The Wize Guys

Episode 39: Your fab5 dashboard crash course - the KPIs that build the business to run without you

January 26, 2023 Wize Mentoring for Accountants and Bookkeepers Season 1 Episode 39
The Wize Guys
Episode 39: Your fab5 dashboard crash course - the KPIs that build the business to run without you
Show Notes Transcript Chapter Markers

Episode 39: Your fab5 dashboard crash course - the KPIs that build the business to run without you

In this episode of The Wize Guys Podcast, Jamie Johns together with Wize Mentors, Tim Causbrook and Michael Ferris share valuable about key performance indicators or KPIs.

“What you can measure, you can manage,” as Ed Chan always mentions. One of the most important aspects of running a business without you is having KPIs in place which is discussed during weekly and monthly meetings.

At Wize, Jamie has been able to derive the KPIs in the Fab5 dashboard. This helps manage and track the firm’s KPIs. Also, Jamie Fab5 fine-tuning in Sky Accountants for seven years. Today, he’ll share how you can start to implement this dashboard in your firm today!


0:35 - The Wize DRS Model: Design 

1:26 - The concept of “What you can measure, you can manage”

2:36 - How Jamie derived the KPIs included in the Wize Fab5

4:29 - Why Fab5 is critical when growing your firm

10:22 - Tips for implementing buy-in

11:59 - What is lockup?

15:03 - The importance of having timesheets

17:20 - How to measure revenue

20:16 - Leadership is by the influence


“I think healthy competition is a good thing in general and everyone wants to be a winner. It’s quite common. I've actually seen this inspire people to be better.” - Jamie Johns

“It's not what we do, it's how we do it to get the success or the outcomes we need. It's always in the how. The answer's in the how.” - Jamie Johns 

“You wanna treat the problem, not the symptom.” - Tim Causbrook









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Episode 39: Your fab5 dashboard crash course - the KPIs that build the business to run without you

Tim Causbrook: Today's session is on design. So we split these up, you might have noticed into monthly sessions. We've got recruit, which is building the team out design, which is to do with the systems and then scale. It always says you wanna scale good things and it's very important that scale is the third stage there. That you recruit and design before you scale and get your house in order. So today we're looking at design and there are a lot of really important systems in Wize. You might notice we're kind of really fanatical about systems, but I would rage up maybe the most important one is the one that we're looking at today. It also seems to be one that some people have struggled with. So I think it'll be a really, really good session. 

In terms of kicking us off, we'll just start off with this. This saying that we're really big fans of here and that is, “You can't manage what you don't measure” by Peter F. Drucker. It's a very neat little saying, but it has a lot of wisdom to it. In my own firm, we went for 20 years without a single KPI, which is kind of staggering when you think about it. Love to hear about you guys in the chats, if you have any KPIs currently or if you've tried them in the past, and how that's gone. Some accountants seem to kind of not like them. They might seem if they've had any pushback if you've tried to have them. 

One of the questions that we've got is, well, ‘What KPIs should you look at? KPIs are great in theory, but really getting down to the detail, which is what we're all about at Wize Mentoring. And the most important, ‘What should we care about?’ 

Jamie. So you put this together with Ed's help. The Fab Five is what we call the key KPIs that we think are the most important at Wize Mentoring. Just to give us a bit of introduction to the topic. If people haven't heard of the Fab Five before or haven't really done much thinking about KPIs in general, could you just give us a bit of background? How did you guys come to decide on these five KPIs? Like why a Fab Five dashboard and why these? What's so special about these five that you've included? 

Jamie Johns: Yeah, well they sort of they really cover five key areas and really involve accountability. So when you get your firm to a certain size where you start handing over client relationships and start having senior client managers. Tim, the most important thing is accountability. 

Tim Causbrook: Yep. 

Jamie Johns: As Ed Chance says you wanna be in control without being controlling. You don't wanna micromanage people. So what you wanna do is micro-train so that you don't have to micromanage. That's where the Fab Five really comes from starting the first one is like revenue for example. Now, if you can get your firm to achieve its targeted revenue, then you're about 80% there. Because the reason is wages and overheads are normally pretty fixed. So once you step back from the day-to-day working in the firm and you hand over those relationships, you've gotta be able to like ~ number one, make sure that each team that you got hits the revenue target. Then, of course, there's profitability and that's by teams. 

