Simple Things

Its amazing how much one can save by just going through standard overhead expenses. Case in point - We are going to cut our cell phone expenses in half because they have new plans at lower rates.

Billing and Internal Audit

Internal Audit is necessary no matter how tight you think your accounting parocesses are. Many believe that audits help reduce fraud and stealing, but it also assists in finding honost billing mistakes.

Salaries and Raises

One of the hardest items to manage is that of compensation. We all want more money, we all value our employees and feel they should make more money, but we all have a fiscal responsibility to the firm. In short I believe we all want to be fair when it comes to compensation, but it is very easy to let emotion take over. I have standardized our process in that each job description has a salary range. The salary range is derived from the responsibilities of the job (not title) and compared to available industry benchmarks. Individuals are hired within the ranges and each year we check to confirm that all individuals are paid appropriatly for the position.

When annual reviews are preformed employees are elgible for up to a 7% raise. The reviews are done on a 5 point scale. If an employee scores at 3 or below they are not raise elgible. Score of 3-5 recieve a corralating increase in compensation starting at 2.5% for 3.1 up to 7% for a 5 (by the way - I have never given a 5 review). If the manager wants to give additional monies, they have to look for a promotion.

I believe this is as fair as can possibly be, but if someone has a better idea......

Creating Systems

Over the last few months I have met with multiple CEOs of growing service firms. One of the biggest challanges that they all faced is that they are very quick to jum in a solve an issue, but they have a tendancy not to create a system that others can follow. In order to continue gorwing, firm leadership must create and document processes. They must take the time to teach people the system. If an issue ocome up more then twice, did you ever really fix the issue.

Innovation

I believe innovation is derived from collabration and that genius comes from a group - not an individual. As a firm becomes more mature it becomes very process oriented. This allows people to become complaicent and less innovative. In short innovation burns more calories then just following process. To be innovative you must talk to others, think outside the box, and go over and above. Managers must take steps to keep the blinders away from their staff and encourage collabration. Developing a puzzle solving culture where stand up meetings are the norm wil keep new ideas flowing and will provide insight that many firms never understand.

Process and Methodology

Its important to remember that no matter how "custom" you business is you still need a process with associated time benchamrks. A process allows for training of new individuals, consistancy for delivery, and expectations of time to deliver. In short not haveing a process with cost you money and frustrated employees.

Hiring of Staff

In a small firm you must always be looking for new talent - even if you dont have available positions. Multiple times throughout my career I felt like we had a solid team and no one was looking to leave. In some cases I followed my own advice and had individuals "on deck". In many cases its easy to let the day to day grind get the better of you and to forget this.

Furthermore dont ever think that someone cant be replaced. I have lost some great employees over the years, only to find individuals that are much more talented.

CSI

It suprising to me that many firms dont measure or embrace Customer Service. If a firm really makes an effort to gather the data and reward high performing individuals customer service becomes part of the culture of the firm. The survey is the traditional measurment tool, but the process to gather the survey results is even more important. Here is the process that I ahve developed over the last few years.

Process

1. The marketing assistant will send a report denoting all qualifying projects to all Portfolio Managers and Sales People the first Wednesday of each month.
2. The Sales Person will call the client to make them aware that the survey will be coming and the purpose of the survey.
3. The survey will be sent by the Marketing Assistant using the COOs email address and Name on the third Wednesday of each month to the qualifying clients.
4. The Marketing assistant will compile the results the following week and send to all Portfolio Managers and Sales People
5. The Sales Person will follow up on any survey not returned the week following the status report.
6. The Marketing assistant will send a weekly update to all named client contacts on all additional surveys completed.
7. Executive management (CEO, COO, CTO, and CFO) will call any client providing a score of 2 or below. The caller will gather feedback, disseminate to affected department heads, and deliver in the bi-weekly management meeting.
8. If we did not receive a returned survey the Portfolio Manager will work with the Sales Person to accomplish the goal.

Marketing Budget

An age old question for managers of a service firm is how much to spend on marketing. We all want great glossy brochures, but do they really drive the business. The suggested marketing budget is 1.75% of gross revenue. A marketing plan should be created at the beginning of the year to account for approximatly 75% of the budget. The otehr 25% of the allocated budget should be held in reserve for unknow items that always come up. Please note that this is just marketing budget and does not account for total cost of sale (i.e. sales people or business development time)

Team Based Delivery

As a company grows so does its structure. As a small company with under 30 employees it was very easy to segment staff into functional units or practice groups. The company was small enough that everyone worked together to accomplish the end goal. Around 40 employees communication starts to suffer and the "team" starts to experiance bad exchanges. I have found that orginizing your staff into delivery teams (with representation from each practice group) provides a greate foundation for client delivery. Not only is communication better, but end goals are aligned. This can extend to include team based incentive and bonus programs.

Search Engine Advertising

One of the most cost effective forms of advertising for the professional firm is using Pay Per Click (PPC) advertising. In short a firm can bid on an individual key word or phrase. When a user enters the word or phrase to a search engine the firms site is returned within the sponsored link area. The firm only pays if someone clicks on the link and visits their site. Google and MSN both have great programs and can be geographically targeted. We spend less the $1000 per month and get over 100 leads monthly from our web site.

Salary Increases

Compensation is one of the primary drivers for all employees. As you manage the firm it is important to have a detailed process on how you address salary adjustments. This goes beyond annual reviews and compensation committee, but explores what expectations staff and management should have on an ongoing basis. It is important to standardize positions, titles, and salary ranges for each position within the firm. This process provides individuals with general guidelines, but also allows one to eliminate the difference between a salary adjustment and a promotion.
A salary adjustment is the process of giving someone a raise for meeting or exceeding expectations at their review. A great benchmark for meeting expectations is 2.5% with increasing percentages based on merit preformance - maxing out around 7%. Comp adjustmenrs of over 7% are normally associated with someone who was underpaid in comparison to the salary ranes for that position or associted with a promotion. A promotion occurs when someone is displaing the traits of the position next in line with the employees career path.
In professional service firms managers are very dedicated to their employees and it makes it easy to provide cases for raises that would exceed the benchmarks. Although understood, one must consider the longivity of the firm and of the employees career path.

The Start of it All

Hello world! Over the last few years I have really wanted to write a book and inspire individuals to be innovative and creative. I have considered many topics, but keep coming back to something as boring as managing a professional services firm. I currently manage one of the fastest growing interactive agencies in the United States and figured my experiance might lend to assisting someone in building their own services firm - be it law, accounting, advertising, or any other billable hour profession. I look forward to sharing my insights and challenges.