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It is always important to identify your talent. To do that, you need to measure your talent, but measuring talent is not an easy process. However, the outcome is valuable and allows you to differentiate between employees, ensure consistency during evaluations and create appropriate growth and development plans that are tailored to individuals’ needs. The challenges then are how do you know what to measure and do law firms need to evaluate anything other than billable hours to determine someone’s talent and value to the firm?

Using only billable hours as a metric leaves much to be desired. It’s very short-term, yet broad in scope, and encourages people to focus only on immediate opportunities. It fosters an environment where people won’t focus on generating work with new clients and services. While billable hours may be a good indicator of an employee’s work ethic and ambition, they do little to indicate if that employee provides excellent client service or has superior relationship-building skills. Moreover, they do not address other important attributes — for example, personal qualities such as leadership and team-building abilities — that contribute to making a successful lawyer who adds value to the firm

A scorecard is a useful tool to measure how people progress against their goals. A good practice is to use a 'balanced scorecard,' a term popularized by Robert Kaplan and David Norton in the article 'The Balanced Scorecard — Measures that Drive Performance,' which ran in The Harvard Business Review in 1992. Kaplan and Norton proposed that businesses should use a scorecard that balances an external view of the business (customers and shareholders) with an internal view: what the business must excel at, and how it can continue to improve and create value.

The process of developing a balanced scorecard starts by defining the categories of measures or 'results areas' that are linked to the firm’s strategic goals and priorities. After all, to quote the first sentence of Kaplan and Norton’s article, 'what you measure is what you get.' It’s generally agreed that three to five categories are sufficient. The categories should take a one-year view and the metrics should reflect what individuals (and the firm) need to do to meet the firm’s strategic goals.

By way of example, Deloitte uses a form of the balanced scorecard, structured around four categories: quality, talent, financial and marketplace. These represent areas that are important to Deloitte’s success and allow individuals to set personal goals that are relevant and related to the firm’s strategic objectives. These categories help people to round out their capabilities by focusing on important areas where they need to develop. Someone who is good at managing teams and coaching people (talent), for example, may need help with building eminence (marketplace) to be successful.

One of Deloitte’s clients uses four different categories: customer service, financial, operational and organizational. These categories reinforce the importance of customer service to the organization’s success, the need to continually improve its operational processes, invest in its people and measure its financial results.

To achieve the optimum impact, the scorecard should be used to set targets in individual personal plans and to track progress against those targets as part of the annual review process. That’s sometimes hard to do where lots of work is done in teams — but you can and should translate team goals into individual accountabilities to make them real and meaningful. It’s helpful when firms provide their people with general targets appropriate for different roles within the firm. In addition, individuals should be encouraged to set their goals in consultation with their team members to ensure alignment.

In terms of individual metrics, leading and lagging indicators should be balanced. Lagging indicators identify how a person has done in the past. Leading indicators reveal more about future results. Billable hours are an example of a lagging indicator as it’s a scorekeeping measure. Participating in business development or eminence-building activities would be a leading indicator.

If, for example, you have a strategic objective to grow the firm’s client base or to increase the range of services provided to current clients, it is important to set targets that encourage professionals to balance the time they spend on current files with existing clients (a lagging indicator) and time spent on building new client relationships (a leading indicator).

Finally, it is important to be flexible. Scorecards should be reviewed and revised as priorities change and in accordance with changes in the business environment. If something material changes, make sure that is reflected in the metrics and perhaps in the scorecard itself.

In today’s competitive market, measuring performance on multiple levels is essential to understanding business performance and driving success. By putting in place the right measures and processes, firms can strengthen their competitive advantage and ensure they have the foundations in place to drive success.

Richard Lee is a partner and Sara Arnstein is a manager in Deloitte’s Human Capital practice, based in Toronto. Deloitte’s Human Capital practice helps organizations to develop and implement effective talent management strategies. The authors acknowledge Brita Lerohl’s valuable contribution to this article.