How to Tailor a Partner Scorecard To Your Individual Firm's Goals

Last month, we reviewed what a partner scorecard is and why keeping score is important. This month we review how to tailor a scorecard to your individual firm's goals.

How to Determine Firm Goals

Depending upon the size of your firm, you can determine what goals to set for the firm in a number of different ways. I suggest the following:

• Survey the partners on what they think are some of the areas in the firm that need improvement.
• Solicit feedback from other employees of the firm.
• Review law firm literature to determine what it takes to run a successful law firm.
• Ask your accountant or auditors for suggestions on how the firm can improve as part of their annual engagement.

Surveying the partners can take place at a partners' retreat through a general questionnaire or part of a strategic planning process.

Soliciting feedback from employees is best achieved through an anonymous online questionnaire, as preparation for an annual performance evaluation or through an upward evaluation process.

Doing industry research by going on the Internet, researching articles, reading business books and implementing ideas from educational seminars is another means of obtaining important measures to quantify on the scorecard.

A firm's accountants, tax advisers or auditors can get to know the firm's operations intimately during the course of their engagements. Take advantage of their knowledge by soliciting feedback from these advisers instead of just receiving an annual tax return or audit report.

Prioritize Goals

Once a firm has developed a list of goals that are deemed important and worthwhile to pursue, prioritize them. If the list is too long, narrow down the list by reviewing how many times each goal appeared in the development process and revisiting why the goal is important and what will result if that goal is achieved. Introducing too many goals at once can be disastrous.

Make sure the goals include financial as well as non-financial goals. Set aside some goals for the firm overall to be implemented at the firm administrative management level, and then list which goals can be set at the individual partner level. These goals should be financial as well as non-financial. An example of a financial goal is realization. An example of a non-financial goal is one-on-one meetings with top referral sources.

Seek Acceptance and Communicate Goals

It is important to gain 'buy-in' from the partners. Before this can happen, all partners must understand what each goal means, how it is calculated and why it is important, i.e., what will be the desired result if that goal is achieved. What will happen if a partner increases his realization from 85% to 90%? What will happen if a partner increases her business development efforts by routinely meeting with top referral sources?

Calculate Current Trends And Set Realistic Targets

The next two steps are to calculate current trends and then to set realistic goals for each partner based on their individual scenarios. If a partner has realization of 92%, a realistic goal may be to increase realization to 95%. If a partner has realization of 70%, staggered goals may be needed with an overall long-term goal of 95%. If a partner has very limited time, or works part-time, his goals for one-on-one meetings with referral sources may be less than a full-time partner's meetings with nurtured business relationships and contacts.

Design an Easily Readable Format

Design a scorecard that is easily readable with clear distinctions between trends, monthly results and year-to-date results compared with goals. Being able to quickly scan a scorecard for the vital statistics is important. A partner should have only to glance at the scorecard in a few minutes to determine where she achieved and where she fell short for the month.

Measure Goals and Publish Results

For a partner scorecard program to succeed, a firm must measure the goals on a periodic basis and communicate the results. Calculating and publishing realization only once a year may not give a partner the motivation to achieve continuous improvement throughout the year. Since most practices bill monthly, realization is a goal that should be measured and published monthly in order to communicate results timely. After July realization is published, a partner has six more months to reset interim goals in order to achieve the annual goal. For any partner not meeting his goal, there should be a system for providing feedback and helping the partner set a course of action to continually improve.

Follow Up and Provide Feedback

By following up on actual results and providing feedback to partners monthly, the firm is reinforcing the importance of the goals and their importance to the success of the firm. Give feedback to those partners who can benefit from improvement, but do not forget to celebrate those partners who are achieving their goals as positive reinforcement.

Conclusion

By having the partners who will be held accountable for goals involved in the process of determining those goals, there is a greater chance of acceptance of and success for the process. Often, firms set goals without proper communication. Then partners may not fully understand the goals, how they are calculated and why they are important. And when there is weak support, partners may be reticent to speak up. As a result, they are not vested in the plan sufficiently enough to achieve successful results. Over the next few months we will review 'must have' goals for your firm. The first one we will discuss will be realization. Realization goals are important because improvements in realization can increase partner profits significantly as no additional costs or investments are necessary.

