Innovative Practice Management

Recently I was asked by a former tax partner of an international firm how we measured the productivity of our associates given that we no longer keep time sheets. Ignoring for the moment that Peter Block has already answered that question in his book The Answer to How is Yes, I have more than one issue with this question.

First, his question presumes time sheets are an accurate indication of individual productivity. I don’t agree with that assumption, and I’ve addressed my feelings about that in a previous post. Second, his question presupposes productivity is a critical factor in performance evaluation.

My response was to ask him if during his tenure as a partner he could rank the associates working for him. He, being somewhat offended, responded that of course he could. When asked if he looked at traditional productivity reports such as charge hour summaries or budget to actual analyses to do this, he responded that he didn’t have to. Checkmate! The most common measurements of productivity in our profession aren’t needed to know the relative effectiveness of your associates or peers. So is measuring individual productivity, at best, over-rated or at worst a waste of time?

Measuring productivity is a management tool which may or may not be relevant to your firm depending on your management style and your client base. For our firm we are more concerned with ‘effectiveness’ than with productivity. We don’t do ‘piecework’ nor are we a tax or accounting mill ginning out high volumes where efficiency may be more important than overall client service. Productivity is a measure of efficiency, and while efficiency is relevant, it is only one very small aspect of overall individual performance. As accountants we default to it because it is easily measureable - and you know how we like to measure. We have found that the attributes that are the most easily measured are also the least significant in achieving the strategic priorities we have set for our firm.

We agree with the concept of the importance of effectiveness over efficiency advanced in Ron Baker’s book, The Firm of the Future. The effectiveness of our associates is a function of how well they address the strategic priorities and mission of our firm, and not necessarily how fast they do so. The personal characteristics necessary to be effective include such traits as commitment, loyalty, selflessness, common sense, concern for client, concern for associates, professionalism, and more. All of which are, for the most part, subjective in nature and correspondingly not easily measurable. More importantly though pursuing effectiveness is frequently precluded by the never ending quest in our profession for efficiency / productivity.

Productivity is about efficiency and speed. Effectiveness is about quality - quality service, quality relationships, and quality environment. Certainly measuring productivity has some value, and it’s not always mutually exculsive of effectiveness, but in terms of evaluating performance because it is easily measured it receives far more import than is justified. In my opinion effectiveness receives far less consideration than it should. Yes, it’s more subjective and harder to quantify, but who said management of a professional accounting firm was easy?