33.2 Performance monitoring

The monitoring of operational and financial performance is an essential, yet often underestimated, management function in consulting firms. The purpose is not to produce statistics for their own sake, but systematically to collect and evaluate key information likely to reveal negative trends (from which will spring the need for action to redress the situation) or positive trends (which may need to be reinforced so that any opportunities disclosed are not missed).

Performance monitoring aims at immediate improvements first of all, but its strategic implications should not be overlooked. It helps to reveal changes and trends that will affect the consulting firm in the long run, such as major shifts in demand for certain kinds of service, or the increasing cost of selling services to certain markets. Adjustments to the firm’s strategy can thus be based on hard data rather than guesses and estimates.

Comparing and benchmarking

It is impossible to assess performance without making comparisons: superior or substandard performance can be identified and assessed only with reference to some other performance. Consultants use comparisons and benchmarking extensively when working with clients, and they should not hesitate to apply them to their own operation.

Comparing results achieved with planned or projected targets can be revealing, provided that the targets were based on thorough analysis and realistic goalsetting, and not just on guesswork. The main documents to which this comparison refers in performance monitoring are the annual workplan and operating budget.