While it is easier to measure in some industries than in others, measuring and creating performance criteria in a professional service firm can be challenging. But it does not have to be that way.
Professional service firms, like all other companies, have key matrices that they operate under. These can be calculated at an overall corporate level, departmental levels and at individual position levels.
It is incumbent upon senior management to identify, benchmark and track their firm's key matrices. Once this is accomplished, not only can firm performance be measured daily, each employee and each department can be measured daily as well.
Given this data, it is possible to design incentive compensation programs designed around performance criteria -- criteria that is specific, measurable and attainable. In this manner, each individual employee, each department manger and even each company executive can have personal compensation and incentive packages geared toward both meeting quotas and goals and also on excess profit-based incentive programs.
The key to daily management of the overall organization and each individual department is the ability to track what is happening on a daily corporate flash report. If you cannot measure it, you can not manage it. The roots of measuring are the benchmarked key matrices. Utilization of this methodology provides firms with a real-time ability to hold both employees and overall departments accountable, not just at the end of a financial reporting period, but hourly or daily. Why manage the game after the final whistle blows when it can be managed on a play-by-play basis?
When a company is run in such a way that everyone knows they can measure themselves against others or against stated tangible goals, productivity and performance tend to increase. The company then has the ability to publish this data on a regular basis internally, creating a positive environment of both individual and departmentwide competitiveness.
With these programs in place, performance awards are easy to define. Why wait for the end of the year to offer these? Instead, give them out throughout the year and create an environment that revolves around rewarding constant measurable excess performance.
The question often comes up around year-end based bonus programs. All too often, these programs become expected rather than earned by employees. Across the board, year-end bonuses do not act as an incentive. They actually have the opposite effect.
After all, if a self-perceived overachiever gets a year-end bonus similar to that of an employee who just does what is required, where is the incentive to excel? Rather than cut back, the overachiever finds a new employer that recognizes and rewards performance.
The key to running a productivity-based organization that consistently outperforms its own lofty goals is designing performance and incentive plans that are constantly achieved by a few and realistically achievable by many.
Constant and frequent reward wins the day.
Gregg Steinberg (email@example.com) is president of International Profit Associates. IPA's 1700 employees offer consulting services to businesses throughout the United States, including Alaska and Hawaii, as well as Canada. Reach him at (847) 808-5590 or at www.ipa-iba.com.