The critical thing with the Fab Five is it's by teams. That's an important point for people to recognize that it's by teams. That's probably their critical thing. Lockup is a traditional term that you use in accounting and bookkeeping for anyone who sells time. We can go into that a bit further. Then, of course, sales, which is new fees, won and lost, and the percentage of leads and prospects that you're converting to clients. And then finally the net promoter score. So both the net promoter score from the client's point of view and from the second biggest asset you got is your team. You can't have a business without the team and monitoring how well the team is going. 

Tim Causbrook: Yeah. Awesome. Thanks for that. 

And Jamie, you said it's really important that if you have more than one team, you separate these out by teams. Why is that so important? Could you fill us in? 

Jamie Johns: Yeah, because the senior client manager is accountable. They're the one person who is accountable for the team. So, that's why you've got it at the start. They're the manager. What’s the manager's name? Obviously, the senior client manager, their responsibility, salary, and role are all in order to reach those KPIs. This is like really, really critical is the Fab Five. As your firm grows, you can be in control without being controlling because otherwise you're gonna continually try and micromanage people. 

I've dealt with this a hundred times where people are concerned about the performance of their staff on a day-to-day level. With senior client managers and we know Tim from our dealings that we can't get nervous about just what happens in a week in a month. You've really gotta set these KPIs and look at the development of the senior client manager in terms of accountability over a minimum of a year now. Provided that people have got a positive attitude, which is absolutely critical. You can lead people with results. Because at the end of the day, Tim, you want to influence people. So if you are the owner of your firm, you want to influence people, but how are you gonna influence people? The only way to do that is by showing them the results. That's why the Fab Five's critical in terms of the Wize philosophy of getting your firm to run without you.

Tim Causbrook: Can we pick apart something there? I mean you've just gone over it really well. Just then one of the things I get consistently here in my Wize Growth one-on-one monthly meetings is that assistant client managers or production managers just don't really care about these things. They care about getting through their own allotted work. Have you had experience in using this Fab Five in terms of getting the people in those management positions to care about these things that they might not have otherwise thought about as they go day to day to their job? Does that make sense?

Jamie Johns: I think so, yeah. I mean at the end of the day, Tim, what you focus on is where your energy will sort of will go. It's really good if you do have senior client managers to get them to give you a report on the Fab5 once a quarter and that's what we do even at Sky Accountants. 

So once a quarter, the senior client manager gives probably about a 20 to 30-minute presentation on their Fab Five. You don't need to regurgitate where they need to report to you how they're going in a non blame way of their results. Then your role as the firm owner is to support the senior client manager on how to improve their results. 

Tim Causbrook: It's a really interesting point that blames culture. Another kind of conversation I've been having a lot lately and it's something I tried to navigate on my own phone when I sub doing the Fab Five, ‘cause I have three teams. There was inevitably gonna be some level of competition and we had people who were quite nervous about having this because they didn't want the competition. Have you had any issues with that in your own firm or in the firms you've mentored or do any insights as to why that might not be a problem? Or how to manage that? 

Jamie Johns: Yeah, I've never come across sort of people being sort of overly competitive in a negative way. What I have seen is the client managers are doing well offering to support the other client managers who aren't doing so well in particular areas. So I've never seen it in a negative flight. I think healthy competition is a good thing in general and everyone wants to be a winner. It’s quite common. I've actually seen this inspire people to be better. So I've seen it. I haven't seen it in a negative light. What I've seen is the people who don't have very good results thinking, ‘How can I do better?’ On the flip side, I've seen other people that are doing great maybe just in sales, ‘How do I reach out to another client manager and get the results that they have?’ 

Tim Causbrook: Yeah, I was gonna say, do you find that it's the opposite of what I've described that it fosters more into team helping? You can see exactly where people are doing a really good job and a bad job across those five numbers.

Jamie Johns: 90% of the time, I would say that it's viewed in a very positive flight. Only to say about any numbers, scoreboard, or measurement will filter out the people who are. It will filter out people who consistently aren't performing. But that's the same as a professional sport. If you are keeping stats on a sportsperson, you'll obviously know whether they're going well or not.

