Make a Resolution to Measure

What Metrics Will Help You Improve Your Firm This Year

By Chris Liebtag, Lean Six Sigma Black Belt  |  January 2013

Were you one of the millions of people who set a New Year resolution? I did. I resolved to lose weight. To be a better person. To work smarter and not harder.

These are all fine resolutions indeed. However, if you noticed, I didn't quantify how much weight I would lose or define what it means to work smarter or be a better person. How successful will I be? That's yet to be determined and in the end, it will be difficult to say. Why? Because it's almost impossible to gauge the success of any resolution if you can't or don't measure your efforts.

With tax season around the corner, there are many CPAs across the country saying things like "We're not going to do what we did last year" or "We are going to be more efficient this year." While those things are encouraging to say, you need to be able to prove that you truly did improve. Measuring any change or having the ability to do so starts with identifying what to measure – your metrics.

You have metrics that you look at on a regular basis to measure the success of your firm. However, if you really want to change the way you do things, there are some additional metrics you'll want to measure. If your firm has resolved to improve your performance this year, you should also resolve to consider these three metrics.

Control Time

Whether you're looking at tax returns or audits, time is the one variable that the accounting profession can very accurately measure. You have more control over how you spend your time than you'd like to admit. Do you manage it well? How long does it take for you to plan engagements? Who is in the room during the planning meetings? Are you effectively using everyone's time? The time you need to control incudes everything you do and not just what appears on your timesheet.

When it comes to client work, how much time do you, and others in the firm, spend waiting on information from clients? The client's clock starts once they send you something. And they now expect a completed project within a certain period of time. But has your clock started? You received whatever it is they sent, but you may not have everything you really need to complete the project.

Make sure you not only plan accordingly, but that you manage the expectations that come with time.

Manage Overall Cycle Time

Think about your tax practice. Once you determine when your process or "clock" starts, how many days will it take for an average client's return to be filed? This is your overall cycle time. And you want to deliver within the timeframe that your clients expect.

On the audit side, the cycle occurs between planning and completion of financials. However, the most critical part of the process is the time that lapses between your team departing the field and the day you actually issue the financial statements. How many days is that? Can you even answer that question?

Managing and minimizing the cycle time of all your processes can be the difference between which engagements are profitable and which are not.

Reduce the Number of Touches

How many times is the same tax return being picked up and put down? How many different people have time charged to these same returns? If you want to get to the heart of efficiency, this is a good one. The more people in your firm that are involved in the process can have an impact on profitability. So can the number of times the same person picks up that exact same return. Reducing touches can not only help you deliver the return to your client quicker, but it can reduce the hours you have in the job.

Uncover Your Opportunities

These three metrics aren't the only ones lean firms measure, but they are a great start. If you think about time, cycle time and number of touches, you will probably recognize that your firm could improve in at least one of those areas. Until you know where real opportunities for improvement exist, you can't resolve to work on them and improve them.

Measure what's important. Improve your metrics. Experience increased profitability. And resolve to continue improving as you embark on your firm's lean journey. 

Lean CPA
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