Partner Productivity – What is Your Style?

From time to time we review partner efficiency and productivity or are asked by firms to evaluate the performance of their partners in terms of hours charged and dollars produced, amongst other criteria. It would be obvious to say that there are generally going to be three differing groups or categories – the overachievers, those that are average, and then the underachievers. Now before we start getting cursed at and things thrown at us, of course this is intended with tongue in cheek. These categories are loosely referenced in terms of efficiency and productivity and will also have both positives and negatives associated with the outliers.

Historically the benchmark for chargeable time by partners was within the range of 60% - 65% of available hours, which essentially equates to 990 – 1,073 hours based on available hours of 1,650 per annum or 44 weeks at 37.5 hrs per week. However, just as many professional staff are currently struggling to achieve the more traditional efficiency and productivity benchmarks themselves; few partners would achieve a similar level of chargeable time as this historic target at present.

In fact, chargeable hours of 1,000 per annum or more would currently represent those above the current market average, and in some limited instances, charged hours by principals are well above this level. Now, what do such results tell? For one, the generation of revenue is heavily dependent upon the principal. We quite often see higher charged hours in regional firms with such firms often having fewer professional personnel and higher profit percentage prior to partners’ benefits. However, these types of firms often also find the practitioner is short on time to address the management and operation of the practice and/or is working insane hours per annum. Naturally, should anything happen to the principal, continuing revenue will be significantly impacted.

At the other end of the scale, we are seeing a proportion of practitioners charging say 300 – 500 hours per annum. At times this is representative of poor time keeping by the principals; we are often told within firms that everyone records their time except the partners / principals who often dislike the process. It can also be as a result of firms following the philosophy of working on the business, not in it, which is supported by several consultants to the profession. This is well and good; however it is necessary to then replace the role of the principal as most experienced adviser and the most expensive resource generating revenue.

In such firms, we often find a higher leverage of professional personnel with an accompanying elevated cost, which may impact upon profitability. The professional staff may be more senior, replacing part of the skills and expertise that would be otherwise be provided by the partner. In such instances it’s important that key personnel are signatories to employment agreements containing effective restrictive covenants, as this approach will see increased relationship building between these staff and your clients, with partners having less involvement and knowledge. However, it will free up the time of the principal to build relationships, perform business development activities and the like, but it’s imperative such activities take place.

Thus, in reality, it doesn’t really matter which approach is utilised by a firm, just as long as the principal understands how this will benefit and/or impact on the practice, and whether it is achieving their desired outcomes. Often we find firms endeavouring to transition towards working more on the practice, rather than in it, only to find revenue declining as a result of not adequately replacing themselves as key resources in the firm, and in terms of revenue generation. 

The exact results for annual chargeable hours for both principals and their personnel will be available from the end of August in our 2019 Efficiency & Productivity Reports.

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