Marginal Gains: Effective performance monitoring
'Increase profitability and expand'
A common mantra for businesses of all shapes and sizes all over the world, but sadly not one that can be magicked into being simply by repeating it 1000x during a daily meditation session.
What's required is strategic nous, the right forward-thinking technology and a commitment to combining those two things more efficiently and effectively than competitors.
In recent posts, I’ve introduced the concept of marginal gains, shown how two of the UK’s leading sports coaches utilised this strategy to reach the pinnacle of their respective disciplines and looked into the ways in which a marginal gains philosophy can assist accountants in their evolution from number cruncher to business adviser.
Now, I’d like to give you an example of a specific area where an applied marginal gains strategy can make an immediate, incremental impact on your practice: Key Performance Indicators (KPIs).
In old-world accounting, firms used revenue as their primary KPI, but in order to build your business around a more comprehensive and ongoing offering of financial services, a suitable range of KPIs should be put in place. Our technology can help facilitate this.
The introduction of new KPIs will result in a marginal gain in and of itself, but it will also help your practice implement and constantly re-evaluate a range of other gains across your business as you establish which are most effective.
Your new KPIs might encompass the following areas:
- Recovery rates
- Chargeable time
- Work in progress
- Employee/department productivity
As the saying goes: what gets measured, gets improved. Say your present KPIs are of the ‘lagging’ variety (indicating how you did), by temporarily switching a small number of test subjects to ‘leading’ KPIs (indicating how you are doing) you can immediately observe the effect this has on your business.
The beauty of a marginal gains strategy is that if such a test yields a negative result, the scale of the failure is insignificant and unlikely to affect other departments as you can quickly eradicate it from your approach.
Conversely, a positive result can be applied to other areas of your business. Over time these small upticks will compound and increase in value, especially in comparison to competitors that either didn’t make the equivalent improvements or worsened.
Keeping up and staying relevant
Naturally, what works for you will be dependant on your business model and the specific, overarching goals of your company, but there are challenges that all accounting practices will face.
For example, keeping up with ever-evolving tax regulations or all-new reporting standards and continually interpreting what those changes might mean for your clients; the new UK GAAP being a case in point.
Too many firms simply accept that errors will be made and deadlines missed, and the resulting fines, reduced fees, and potential client-relationship harm can hurt firms badly; research suggests that with the right technology rollout, firms can make savings of up to 33% in their compliance teams.
In a separate study, 27.5% of professionals reported that incorrect information has been manually inputted onto their systems. Through a process of technological change, firms can introduce new KPIs based on improving checking processes; successful gains of this kind would save time and improve efficiency, and also cut the unnecessary costs firms incur due to human error.
With the right combination of IRIS's market-leading software, a compelling, well-structured marginal gains strategy and a commitment to outperforming your competition, ‘increase profitability and expand’ will become more than just a mantra. It will be a mission statement.
The next part of our Marginal Gains journey is now available to download: an extensive report detailing IRIS's ability to solve UK accountancy challenges while delivering a quick and compelling ROI.
The journey continues...
Next up in our Marginal Gains series we’ll be demonstrating how our free-to-use ROI calculator works out how much you’ll save when you combine a marginal gains strategy with IRIS software.
You can also read more about Marginal Gains in the blogs below: