Thoughts on ways to improve the management of professional services firms

Friday, November 10, 2006

Professional Services - On Time, Time Keeping and Performance Management

One of my recurring themes with my colleagues has been the need for all of us to keep time sheets. I know some do and some don't. But, in my view, we all should. So I would like to start by looking at some time keeping issues.

When I go into a professional services firm, I start by finding out about their time keeping systems. I do this regardless of the assignment. Why? Because as a strategic consultant with a strong expertise in professional services firms, I know that measurement drives performance. That is, we focus on the things that we measure. And in doing so, we set the structure for performance across the whole firm. To illustrate.

If the time keeping systems are sloppy, then I know that I can normally get an immediate improvement in bottom line performance by tightening up those systems. The reason for this is simple. Our memories about time are very imperfect. As a general rule, filling in time sheets at the end of the day normally leads to underestimation of time on time on particular jobs of up to a third. This figure can rise to 50 per cent if time sheets are filled in on a weekly basis. So it is important to capture time properly.

In my experience, people often become very uncomfortable at this point. We have been charging the client x. We are going to lose our clients if we now charge them x plus 30 per cent. Sometimes these concerns have a degree of validity. If so, we know that the firm has a performance problem that has been concealed by the sloppy time keeping in that they have in fact been discounting their fees. Nevertheless, improved time keeping nearly always flows through to an immediate and positive bottom line impact.

This holds for both time based and fixed price charging. In fact, accurate time keeping is most important in fixed price or blended charging modes because otherwise you cannot dtermine the real profitability of either individual jobs or different classes of work.

Performance follows measurement

The next thing I look at is just what is measured and the targets attached to those measures since this indicates immediately what problems the firm might have, as well as just what will work in that firm.

I start by looking at individual time recording. What hours are staff expected to work, how is that time broken up between charge and firm time?

Now there is substantial variation in approach here between firms in terms of target hours and the break-up of those hours. However, from my experience there is an almost universal rule that firms focus first on charge time, after all that is where the income comes from, with firm time treated almost as a residual to be minimised. I also know that where this happens the firm is likely to experience problems in terms of over-runs in charge time, together with unwillingness on the part of staff to commit time to marketing or personal development since this is usually included in firm or non-charge time.

The lesson here is that firm time is an asset that requires conscious management.

I then look at the way in which performance is assessed.

A key issue here is the extent to which measurement, especially for more senior professionals, is solely based on personal performance. As soon as I see this, I know that the firm will have problems of delegation and revenue maximisation.

A second, broader, issue is the way in which measurement links to the stated objectives and values of the firm. As soon as I see a conflict here I know that there is a problem.

Time keeping, performance measurement and performance for the individual independent

Many smaller independents argue that these issues do not apply to them. We are small and know our own business. The reality can be quite different.

To begin with, most if not all of us overestimate our real working hours. As soon as I hear someone say that they work 55 hour weeks, I am suspicious and want to know what they mean by work.

Now I work reasonably hard. I also keep very accurate time records, logging off whenever I stop work. For example, my time on this report is recorded. During the shower I just had (I mainly work from home), I stopped recording and have just started again. So I know my real working hours very exactly.

Some weeks I work very long hours. But when I look at the overall pattern, I find that my average hours across the last five calendar years as a whole ranged between 43 and 44 hours per week. Further, given family commitments, the only way I can get to these figures is by working early in the morning, at night and at weekends.

So you can see why I am suspicious when some one tells me that they average 50 hours plus per week. It suggests to me that they do not really know their time. And, consequently, they cannot really judge the value attached to that time. The only way to overcome this is to keep proper time sheets.

Of course, it's not just the hours we work but the distribution of those hours that is important. Here time keeping is very important in adjusting priorities as we go along.

On Activity versus Reflection
One of the things that I try to focus on in time monitoring is the level of time devoted to service and personal development.

In my experience, independents can be broken into two groups, those that act and those that both act and reflect.The majority of independents act, get the job, do the job. Of course they learn to some degree as they go along, but this is limited to what they notice and internalise while doing the job. A smaller group stands back and reflects on what they have learned. Within this second group, a still smaller cohort attempts to define and document.

In my view, action combined with reflection is essential to professional and business development in laying the basis for future work. Further, the process is greatly reinforced where the lessons are properly defined and documented. Without these steps, we will not have the things we require two years out.

On the difficulties of reflection

The problem, of course, with reflection, definition and documentation is that it takes time. This can make it very hard to do.

I was reminded of this at a dinner in Sydney for one of our senior colleagues who was in Sydney because of the work he is doing with a specialist medical college on the definition of medical competencies.

Over dinner, our colleague talked about the fascinating leading edge work he has been doing with another client. All those present could see how this might form the basis for a new national service offering. We could all share our colleague's frustration about the way in which other pressures made it difficult for him to do the necessary thinking and writing required to really take advantage of the work.

There is no easy answer here. We just have to do the best we can, recognising that we are all human. The key thing is to recognise that action is required and therefore to allocate at least some time despite other pressures.

2 comments:

Small Business USA said...

Jim - I get what you are saying about time. It has been something I have struggled with my entire life. Until a few years ago I would work about 18 hours a day, starting at 4:00 in the morning and finishing at 10:00. I always took a 15-30 minute break during the day for a riposino. I worked 7 days a week. I missed my kids growing up. I thought it was more important that they have the financial stability these kind of hours could provide.

I also struggled with time during the day. I remembered something a 90 year old Marketing professor told me. Never put things off. He told me when a paper came into my hand to act on it. Throw it away, move it to the next level or send it to someone who could do something about it. It was very helpful.

Finally about 4 years ago I realized I was wasting time because I would start on a problem, someone would need something I would stop, listen, act and it would take me 15 minutes to focus again.

I put my watch away, eliminated all of my business cell phones, gave my secretaries number to those who needed it and have not put my watch back on. It has increased my personal productivity significantly.

Time is very valuable, many translate working many hours to doing a good jov. This is usually not the case. A good manager can also manage his time inside and outside of the professional world.

I think you should take this into more detail on smaller points. The topic is very important and can be the difference between success and failure of any business man.

Jim Belshaw said...

David, this is very interesting. I emphasised the need to keep time records so that you know how you are spending time. You have gone a different route, but it comes back in some ways to the same thing, finding the path to get best results given individual needs.

I have always had enormous personal problems with time management.You point to one of the issues here, interruptions.

When I was working in the Government and running a busy branch, I kept a detailed time diary at one point just to look at the pattern. I found that the average period between interruptions was five minutes. This is where your suggestions come in.

But I have another personal problem as well, staying on target. I keep getting distracted. This is where I find time sheers very helpful.

It is probably worthwhile writing some specific stuff on time management at pesronal level.