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How Total Performance Management Can Help You Achieve a Stronger Bottom Line
There’s a lot of high-tech anxiety among law firms and professional service organizations. Some are on the cusp of a potential upgrade or overhaul of legacy practice management software. Meanwhile, these firms need to keep their current software working to run the business while keeping a laser focus on performance. My colleagues have discussed ways to overcome technology challenges in earlier blog posts. In this post, I’ll focus on the last point – performance – and explain how you can make the most of new tools that enable improvement.
Embracing advances in technology
Business intelligence and analytics capabilities have improved dramatically in recent years. There is a tremendous opportunity to deliver smarter insight to decision makers faster than previously possible. It’s now possible to access information at low levels of detail and then summarize it in reports and dashboards in meaningful ways. What has changed? Technology allows us to work with large sets of data, integrate it with data from disparate software systems, and enable workflows so people can act on the information being presented.
By bringing together data, insight, and action, firms can take a total performance management approach to operations to achieve a stronger bottom line. This approach goes beyond traditional BI boundaries to enable greater precision and insight into the drivers of performance and profitability so firms gain better control of operations.
Taking a comprehensive view of operations
Total performance management is the ability to comprehensively assess what's happening within an organization. It's the ability to look at the business through multiple lenses and apply metrics to better analyze performance and support operational decisions. It is:
- Selecting the right measures and the lenses by which to evaluate those measures
- Creating, delivering, and deploying views in a consumable way that people understand
- Developing the right level of detail so that people understand the drivers behind the numbers
- Giving people insight into what specifically they can do to enable improvements
- Creating workflows that allow people to take immediate action as needed
Put into practice, total performance management allows firms to track the performance of individual timekeepers across key metrics such as hours worked, fees billed, and business development activities. It allows firms to look at groups of clients and groups of timekeepers and assess performance from the perspective of offices, departments, areas of law, and titles, among other data elements. Plus, it enables action. When the user is alerted to late time, old accounts receivables, old work in progress, the individual can use the workflow to address certain situations right at their screen. This approach enables a level of insight and accountability that’s not possible with legacy BI solutions.
Ensuring the success of total performance management
For total performance management to be effective, firms need to have a robust data set. It should include all the key elements and measures, organized so the data can be extracted and summarized for distribution, while also offering the ability to drill down to the details. Analysts need to understand the data sets or be supported by professionals that do.
Success is also dependent upon education and communication. Your people need to understand how to use the tools at their fingertips and how to respond when action is needed. Plus, they need to understand what they’re seeing.
Educating your end users and communicating value
Certain measures being presented in analytics are very straightforward; others are not. Any timekeeper would certainly understand hours worked relative to a specific benchmark. Most timekeepers understand realization, whether it's related to billing, collections, or in comparison to an established baseline. Many partners will understand not just the calculation but the importance of days-to-collect and days-to-bill and how each impacts the cash cycle of a firm. But not all will. You need to allow time and training to help ensure that your people not only understand how information is generated but why it’s important.
To ensure adoption, reports and dashboards should be relatable to the people who are using them. There's got to be a “what's in it for me” piece to developing and deploying advanced analytical tools. Firms need to deliver information to the right people in the firm and the information should make sense. These tools should answer these fundamental questions at a glance:
- Why is this information important?
- Why should I care?
- What does the information tell me?
- What can I do with the information?
When rolling out new tools, firms benefit from starting with a minimalist approach and highlighting only a few metrics that are absolutely critical to the firm. Other items can be added on later as comfort with the process grows.
Overcoming the fear of change to realize long-term gains
Experiencing the benefits of total performance management may require some changes to your solution landscape, which many firms dread. Instead of focusing on what could be, they focus on the horror stories of software implementations gone wrong or they lament giving up what’s familiar.
One of the primary challenges to overcome when seeking to enhance a system is that firms often try to recreate existing processes, tools, and workflows rather than take advantage improvements that are available in a new solution. This is not an issue that's unique to business intelligence or law firms – it's unique to software and technology in general. Firms need to be fearless to realize the greatest gains. That's not to say firms should go into these projects lightly. Implementing new technology is a big project. But the gains can significantly outweigh the costs when you choose the right software and work with the right team to implement it.