The first quarter of 2004 has brought mixed results to the economy. While the markets have appeared to rise, unemployment is still the concern of many Americans. Reviewing the impact this has had on our profession, it appears that the shake-out of bad economic times has ended for now. It was a long and dark three or four years for most of us. But, by all appearances, good times lay ahead. For this reason, there has never been a better time to get your house (practice) in order.
I would invite you to consider the concept of practice efficiency. This is where hardware, software, procedures, employees and training all work in concert with each other to produce greater output with less effort. I call this tactical efficiency.
Tactical efficiency in your practice is one of two operational aspects. Strategic effectiveness is the other. Strategic effectiveness is often discussed within the framework of a leadership system. Management consultants, for instance, may use such a system to help entrepreneurs understand how to structure their business from a leadership and task-delegated basis. Certainly, this is an important component in your business effectiveness. However, the other operational aspect, tactical efficiency, is just as important.
Tactical efficiency involves the smooth operational and procedural aspects of your office. It can be broken down into a number of areas. Here are just a few:
Time Efficiency. This is the proper application of time management to produce the most efficient use of your time and that of your employees. A typical example of not utilizing time efficiency is where the advisor has scheduled appointments on opposite sides of town without sufficient time built in for travel. Another example (more to the point) is when we fail to schedule time for office tasks such as opening mail, answering e-mail or returning phone calls. Negative influences on our time are called time demanders. If you allow yourself or your employees to constantly interrupt the day with unimportant phone calls, or you attempt to answer all e-mails throughout the day as received, you will never have enough time to get everything done. We all have had to deal with clients who are time demanders. Allowing a client to engage you in a lengthy conversation of less importance could seriously eat into your time. One work-around could be to ask the client if you could schedule a time to discuss this issue in more detail. This shows you respect the views of your client and are willing to set aside a specific time to discuss them, but that it is not convenient at the moment. Setting aside specific blocks of time each day to return phone calls and/or e-mails is far more efficient than being constantly interrupted with such tasks throughout the day.
Technical Systems Efficiency. This is where your technical systems, such as computers, printers, telecommunications, software, etc., all work in smooth harmony with each other, sharing information seamlessly. Much has been written about new software and computer systems and how they can make your life easier through increased automation. And, as attractive as this seems, cost is often an issue. Just trying to keep up with the newest and fanciest equipment can land you in the poor house. And, for most of us, it may be unnecessary. Most practices I have analyzed are greatly underutilizing the technology they already own. Adding more equipment only compounds this issue. The first step is to determine what you can do (if anything) to make what you already own work better. One clue is to get advice on this from someone who does not have a vested interest in selling you more equipment.
Operational and Procedural Efficiency. How do you train new employees? What resources are available to them to learn their new position quickly? Can an existing employee take on another employee's tasks if that employee has an extended illness or leaves? Developing detailed, written procedures and operational guidelines are critical aspects of efficient office operations. Having such documentation significantly cuts down on training time, which can slow down your practice operations (or bring them to a screeching halt). It also builds in a safety valve in the event a key employee is unavailable to do their job. Cross-training of employees is affordable and possible at this point. What if you are your only employee? Having written procedures, tying your activities to effective time management and scheduling operational task time in your schedule with the same priority as client appointments are critical for the one-person shop. Automating or outsourcing other tasks is another consideration, depending on cost.
Office Space Utilization Efficiency. If you are like most practitioners, we started out small and added furniture, equipment and employees as we grew. Unless you really thought about such expansion from the get-go, chances are the types of equipment and placement is a hodge-podge of unrelated, ill-placed stuff. Most of us find ourselves addressing this issue on a piecemeal basis. When that filing cabinet gets full, we figure out how to stuff another one somewhere else in the office, right? Well, there is a better way and, magically, it can greatly improve office efficiency and employee attitudes. It also can lend itself to a better client perception. There is something to be said for a well-thought-out filing system. Just as important is equipment, furniture and room placement, often referred to as positional efficiency. I am not suggesting that you transform yourself into a Feng Shui expert. However, practical and efficient space utilization lends itself to a better work environment, and your clients do notice the difference.
Practice Recordkeeping and Bookkeeping. Even though we preach to our clients the importance of organizing their finances, how much time do we actually spend organizing our own? Proper recordkeeping is critical from a compliance standpoint. I do not need to remind you of all the issues surrounding increased scrutiny of such records. Having a system to simplify this process of recordkeeping is a key element in practice efficiency. Bookkeeping, ultimately, is a key diagnostic tool to measure the direction and speed by which your practice is growing and evolving. This, too, can be automated to a certain extent, and simplified to reduce your time and effort while increasing the benefit derived from such activity.
All of these, and more, represent a mosaic of tasks that must be accomplished to achieve the highest levels of practice efficiency.
In future articles, I will discuss some of the finer points of practice efficiency, such as paperwork handling procedures, filing systems, computer files and storage issues and using new technology to increase your practice efficiency. Remember, increasing your practice efficiency means having more time and resources to improve product and service quality, not to mention overall client satisfaction.
David Lawrence has more than 20 years of experience in the financial services profession. He is the current president of the Tampa Bay chapter of the Financial Planning Association.