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The
challenge that confronts the leadership of every CPA firm is this:
How do we build and lead a practice that consistently performs
at the upper levels of its potential? Every
business —
including
your CPA firm — is an organizational system of key
performance drivers. And the
way your key performance drivers function together is what determines
the performance and growth of your firm.
Here’s
the bottom line: your firm is
perfectly designed to get the results it’s getting.
If you aren’t getting the results you want, then you need to
improve the way your key drivers perform.
Many
firms are preoccupied with performance indicators, but fail to focus
on and manage performance drivers. The
distinction is critical. Key
drivers produce performance, and key indicators measure performance.
Key indicators play an important role, to be sure, but they
don’t produce performance; they measure it.
Well-designed indicators give you critical information and
feedback about how your firm is performing, but drivers are the cause
of performance. Further, you
can’t manage indicators; you can only manage drivers.
Many leadership teams fail to make this distinction and as a
result focus too much attention on performance indicators and too
little attention on performance drivers.
The
Performance Driver Model
The
Performance Driver Model illustrated
below focuses on the fundamental drivers that shape the
performance and growth of a firm. The model will help you evaluate how
your firm performs, not just as a collection of individual parts, but as a business system.
It
is the alignment of the five drivers that matters most.
The best results are produced when there is an organizational
culture that aligns and motivates people; an effective strategy that
delivers value in response to the priorities of clients; processes and
systems that produce efficient, high quality work; an organization
structure that empowers people and facilitates workflow; and a people
strategy that recruits, develops, and retains the right people.
Here
is why it is important for you to pay careful attention to the five
drivers.
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The
five drivers are the physics of business performance.
For your organization to reach its full potential, the five
drivers must function effectively. The
performance of the five drivers determines the performance of your
firm.
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The
five drivers operate with or without your awareness or action.
If you aren’t paying attention to and managing them, the
five drivers do not stop operating and do not stop shaping
performance. If you aren’t
managing the five drivers, then who is?
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The
five drivers are interdependent. What
happens in one driver affects the other four.
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Many
planning and improvement initiatives are less-than-successful
because they address parts of a firm but fail to focus on how key
performance drivers work together to produce results.
This means that peak performance comes from managing the
business system and not just the parts.
A fragmented approach will not work.
If you want next level performance, you must improve the
way the system performs!
Here
is a brief overview of each of the five drivers.
Performance
Driver #1: Culture
Culture
is the foundation on which all the other performance drivers are built
and from which they draw their energy and strength.
The power of culture lies in its ability to engage and align
people. Culture is a key source
of the “E Factors” —
engagement, energy, enthusiasm,
effort, excitement, and excellence.
A strong and effective culture is like having additional
executives you don’t have to pay for!
An ineffective culture discourages people and weakens the
organization. An effective
culture engages people and strengthens the organization.
Culture supports and feeds everything your firm and its people
do.
Performance
Driver #2: Strategy
Strategy
brings focus, discipline, and passion to your firm and its people.
The focus of strategy is to understand the competitive
environment, to deliver value in response to client priorities, to
achieve strategic and operational objectives, to build deep
relationships with clients, and to build loyalty.
The discipline of strategy is the ability to execute and follow
through. The passion of strategy
is a deep and unwavering commitment to the services you provide, to
the client, and to producing results. Strategy
must also drive change in response to client priorities and
competitive realities in the market (many firms struggle with this
kind of strategic innovation).
Performance
Driver #3: Processes
Processes
are what give a firm the capability to perform and produce results.
Business performance can only be improved to the extent that
processes allow. Firm leadership
should not rely on individual or team heroics to overcome
fundamentally flawed processes. Over
time, strong people cannot compensate for weak processes. The best
firms work relentlessly within and across business units to drive out
non-value-added activity. They
continually ask: how can we
make our firm work better on behalf of our people and our clients?
Performance
Driver #4: Structure
The
design of a firm is fundamental to its success.
The purpose of organization structure is to support people and
processes to make sure the right people are in the right jobs doing
the right things. Attention
must be paid to roles, responsibilities, and rewards, and to the
informal structure of trust, respect, and interpersonal connection.
High performance firms have great teamwork: They are designed
to support their people so they can work effectively with each other
and for clients.
Performance
Driver #5: People
It
can’t be said often enough or strongly enough: people are the heart
and soul of a firm. People make
the critical difference between mediocrity and consistent high
performance. High performance
firms therefore pay careful attention to the way they select, develop,
and retain their people. They
understand that the right strategy with the wrong people won’t work.
Successful firms select and train for life skills and job
skills, and they select for people who “fit” with their
organizational culture. To
remain competitive, firms need to create an environment that brings
out the best in their people. At
the end of the day, your firm is
a human system and a business system. The
success of the business system is dependent on the effectiveness of
the human system that supports it.
Your firm cannot become what its people are not.
How well are the five drivers of your firm working?
In
future articles, I will provide more detail on each of the five
drivers. I will also provide
tips and ideas for using the Performance Driver Model to help clients
improve business performance and growth.
The title of the next article will be, “How to Build a High
Performance Culture.”
Timothy
Kight is Chairman of Focus3 Performance Services, a Columbus,
Ohio-based consulting firm whose mission is to assist client companies
to focus on and improve organizational performance, leadership
effectiveness, and personal excellence.
He
can be reached at tkight@focus3.biz.
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