In professional services, some of the more commonly tracked metrics include services revenue, gross margin, utilization rate, realization rate, and so on. It is difficult to lead a high-performing professional services organization unless you have a strong handle on these metrics. But, sometimes lost in the shuffle are three metrics that can paint the rest of the performance picture for your professional services organization. These three metrics are:

Team Satisfaction

The age-old saying in professional services is that you want to deliver the project "on-time and on-budget". When you accomplish those two goals, you usually have a happy client and a profitable engagement for the firm. But, these seemingly successful projects can actually damage the future viability of the firm. How? Because on-time and on-budget tells you nothing about the team's satisfaction level throughout the engagement.

When a project is poorly estimated or executed, it often requires greater work output from the team in order to hit the original deadline and budget. Eight-hour days become 12-hour days and weekend time gets consumed as well. When the team is pushed too hard for too long, members will grow weary and start to look for greener pastures elsewhere. Attrition of top talent is one of worst things that can happen to a professional services company. If you aren't measuring team satisfaction regularly, you may well have a future voluntary attrition problem.

As we mention in our Compass e-Book, high attrition rates usually lead to firm under-performance. Unhappy project teams are typically side-effects of deep-rooted problems with Sales and/or Delivery that require investigation and remediation. Perhaps the team is working long hours to fulfill unrealistic expectations set during the sales cycle. It could be that half of the team is unhappy with the work they are doing, but they are moving forward as professionals and getting it done. Is the client difficult to manage and/or being unprofessional towards your team? Determine how you want to measure team satisfaction, implement the procedures and policies to capture that data, and then take the necessary actions to address any team satisfaction issues as they arise.

Effective Bill Rate

Our e-book, Compass, covers Effective Bill Rates in detail. This metric, is worth mentioning again here because of its tight correlation to firm performance. Professional services firms usually calculate planned average bill rates, revenue, and margin during the estimation of a project, but sometimes fail to assess the actual financial results at the end of the project. The planned Average Bill Rate and the actual Effective Bill Rate can be quite different over a project's lifetime, especially when the project requires unexpected non-billable effort. Here are some advantages to tracking Effective Bill Rate:

• Monitoring the variance from the planned Average Bill Rate to the actual Effective Bill Rate can help organizations fine tune their estimation and project resourcing processes.
• Effective Bill Rate helps you compare the financial performance of fixed fee vs. time and materials engagements. Should your firm focus more on one of these engagement types? Depending on the risks and variability of the engagements, one billing type may be optimal and the Effective Bill Rate can help illuminate this.
• For engagements with similar roles and rates, the Effective Bill Rate can be used to compare the relative performance between the engagements. This can also help evaluate the delivery team of each project.

Revenue by Day

Understanding the amount of revenue your firm can produce on any given business day allows you to set a daily revenue bar to evaluate your business performance. Often, firms look at potential Revenue by Day as an output of their capacity-based planning and as an input into forecasting.

For professional services firms that forecast revenue on a monthly basis, but need to make adjustments to that forecast throughout the month, Revenue by Day gives an early and consistent indicator as to performance against the forecast. As your team bills time against projects each day, you can evaluate the actual, daily revenue against the forecasted revenue by simply multiplying the month’s number of business days by the average Revenue by Day.

In conducting historical analysis, Revenue by Day can you help you pinpoint how you might have exceeded or fallen short of forecast. Days that fall short of, or significantly exceed, your expected Revenue by Day stand out as areas to investigate further. In this way, Revenue by Day can help you quickly identify days that contributed to the miss on your forecast.