Knowing your numbers: it’s a double-edged sword. Every law firm should have metrics or “key performance indicators” that can help you determine if you’re on track to meet monthly, quarterly or yearly goals.
But what starts as a helpful exercise can quickly go awry when your employees are overburdened with too many metrics, unhelpful metrics, or a tremendous feeling of pressure around meeting metrics.
A common sticking point we hear from law firm owners is determining which data points to track. Once you get into the swing of picking out the right metrics to track, it’s all too easy to want to get a read on everything. After all, how are you making important decisions about steering the business if you don’t have a big picture view of everything that’s happening?
It’s easy to focus on tracking certain metrics for one quarter or a longer period. For this reason, not all metrics are “set it and forget it.” The 90-day period comes from the Entrepreneurial Operating System, which calls these goals “quarterly rocks.”
Categories of Metrics
You might track metrics in more than one category, such as:
- Marketing KPIs like firm website traffic or email open rates
- Client acquisition KPIs like number of new clients or costs of getting a new client
- Client satisfaction KPIs like number of client referrals
- Client development KPIs like average fee per client
You may choose to focus on improving the customer experience for three months, but if you are successful in achieving that objective, you may focus your team’s attention on other goals in future periods.
There are some metrics that should be tracked on a weekly and monthly basis, such as phone calls received, new clients closed, and revenue. However, there are other metrics that you may add and remove from your tracking strategy based on their level of importance at the current time.
Imagine that you want to track new email subscribers. Over three months, your marketing director might gather these numbers dutifully every single week. They’ll report on how many new email subscribers were added, celebrating success when those numbers hit the goal or exceed it.
While that may be helpful when you have originally launched an email campaign or just setting up your email list, that might not be the long-term metric you choose to track. Perhaps, for example, the more important metric to track in the future is how many of those email subscribers are opening your messages, clicking on links, or booking calls with you after receiving an email.
For this reason, it is helpful to sort your metrics into two buckets: those that you track on an ongoing basis and those that will be adjusted on a monthly or quarterly basis.
Aim for 2-3 Metrics Per Employee to Start
Realistically, a team new to metrics or a new hire won’t be able to improve six numbers at once. It’s okay to keep these numbers on their radar, but if you’re using a weekly reporting system, be realistic.
If they make it through a quarter and easily crushed their three metrics, then it’s time to up those goals or add some new ones into the mix. But giving people too much only makes them feel like they’ve made no progress across the board.
Many law firms choose to use weekly team meetings as a chance to check in on metrics. You may also check in on metrics at additional monthly meetings, such as with your marketing team. Not all of the same metrics will be shared at both of these meetings, so it is important to think about what is vital for the entire team to be aware of and what may be specific to a certain department or person’s role.
It’s not helpful if employees chime in to say, “I fell short on this number this week” and leave it at that. Instead, you need to train your employees how to report on these numbers successfully and when to ask for help. As an example, perhaps the employee whose numbers fell short this week already has some suggestions or strategies they have put in place to improve that metric.
You also need to promote an open forum where employees have a reasonable opportunity to chime back about whether or not these metrics are helpful. Sometimes an employee who is closer to the problem or the potential solution can give good insight over whether you’re tracking the right numbers.
It can be hard for employees who consistently come in under target to continue sharing clear results. This can be a good opportunity for one-on-one feedback from you or a leadership team member about why the metrics are used.
When numbers are shared in a public forum regularly, some employees feel as though it is calling attention to things they are not doing well. Help employees understand that you’re focusing on these numbers to learn more about the metrics and the strategies that have the best impact on the company – not to negatively judge employees unless they make no effort to understand or address that number.
Bear in mind that any time you set a target in your law firm, the target might be too high. Perhaps you set a goal of improving call-to-client conversions by 50% in a quarter. That could be a tremendous leap, but employees shouldn’t feel bad about making a 10% improvement, either. Sometimes when leadership focuses too much on specific numbers, it makes employees laser focus on those metrics.
Too much myopia there means there’s an over-focus on improving that metric – potentially at the expense of time and energy your team could spend performing well. Employees who have “suffered” from micro-managed metrics have reported that the result can be quite the opposite of performance improvement. Instead, the consequence can be less-engaged employees, diminished company morale, and increased turnover.
Remember to refine and recalibrate regularly, such as monthly or quarterly. When you get into a rhythm like this, it’s easier for employees to understand what kinds of things they can do to influence their numbers and the timeframe it takes to get results.
No one disputes that metrics are an important tool for running a successful firm. But, as is often the case, leaders should be on guard to not have too much of a good thing because ultimately law firms are built by people, not by numbers.