Measuring what matters: [want to know how successful your firm is? Take the customer's point of view].

• Author: Morris, Daniel D.

CPA firms are enamored with their internal performance measures. The most popular include [tours billed: hourly rate hilled: percentage write offs: non-billable hours: and gross revenue per partner, per team member and per office. All of these traditional management of accounting practice measures focus on the firm, rather than the customer, We are convinced that CPA firms are too focused on internal measurements for their ego and reward systems to the detriment of the firm's customers and team members, and the firm's financial and emotional outcomes.

Such measures, while informative for the firm's leadership, violate the canons of performance measurement, enhancements that drive improved profitability, customer loyalty and employee happiness. Performance measurement systems must he aligned with the customer's expectations and experience in mind, otherwise the behaviors customers receive will conflict with the behaviors they desire.

Such conflicts lead to lower revenues, lower customer loyalty and higher employee turnover.

Following our motto of "Study Success for Success Leaves Cities." we searched for the best forum to learn how our profession can create performance measurements that:

* are leading rather than lagging indicators:

* are focused externally, where results matter and where revenues and profits are generated;

* can move our profession forward by focusing on the important measures, even if they aren't easily quantifiable: and

* are valued by our customers, because that is where performance matters.

After researching successful service companies, including The Ritz Carlton, Nordstrom and Four Seasons, we determined that FedEx provided one of the best models for emulation.

DELIVERING RESULTS

FedEx is the leading innovator and service provider in the overnight package delivery business. Its brand is so strong that people don't refer to "overnighting" a package, they simply say "FedEx it." FedEx's reputation for premium pricing, delivering packages when you need them and an unconditional guarantee that your delivery will be on time or its free, has catapulted it to market leader while recording superior profits.

The best way to study FedEx is from Memphis, Tenn., its worldwide hub. In Memphis we saw about 175 aircraft from around the world fly in and--with the aid of 9,000 part--time employees--be unloaded and reloaded with about 1.5 million new packages. Planes were airborne again in less then an average of five hours.

We compared FedEx's ability to monitor, control, sort, handle and deliver approximately three million packages a day to the average CPA firm that we consult with that might have l00 projects going at...