Last month, we reviewed what a partner scorecard is and why keeping score is important. This month we review how to tailor a scorecard to your individual firm's goals.

How to Determine Firm Goals

Depending upon the size of your firm, you can determine what goals to set for the firm in a number of different ways. I suggest the following:

• Survey the partners on what they think are some of the areas in the firm that need improvement.
• Solicit feedback from other employees of the firm.
• Review law firm literature to determine what it takes to run a successful law firm.
• Ask your accountant or auditors for suggestions on how the firm can improve as part of their annual engagement.

Surveying the partners can take place at a partners' retreat through a general questionnaire or part of a strategic planning process.

Soliciting feedback from employees is best achieved through an anonymous online questionnaire, as preparation for an annual performance evaluation or through an upward evaluation process.

Doing industry research by going on the Internet, researching articles, reading business books and implementing ideas from educational seminars is another means of obtaining important measures to quantify on the scorecard.

A firm's accountants, tax advisers or auditors can get to know the firm's operations intimately during the course of their engagements. Take advantage of their knowledge by soliciting feedback from these advisers instead of just receiving an annual tax return or audit report.

Prioritize Goals

Once a firm has developed a list of goals that are deemed important and worthwhile to pursue, prioritize them. If the list is too long, narrow down the list by reviewing how many times each goal appeared in the development process and revisiting why the goal is important and what will result if that goal is achieved. Introducing too many goals at once can be disastrous.

Make sure the goals include financial as well as non-financial goals. Set aside some goals for the firm overall to be implemented at the firm administrative management level, and then list which goals can be set at the individual partner level. These goals should be financial as well as non-financial. An example of a financial goal is realization. An example of a non-financial goal is one-on-one meetings with top referral sources.

Seek Acceptance and Communicate Goals

It is important to gain 'buy-in' from the partners. Before this can happen, all partners must understand what each goal means, how it is calculated and why it is important, i.e., what will be the desired result if that goal is achieved. What will happen if a partner increases his realization from 85% to 90%? What will happen if a partner increases her business development efforts by routinely meeting with top referral sources?

Calculate Current Trends And Set Realistic Targets

The next two steps are to calculate current trends and then to set realistic goals for each partner based on their individual scenarios. If a partner has realization of 92%, a realistic goal may be to increase realization to 95%. If a partner has realization of 70%, staggered goals may be needed with an overall long-term goal of 95%. If a partner has very limited time, or works part-time, his goals for one-on-one meetings with referral sources may be less than a full-time partner's meetings with nurtured business relationships and contacts.

Design an Easily Readable Format

Design a scorecard that is easily readable with clear distinctions between trends, monthly results and year-to-date results compared with goals. Being able to quickly scan a scorecard for the vital statistics is important. A partner should have only to glance at the scorecard in a few minutes to determine where she achieved and where she fell short for the month.

Measure Goals and Publish Results

For a partner scorecard program to succeed, a firm must measure the goals on a periodic basis and communicate the results. Calculating and publishing realization only once a year may not give a partner the motivation to achieve continuous improvement throughout the year. Since most practices bill monthly, realization is a goal that should be measured and published monthly in order to communicate results timely. After July realization is published, a partner has six more months to reset interim goals in order to achieve the annual goal. For any partner not meeting his goal, there should be a system for providing feedback and helping the partner set a course of action to continually improve.

Follow Up and Provide Feedback

By following up on actual results and providing feedback to partners monthly, the firm is reinforcing the importance of the goals and their importance to the success of the firm. Give feedback to those partners who can benefit from improvement, but do not forget to celebrate those partners who are achieving their goals as positive reinforcement.

Conclusion

By having the partners who will be held accountable for goals involved in the process of determining those goals, there is a greater chance of acceptance of and success for the process. Often, firms set goals without proper communication. Then partners may not fully understand the goals, how they are calculated and why they are important. And when there is weak support, partners may be reticent to speak up. As a result, they are not vested in the plan sufficiently enough to achieve successful results. Over the next few months we will review 'must have' goals for your firm. The first one we will discuss will be realization. Realization goals are important because improvements in realization can increase partner profits significantly as no additional costs or investments are necessary.