February 2, 2017

KPI’s – useful or overrated?

Owners and Managers of businesses spend time as a part of the management process assessing the efficiency of their businesses.

KPI’s or benchmarking is a useful tool, but is benchmarking over-rated?

As a lawyer, I spend a good deal of my time analysing the performance of my business, particularly the aspect of benchmarking my business against industry standards. So what is the industry standard? Material to assist me in my quest is available from a number of sources but recently I have begun to question whether or not I was following the right path to achieve my performance targets.

The data which is available to me for comparable practices would include the best run and the worst run practices. Do I really care about practices less efficient and productive than my practice? My considered opinion is that I am not in the least interested.

Say, for example, I was able to use data collected anonymously from all my local competitors [I can’t get that material so anyone from another practice reading this can relax] then this information would be more useful.

Take the example of a world-class athlete in track and field – does that athlete have any interest in the average of his competitors in track and field? Clearly not because that athlete would never develop a training program based on the average. The athlete’s goals would be based on what he or she believes is needed to be the best and how to get to be the best.

If it sounds a little blasé, I have concluded that not all other legal firms in Hervey Bay are my competitors.

I have broken up my areas of practice and compared my performance against those firms who practice in the same areas and who are truly competitors.

KPI’s have their value but understanding their true value and usefulness as a tool is the key.

I now approach performance on the basis of the following questions:

  1. What are my true competitors in specific areas of practice achieving and how does my practice compare; and
  2. What strategies must I implement to improve the performance levels of my practice.

I still make use of KPI’s and no doubt time will tell if my new approach is right but my legal practice is based on always looking for a point of difference.