if a particular exception occurs then some action should be prompted and the notification should therefore go to the individual with the responsibility and authority to take appropriate action.
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Filed under Management, Policies/ Procedures by Tom Collins