Shifting the focus from profit to outcome – why your company should measure and assess its employees on outcome not profit
BY DEMETRIO ZEMA
It’s 7.30pm and Sally is still in the office, her bosses have left for the day, some colleagues still linger and she has dinner at 8.00pm, which is about a 25-minute tram ride away. Sally has a daily budget of 60 units and today she has only hit 58 units. Does Sally (a) add two units throughout her time sheet for the day, or (b) does she undertake a further 2 units of work?
Unfortunately some professionals in this situation, who are held accountable by daily budget requirements would proceed with (a). As a result, a client has just paid for 1 or 2 extra units of time, which was not actually spent on their work.
Professional services firms and the corporate world are notorious for setting budget expectations and financial projections based on the income to be generated by its employees. Upon accepting a position at any traditional professional services firm, an employee is set a budget expectation which is to be met monthly and annually. The budget is often set at 4 or 5 times the employees wage and is reflective of the employee’s hourly charge out.
Having worked in these traditional systems for many years, I know too well the stress and pressure placed on employees who are set daily billable targets. Companies who measure employee’s success and growth within the business based on profit rather than outcome, miss the true potential value which that employee can offer to the company and its clients.
If an employee was not focused on hitting a target, rather than achieving an outcome, their focus shifts from adding an extra unit to hit 60 units for the day, to focusing on achieving the best result for the client.
Businesses need to reconfigure their strategy in order to allow employees to feel truly valued and to feel that their focus is not on numbers but on outcomes. Rather than annual reviews being based on budgets achieved or not achieved, reviews should focus on outcome obtained and results achieved for clients and the business.
Shifting the focus from profit to outcomes will allow for greater productivity, higher employee satisfaction and ultimately greater client outcomes. All employees understand and expect to be held accountable for their time and for the work they undertake, however this accountability should not be narrowed to monetary budgets.
Unfortunately, too many numbers are fudged daily by employees who seek to achieve and hit their daily targets. Employers need to shift their focus to employee satisfaction and client outcomes which will ultimately result in a higher profit caused by greater productivity.
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