KPIs for Consultants

02/06/2010 Patrick Consulting, 2

Been a while since the last (and first ) post. Something a bit off topic and not really related to any technologies, KPIs (Key Performance Indicators).

KPIs are a relevant part in almost everyone’s salary, right? But how do you determine qualitative KPI measurements and especially in the consulting business, what are “good” KPIs? More importantly, what KPIs could you use to determine a consultant’s performance?

Since this blog is around consulting, we will focus on KPIs for consultants for the remainder of the post. Lets define “good” and “bad” KPIs first. What makes a KPI good or bad? Well lets look at two examples.

KPI Title: Project Success
Definition: Completing a project on time and budget
Measures: Project completion date and remaining project budget after project completion
Targets: Increase number of on time and budget projects each month

What is wrong with this KPI?

• The definition does not mention anything about when a project is delivered on time and budget. For both components, there are many influencing variables. Just take the project completion date as an example. A project completion date is usually part of the contract. But things like hardware acquisition, the client’s availability and other parts are well beyond any influence a project manager can possibly have. Although the project date in the contract states 31/05/2010, the project may end 2 weeks later, but still in consent with the clients expectations, as they might have had issues with getting their hardware purchase sorted. So from a client’s perspective the project is still in time as such, but how do we define variables like these?
• Measures should contain information on what data will be used to calculate the reached KPI value
• Target should be clearly defined in numbers, percentage; e.g. Increase number of successful project completions by 3% per month compared to the previous month
• Exceptions. In my opinion every KPI should have rules for exceptions defined, which adjust the KPI under certain circumstances. These cater for various events that a consultant clearly can’t influence; e.g. the sold project has been under quoted by sales.

KPI Title: Customer Satisfaction
Definition: The sum of all total scores from completed customer surveys within a financial quarter, relevant for the consultant’s projects, divided by the number of customer surveys conducted for the consultants projects.
Measures: Customer satisfaction surveys will be conducted at the end of each project. The customer will answer several questions, relevant to the project and the consultant’s role within the project. All reports are stored centrally and can be accessed any time. The results within a financial quarter will be provided to the consultant and their manager.
Targets: Have an average customer satisfaction of 75% across all projects within a financial quarter
Exceptions: In case the consultant is engaged in a longer project and has no customer reviews during a financial quarter, the KPI bonus will still be paid.

Yes, there might be things missing, but I guess you get the idea and difference of “bad” and “good” KPIs. I think it is really important to spend enough time defining the KPIs, their measures, definitions, targets and exceptions.

Now lets try to define a couple of KPIs for consultants. The following list contains ideas for different KPIs and I am happy about any feedback and criticism. Feel free to extend the list in the comments, I’ll then add the KPI to the list in the post.

• Customer Satisfaction: Conduct, measure and evaluate a customer’s satisfaction with the consultants work on a regular basis
• Billable Hours: Put the number of billable hours in relation to non-billable hours. For exceptions and amendments to this KPI, also consider work a consultant might be doing internally for your company
• Ideas for improvements/re-use/new services:Reward consultants for new ideas, re-usable components and contribution. At the end of the day, a company’s intellectual property is dependent on the consultant’s creativity (or laziness when it comes to re-usable components ) Put a KPI in place that measures the consultants contribution, but also make it one of the smallest KPIs. Otherwise you will spend lots of time reviewing lots of “ideas”.
• Training: Define training goals during performance reviews and give your consultants some encouragement to meet their training goals.
• Certification:Define a KPI for acquired certifications. This will not only push your companies reputation, but also assist in meeting the companies targets in acquiring certain partner certifications (e.g. Microsoft Partner Achievements)
• Sales Contribution:Lets be honest. At least 30% of the work companies win, are related to a consultant working for a company and finding opportunities. They then forward theses opportunities to the sales department and these guys get their commission on projects, that they might have never known of. Create a KPI that measures a consultants contribution to sales. This might include work they did for proposals, opportunities they have developed while working with a customer, etc. Also extensions to projects. Sometimes, while working on a project consultants spot extensions or additional features that could be implemented without sacrificing the project dead line. Consultants are the first point of contact for almost any customer. Never underestimate the sales power of your consulting team!

As I said before, this is just a list of ideas and, please, feel free to contribute to the list

It is good to have KPIs in place to reward your consultants and measure their performance at the same time, but don’t put too much pressure on them by implementing a never ending list of KPIs they need to meet to gain their bonus. This will most certainly affect the overall quality of the work and at the end of the day a company’s reputation.

Also be careful with the sales contribution KPI. Make this a quite flexible KPI that is handled as a “add-on” for a consultants salary, rather than a must. As a customer, I certainly don’t want to have a consultant sitting next to me that constantly pushes me for additional features that I “need”, just so he/she can meet his/her sales KPI. Rather consider giving them commission based on their contribution; e.g. a consultant has spotted an opportunity, estimated the work and the client has agreed on the work. Grant them a certain percentage of the overall project revenue.

Last but not least, review the defined KPIs on a regular basis. Base your review on the following questions:

• Are they still relevant to the business?
• Are they in line with the business strategy?
• Are the targets, definitions, measures and exceptions up to date?
• How relevant are they to the consultant’s individual role?
• Do they measure a consultant’s performance well enough?
• What is the value of the KPI to the overall business?

I hope this all makes sense and I am more than happy about feedback, ideas and criticism. I am in no way an experienced manager that works with KPIs everyday, I am just thinking out loud here

Consulting, KPI, Performance, Performance Target

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