So, at the end of the day results don't lie. Figures and statistics are just facts. That's the important thing here. It takes all the emotion out of trying to micromanage people because no one likes to be a micromanager. Particularly post-pandemic, I saw a recent study done that the great resignation probably started in the US and around the world. One of the top things, people don't like anymore is being micromanaged. I saw all that recently. So if you use the Fab Five in this way, you will not have to micromanage people.

Tim Causbrook: Yeah. I've experienced that in my own firm very much so the issues. I was trying to micromanage before I met Ed because we're looking at it every week. I think you said something earlier, Jamie, about it being right there in front of them. There's accountability from that and they started caring about it cuz I saw it each week and I didn't. I didn't wanna see it. They didn't want it to be there. Whereas out sight out of mind, the problem was still very much there. Whether it be whipped at as whatever it is. But if you're not looking at it, it's not front and center and you can kind of ignore it. 

Jamie Johns: Yeah. Well I mean, anyone who's an accountant or a bookkeeper, working with their clients and doing the work every day, it's very not shortsighted but it's very close. So it's great to take stock at times and put your head up and have a look at the forest and see how you are actually going from a performance point of view. Because, it's not what we do, it's how we do it to get the success or the outcomes we need. It's always in the how. The answer's in the how. 

Tim Causbrook: Yeah. No, awesome. Thanks for that. 

I'm assuming a lot of people on this call might not have started looking at these numbers yet and there's an element of change management involved in shifting to doing that and making it a part of your weekly meetings. I've known that you've had some kind of experience with getting buy-in in your own firm by getting your senior production manager. Can you tell us a little bit about that if you've got a sec, Mick? 

Michael Ferris: Yeah, sure. So my firm's just a single team. I'm still the senior client manager. In our weekly tactical meeting, I invited our senior production manager to come along to that in the spirit of keeping her abreast of what we plan to do that month, how we're going towards the budget, what needs to be finished, and all of that stuff. As Jamie said, if you can hit the revenue budget, you're 80% of the way there. So I figured why not give myself the best chance and get everybody on the same page? As you said, Tim, looking at it weekly. Otherwise, it's outta sight outta mind. You don't have that same level of accountability or those team members don't. 

One of the things that Jamie said to me and the recent six months that struck a chord was about getting everybody to treat the businesses like the goose that lays the golden egg. I think that could even be Ed saying. That's one way to get buy-in from assistant client managers and senior production managers to get them working towards the budget I found in my firm. If I just keep dripping on them and reinforcing that the business needs to win first because it's supporting us all and the revenue budget is 80% of it. So let's just keep pushing to get the workout. Let's know what the monthly budget is and let's aim to hit it. Then arguably we're most of the way there. 

Tim Causbrook: That's great. 

Jamie, you just wanna give people a little bit more measure of revenue and whether cash basis is king or accrual. Can you just give us a little bit more detail about that? 

Jamie Johns: At the end of the day, what lockup is really the average number of days in terms of revenue? So the average number of days in terms of revenue that is tied up or what we say locked up in debtors. Who owes you money? In some firms, over the last 25 years, I've seen massive debtors. They have a massive amount of money locked up is a good word for it in fees that they're owed. That's debtors probably that's an easy one to understand. 

Some firms that are here attending a bit like probably half of our revenue is monthly fixed fees and direct debit. You can use things like go proposal and Practice Ignition and all that type of thing. You don't have debtors, there are probably some firms that don't have debtors. One of my teams for example has probably negative debtors of a couple hundred thousand because they bill in advance for the year ahead. You can get from one extreme. I'm just explaining one extreme to the other. The other is where you might do a traditional time billing. Someone might be accountants or bookkeepers might say 50 an hour or a hundred hours or your senior client managers possibly in Australia or the US or wherever up to $200-$300 an hour. That's the traditional time billing method, Tim. So when you traditionally time, that time if you bill at the end. That's assuming you do billing, but if you don't bill it's caught in the whip or what we call work in progress. So that's, that's the traditional sense of whip. 

