Key performance indicators have a dramatic effect on one professional services firm
Kirkpatrick and Hope was, until 2003, a very traditional sort of accountancy firm. They could do your accounts or handle your tax affairs as well as the next accountants. Which is a problem for many professional services firms – how do you differentiate yourself from your competitors and resist pressure on pricing? In this case it took a ruptured Achilles tendon and extended leave from the office to give time for strategic planning. Kirkpatrick and Hope was reborn as K & H with a new identity, a new affiliation to the AVN network, and a new enthusiasm for the future.
In 2005 a group of partners led a management buy-out after the last founding partner decided to sell. They had new ideas and a new vision. After years of lacklustre results, low morale and disagreements, they had a new strategy and a new way of doing business.
Andrew Gray, Chairman of K&H, explained to me how they implemented their new strategy.
“Our mission is to improve the lives of small business owners. Many entrepreneurs work incredibly hard for their customers and don’t have time to step back and consider their own business. Important issues such as pricing, marketing, or increasing profitability don’t get much of a look in. Whilst accountancy is still the heart of our service, we take every opportunity to encourage owners to think about their results, and how they can improve their businesses.
The culture change within our own firm has been dramatic. Advising on planning, profitability, pricing, and business development are now a core part of our service, not an add-on. And internally we had to learn to walk the talk, which meant putting in place new processes and performance metrics to measure how we are doing.”
When I asked Andrew what was the single most important measure, he smiled.
“That has to be our happiness score - when you have a team that works well together, so much else falls into place. Every month we ask everyone to complete a 360 degree feedback form, and score their happiness at work on a scale from 0 to 10. We have seen a dramatic shift from the early days, when the average was around 5. Now we consistently score a happier 8 or 8.5. We are not romantics though – it is still work and there will always be some parts of everyone’s workday which isn’t particularly enjoyable. We don’t aim to protect people from that. We frequently challenge people to push outside of what they might feel comfortable with. But as a management team we are now agreed on values, we have clear objectives, and consistently measure our performance using key performance indicators. It really does have a big impact on people’s happiness at work, and their performance. It has made more of a difference to our overall business performance than I would have guessed.
It hasn’t been plain sailing, of course, and I’ve learnt that you can’t change people. If they don’t agree with your values and direction, then it’s best just to part company. That’s a lesson I wish I had learnt a lot earlier.
On the plus side, however, our “one page plan” has really helped focus everyone on what is important. We use it to report results each month and whilst it wasn’t easy agreeing what to measure, it has played a major part in turning things around. I couldn’t imagine running the business without it now. Whereas before we would focus 100% on financial measures, now more than 50% of our metrics are non-financial: staff happiness, lead generation, and what type of services our clients buy from us, etc.
We have seen the difference that good metrics make to the business, and are now prepared to invest in new systems to cut down on the time we spend collating them.”
I asked Andrew if he thought other businesses make good use of metrics.
“I think people often measure some aspects very well, but are blind to other areas. Many people don’t have the time to think about what results they really want, and how to get there. Some people are specialists in their own business, but don’t know where to start in putting a measurement system together.”
So to finish, I asked Andrew what his advice to business owners would be on performance metrics.
“Start small – just choose one or two measures and report on them consistently. Don’t be too ambitious in changing things.” He smiled again. “Which is funny really, because we dived in and introduced more than 20 measures all at the same time!”
Andrew Gray, Chairman of K&H,heads up a team of 19 happy accountants, tax advisors and business advisors all of whom are passionate about helping ambitious business owners/managers create a better future for both business and for their families.