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"You get what you measure - discover how to use a balanced scorecard approach to measure and deliver the business performance you desire"

 

Measuring the performance of your business using a balanced scorecard of Key Performance Indicators provides valuable feedback to management and assists the ongoing success of your organisation.

 

Business success seems simple enough: you begin with a plan, you have some goals and strategies and you carry them out. However, the reality is that sometimes you achieve success and other times you fall short without really knowing why. Using a balanced scorecard of Key Performance Indicators can provide valuable feedback on why you have or have not succeeded.

 

Key Performance Indicators
Key Performance Indicators are financial and non-financial measures which are used to assess the current performance of your practice and identify those areas within your business that add value and those that need improvement.

 

Most businesses measure their financial performance in some way even though it is often one to two months after the event. However, using a balanced scorecard of Key Performance Indicators means that you can measure the success of all your business strategies and processes, which is far more powerful than just looking at financial results.

 

Understanding How to Measure Performance
To appreciate how Key Performance Indicators can benefit your business, we need to look at your goals and objectives which are usually documented in your business plan. For example, the objectives of a Physiotherapy practice might be to achieve a meaningful local market share. To realize this, the practice may need to:

 

- Acquire new equipment or adopt unique techniques

- Provide reliable and timely service

- Introduce high quality patient care

- Identify the most viable patient segments of the market to pursue

- Adopt a convenient payment process

- Provide a professional follow-up service for patients

 

These would be the practice's Key Success Factors and your business processes should be designed to work away at these Key Success Factors every day. Many business owners develop good strategies, but often they do not adjust their business processes to address these. The best way to truly measure whether your business processes are limiting the achievement of the goals of your business is to use a balanced scorecard of Key Performance Indicators.

 

Developing SMARTA Key Performance Indicators
As many businesses do not adequately define their performance objectives, it is essential that Key Performance Indicators are developed using the acronym SMARTA, which means they should be:

 

Specific
Measurable
Achievable
Relevant
Timely and
Aligned

 

Each component of the SMARTA principle is explained below.

- A specific indicator needs to be detailed clearly, e.g. seeing 15 new patients per week.

- The indicators needs to be able to be measured, e.g. the number of injuries in the workplace. It is important that a system or procedure exists which enables the recording of the measure.

- The Key Performance Indicators set by the practice need to be achievable by staff given a reasonable amount of effort and application.

- Whilst the objective might be important to the practice overall, it needs to be relevant to staff members so that they can relate to it.

- Key Performance Indicators need to be measured on a timely basis, e.g. daily, weekly or monthly, rather than being left open.

- Key Performance Indicators need to be directly aligned to organisational goals and objectives.

 

The Importance of a Balanced Scorecard of Key Performance Indicators
The fundamental importance of creating a balanced scorecard of Key Performance Indicators is that it provides a comprehensive overview of all the key elements that impact on the performance of the practice. We believe there are five key areas that need to be measured and these are detailed below.

 

Client Service Excellence
Given that patients are the most important element of a successful physiotherapy practice, it is essential that we understand how well we are meeting the requirements of the patients. Casual comments or one-off points of view are not helpful in measuring how well the staff are servicing the clients. It is important that a documented process is put in place to regularly measure how well patients perceive the product and service experience the practice provides. Thus we need to implement a small number of measurable indicators that will help us understand the real values that we are providing to our patients and assist in identifying those areas in which we need to make improvement. Some Key Performance Indicators for Client Service Excellence are:

 

- Level of patient satisfaction >95%

- Level of patient retention >90%

- Number of patient complaints <2

 

Business Development Effectiveness
The ongoing success and growth of any business is based on how well we identify and promote those areas which will generate new and ongoing clients. Many businesses spend large amounts of money on a number of business development initiatives; however, most have no idea of the effectiveness of this expenditure. There needs to be a robust process to critically evaluate the effectiveness of funds spent on business development including such areas such as websites, yellow pages online and print advertisements. Some Key Performance Indicators for Business Development Effectiveness are:

 

- New patients seen per physiotherapist per week >15

- Average revenue per physiotherapist per day >$750

- Average advertising effectiveness rate (%) >100

 

Practice Efficiency and Productivity
Today's physiotherapy practices will succeed or fail based on the efficiency and productivity of the staff within the practice. Many activities are carried out by staff members which are often non-value adding and this results in unnecessary costs to the practice. Often the processes have not been clearly documented and thus tasks tend to be duplicative and therefore unproductive. There needs to be a set of measures which the principal can utilise to measure the efficiency and productivity of staff members. Some Key Performance Indicators for Practice Efficiency and Productivity are:

 

- Staff utilisation >85%

- Staff turnover rates <5%

- Number of injuries per annum 0

- Cost savings per annum >$20,000

 

Financial Measures
The financial position of the practice is obviously an important measure of the success of the practice. However, often practices only look at the top line, i.e. revenue and the bottom line, i.e. profit before principal salary and in most cases this is one to two months after the event. The essential element of monitoring financial performance is the need to compare actual performance against a simplified budget as well as last year's performance. This process ensures that the various trends in both revenue and expenditure items are regularly monitored and corrective action can be taken immediately. Some Key Performance Indicators for Financial Measures are:

 

- Revenue per physiotherapist per annum $145K

- Staff costs as a % of revenue <30%

- Rent and leases as a % of revenue <8%

- Supply costs as a % of revenue <3%

- Total costs as a percentage of revenue <60%

- Profit as a percentage of revenue >40%

- Debtors as a percentage of sales (%) <2%

 

Environmental Measures
In today's environment all businesses need to make a contribution to reducing greenhouse gases and waste production. Many companies have found that going 'green' can be exceedingly profitable as well as being environmentally responsible. In order to determine how green our practice has become it is vital that we establish a number of key measurements which can be monitored on a regular basis to provide the evidence for our practices contribution to improving the environment. Some Key Performance Indicators for Environmental Measures are:

 

- % use of low energy lighting 100%

- Amount of waste recycled (%) >50%

- % use recycled paper >75%

 

It is important to remember that there is no one Key Performance Indicator that highlights business success or failure, other than liquidity i.e. no cash - no business. It is obviously difficult and time-consuming to measure everything, therefore those performance indicators that have the most immediate impact on the practice should be considered first. Using a balanced scorecard of Key Performance Indicators provides a thorough overview of all the key elements that impact on the performance of the practice.

 

There's a business saying: "what gets measured, gets managed". Principals need reliable and truthful figures on which decisions can be based.

 

To discover how you can benefit from a balanced scorecard analysis of your business - click here to learn about our business health assessment or click here to find out about business coaching.