If you take a combination of the whip and the debtors, average that out over 365 days. Then look at what is to look what dollar value is locked up in your annual budget of revenue. That's lockup days you can see there. I know it might be a little bit hard to see, but you can see lockup days. So in this sense lock-ups extremely, extremely important. Many firms come across over the last sort of four years with Wize Mentoring has been quite a lot of firms who aren't tracking whip for example. My biggest probably call out in this clinic is to make sure that you reach out to the Wize team and get a little ebook that Ed Chan, Brenton Ward, the other mentors, and I had written called Accountants Write-Off Secrets and that will explain exactly what lockup is.

And further to go on that Tim, if you have to write time off, that's what we call a write-off. So if your firm, it doesn't matter whether you fixed the fee. This is an important point. It doesn't matter whether you fix the fee, like a lot of firms traditionally well do nowadays, which is more sort of a common or modern approach versus the time billing method. It doesn't make any difference. You must measure the efficiency of your teams and measure the efficiency of each individual team member. 

While if you've got a small firm, it's probably manageable and you can get away with sort of possibly not looking at the lockup. But I guarantee you soon as you get a larger firm up to above 500,000 off to a million and then larger, managing it by brute force doesn't work. So it's important that people in your firms do time sheets. That is a really basic sense, each person has budgeted hours to do certain jobs. 

One of the really critical things about delegation is to say, ‘Hey Tim, here's a job. This is how long it should take you to do.’ So, I was sort of mentoring someone the other day, and they were sort of micromanaging this particular team member and I said, ‘Well do you sort of give them hours around how long it takes to do things?’ They said, ‘No I don't.’ And I said, ‘Well that's part of your problem.’ Good leadership to say, ‘Hey here's the job. How many hours it should take?’ Because it doesn't matter at the end of the day, everyone around the world gets paid on time. Whether you fixed fee or whether you time bill, you must measure internal efficiency. 

My clients at Sky Accountants, wouldn't even know that we do time sheets because most of them, we don't build them on time sheets. It's just an internal management thing. One thing years ago Ed taught me was bottom-up management not top-down management. So you want bottom-up management.

Tim Causbrook: It's really helpful and it helps with hiring as well cause it's easy to do. It's easier to do productivity reports right with timesheets. A hundred percent, it's very, very hard. A lot of firms I meet who have trouble knowing if they need to hire don't have time sheets. You wanna treat the problem, not the symptom. If your productivity's low, the last thing you wanna do is hit the bottom line harder by throwing more people in there. It's inefficient. You wanna deal with the pro. So it helps you with hiring as well as managing the turnaround. 

Jamie, in the revenue. Is that on a cash basis or an accrual basis? Because we probably could be clearer about that. I guess sometimes I get that question as well when I'm mentoring. 

Jamie Johns: We always measured on a parole basis. In some firms maybe they may be just a hundred percent have a monthly direct debit. They necessarily don't have any debtors or people that owe their money. So you've gotta use a little bit of discretion but as a rule of thumb, most firms, whether they fix, feel, or not, will do it on an accrual basis. 

Tim Causbrook: Yeah. No, that's really helpful. Thanks. 

I've got one more question for you, Jamie, in terms of just how useful. This Fab Five is kind of an action point here. This Fab Five is in the WizeHub. 

Jamie Johns: We've got new developments coming with the WizeHub, which will really automate it to the next level over the next three or four months as well. So, which is good. 

Tim Causbrook: It’s really exciting. It's addictive. And if they don't, one piece of advice I would give you is like, this is me. This is what I did. I wasn't measuring sales or NPS. I had no way to measure NPS because I wasn't using surveys. But it's all about momentum, not perfection. Don't wait until you're measuring all of those five things to start filling it in. If all you're measuring is revenue and profitability, maybe you don't have lockup cause you don't have time sheets initially, just start with those. Would you say, Jamie, just s start putting in what you are currently measuring? Don't wait down the track.

Jamie Johns: Yeah. It's not about perfection Tim, it's all about progress. Perfection is getting anything done. One of the easiest places to start, it's just with the revenue. Most firms all track their revenue. It's really critical that you track the year-to-date revenue. So most firms can do that. The next step that you really should do is grab the year-to-date from last year and know how to compare. At the same time now at the same time last year, ‘How do we go?’ That's pretty basic. You can do that. And the next step around the revenue is, ‘Well. what's the budget for this financial year? So whether in you're in Canada, the US, or wherever, each team should be setting an annual budget for revenue. So, that would be just my starting point. 

