We all know the classic management principle: “what gets measured gets done.” This maxim has been around so long that no one is sure who said it first. Is it correct? Not always. It is clear that measuring results is not enough. You must also reward them.
Let’s modify the management principle to: “what gets measured and rewarded gets done.” Does this hold true? Not in many situations that are common in accounting firms.
Here are a few examples:
– All firms want their partners to excel at billing and collecting. Performance in these areas is always measured, it is given high visibility and success is rewarded. Yet, it can be difficult to move the needle on execution.
– Similarly, partners are asked to advise their clients of periodic fee rate increases. Some partners do this well and others don’t; even though increased rates would grow their personal book of business, which all firms measure and would be rewarded.
– Many firms add experts in key areas and ask their partners to cross-sell the offerings of these experts. Yet, despite good measures and reward opportunities, a good number of partners don’t cross-sell in a meaningful way, even when the new services would benefit their clients.
We often talk to managing partners about their frustration in these and other areas. They know that partners understand the benefits to the firm and the personal rewards. And here’s what we explain — measurement and rewards are not sufficient to change behaviors where the partner perceives it to be risky to change.
Successful partners, managing large books of client business, regard protecting the client relationship and their existing business as their “security.” They will be reluctant to do anything that threatens this security, such as billing for additional unanticipated work, pushing clients to pay bills sooner or asking clients to pay higher billing rates. A change in this method would make it less risky for the partners to change. For example, giving partners new clients to replace any business lost by clients who are displeased by the partners changed behavior.
Let’s contrast this with another example. In recent years, most firms have pushed partners hard to develop new business and partners have responded favorably. Here’s why — first, success at new business development is measured and rewarded generously with upward compensation adjustments; and equally important, partners are able to attract new business through relationship-building and networking outside their existing client base. This presents no threat to their existing book of business.
The bottom line is: “what gets measured gets done if it is rewarded and is perceived as low risk.” If you apply this principle when asking partners to embrace your initiatives, results will follow.