I recently had a discussion about KPIs (Key Performance Indicators), where I was asked why I needed to see the vision and the mission statements for the law firm. The answer I provided was; the key performance indicators are based on the goals of the business, which are defined by the vision and the mission found in the strategic plan. That got a blank stare, so I tried the more official-sounding explanation. A Key Performance Indicator is a measurable value that demonstrates how effectively the firm is achieving key business objectives. That didn’t exactly go over any better, and I was asked, what is an indicator? Before I drown in this analysis, let’s use the KISS principle. When I use the term KPI, I think of measurements of performance. Let me also say I have seen where every single measure is called a KPI. That makes no sense to me as not all indicators or measurements are key – some must be more important than others.
Let’s start at the beginning. The vision statement defines what success looks like. It should contain all the key elements you want to be successful. You could start with a simple statement saying the firm is a successful law practice. What does that mean? So you change it a little to be, the firm is a profitable personal injury law firm that is known for great client service.
Now you just defined two potential measurements; being profitable and having great client service. OK, so far. If you decide these are key to your business, you just defined two KPIs. Now you develop a mission statement to realize the vision. The mission could be to provide personal injury legal services. Not very exciting, so you work on it some. The mission is to provide legal services for personal injury clients in North and South Carolina. You quickly find out that a lot of law firms do that, so you try and differentiate your firm. The mission becomes; we provide timely and compassionate personal injury legal services with the best settlements in the Carolinas. You have just defined several more potential KPIs. All of this was done before we completed the strategic plan or decided on any processes.
You complete the strategic plan and define some tools, processes, and procedures to meet your goals. Each of those will have a few KPIs. The point of this discussion is, you will develop a unique set of KPIs based on your strategic plan. Using KPIs is a good way to look at the success of a business. There is also a balanced scorecard approach. The balanced scorecard asks that you translate the mission statement into specific measures that reflect success. The balanced scorecard looks at the firm from four perspectives – financial, client, internal, and growth. Within the strategic plan, you would develop measurements relative to each of these perspectives — potentially more KPIs.
One last observation, we all have a different idea of what the measurement focus should be. You can probably guess that I look at the strategic plan as the starting point to define the business. Someone else may be focused on marketing and another on job performance. I have even seen a focus on process effectiveness. All of these ideas are correct as far as they go, which makes my recommendation to consider all of them. I would say that too many measurements may result in analysis paralysis. I would aim for no more than 5 to 10 Key performance indicators. The rest of your list of measurements are metrics to be used for early warning of problems, performance evaluations, process effectiveness, or prediction of outcomes.
Did you find some neat ideas in this blog? What are the exciting ideas you came up with, and how are you implementing them? Let me know by contacting me at dwfavor@catalystgroupinc.com.
For more information on creating a strategic plan that works, contact cheryl@catalystgroupinc.com.