As a rule, you can only share this data with your senior client managers. So once you've got a senior client manager in place, just share that data.

Tim Causbrook: Yeah. Sometimes my client managers will wanna share one of those with people to motivate them or something like that. I had a client manager who was really emphasizing writeups, not write-offs, and she managed to turn that around she kind of showed if you go, it's a bit more detail than it's probably needed. But if you go into one of the sub-tabs there where you fill out lockup, you can see how you've tracked from month to month. I really love going in there and seeing people's progress, whether or not they've been making progress or not. So, it's really nice, nice tool as well for that. 

Jamie, just to kind of like finish up on this. You've been fine-tuning this Fab Five at Sky Accountants, your own firm for over seven years. Now knowing what you now know from implementing it. It does take a bit to get the reporting. You have to start doing surveys. There's a bit of work. You've gotta get someone to actually start updating it. And quite frequently knowing all that you know from having implemented it yourself and built it yourself, could you run Sky Accountants the way you are now and grow it as you have over the last five or six years without this dashboard? How important was this? 

Jamie Johns: I couldn't do it. I couldn't run Sky Accountants without the Fab Five. That's pretty straight. The important thing to mention I think to summarize before we go to the breakout rooms probably said this many times, but a lot of the time you have to question what leadership is and people have probably heard me say this before. But at the end of the day, leadership is to influence everyone. If you really want to define leadership in terms of your firm, whether it's a sports team or a business or whatever you're trying to achieve. I'd have to say leadership is influence. 

But the question begs then, Tim, ‘Wel,l how do you influence people? How do you go about influencing the key people on your team? Again, sports are always a great analogy. But you have the captains of your team and we have our senior client managers. So the question is, ‘Well how do I influence them? How do I change the behavior to get the goals, to get the benchmarks that we need?’ The way to do that is by results. The way to do that is by showing them the scoreboard. And this is missing. 

One of the biggest missing links that even Michael E. Gerber talks about in the book is called the E-myth. Some of you may have read it. He talks about the entrepreneurial myth, the technician, the manager, and all that sort of thing. So, at the end of the day, if you wanna be able to influence the key leaders, influence your senior client managers and therefore influence your entire team, it's just so critical. 

The core of the Wize Mentoring philosophy is to get this scoreboard set up so that you can then show the senior client managers and key leaders the outcomes of how they're doing things, and the outcomes of their actions. It's across those five key areas. It's probably longer than seven years, Tim. It's probably Ed Chan's 40-odd years of experience. I've been in business for over 20 years. So it's really the combination of all Ed's experience and dealing with different hundreds of different firms dealing with our own firms and even input from Brenton. Brenton's been around the coaching scene for years and years and the Fab Five is so critical. So the quicker firms can get their teams together. Whether it's one team or two or three or whatever it is, the quicker that you can get, your Wize ideal team structure in place, get your senior client managers in place and get the Fab five working. The quicker that you'll have bottom-up management and you'll have the ability to influence behavior. But you can't do that without a scoreboard and showing them the scoreboard regularly. What we measure we can manage is a great cliche, but you gotta measure the right things. And that's the key in our industry, whether it's bookkeeping, accounting, tax, or advisory. It's important to measure the right things and that's why we have the Fab Five. 

Tim Causbrook: I couldn't agree more. I was gonna ask you for an action point, but that kind of sounded like the best action point you can do. Just get in there and start measuring it. 

Jamie Johns: Yeah, that's it.

Tim Causbrook: There are so many benefits that come out of what you've just said. 

Jamie Johns: And just remember you delegate the task. Obviously, do it yourself at the start, but then once you've got this working, just delegate the task to division seven accounts. You should be able to just rock up to your monthly board meeting and have these figures there. Then make sure you put the projects, systems, policies, and procedures in place so you can get each of these five ones, KPIs. 

Tim Causbrook: Yep. Oh great. That's great. I'll end it on that one.

The Wize DRS Model: Design
The concept of “What you can measure, you can manage”
How Jamie derived the KPIs included in the Wize Fab5
Why Fab5 is critical when growing your firm
Tips for implementing buy-in
What is lockup?
The importance of having timesheets
How to measure revenue
Leadership is by the influence