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Profitability vs. Health

More notes from Managing the Professional Service Firm

  • Rather than focusing on chargability and realization reports, look at profits per partner.

  • For each activity the firm strives to improve (e.g. delagate better, develop higher value services) examine how each contributes to both short-term profitability and long-term health.
  • These activities, in order of importance to health, are
    • Raise prices
    • Lower variable (delivery) costs
    • Fix underperformers
    • Increase volume
    • Lower overhead costs
  • is so important and offers a systematic method for improving it.