Why this is on my mind
Today I’m speaking at a conference for pension consultants which is supposed to be exploring the opportunities for them and for their clients. Looking at their agenda, there is an obvious issue missing “how should consultants get paid?”.
What measures matter
There are two obvious ways to pay a consultant – On the amount of work they do and on the quality of the work they do.
It is easy to measure the amount of work a consultant does, it is based on time sheets and is measured in the chargeable and non chargeable hours spent over a working period. Obviously most consultants are targeted to maximise the ratio of chargeable to non-chargeable , the latter sometimes being referred to an “non-productive work”. For a consultant primarily engaged in research, the emphasis is different but most consultants rate themselves on their chargeable billing.
Which only tells half the story. I know many consultants who have billed high and destroyed value within a consultancy. The quality of the work was low that clients walked away, the cost of acquisition of new clients to replace these lost relationships was as high as the billing.
So consultants should be judged by the quality as well as the quantity of the work they do.
A new qualitative measure
Until recently it was very hard to gauge the quality of work. However we are moving into a new technological age where clients are able to score the quality of a piece of work at the press of a keyboard button.
I look forward to the first British Consultancy requiring every invoice paid to be accompanied by digital or written feedback in the form of a score on the client’s perception of the quality of the work.
That would put the cat among the pidgeons!
Not so far fetched as this might seem
This may seem far fetched but it really isn’t. If you choose to be on http://www.vouchedfor.co.uk, whether you are a mortgage advisor, an IFA or a solicitor, you submit to being rated by those who buy your time and those ratings are publicly displayed.
I understand that MAS, at our and others suggestion are looking to use the same system for advisers being sign-posted from the guidance guarantee so that their directory delivers qualitative information to those looking to purchase advice going forward.
In the febrile recruitment market, there may come a time when these scores determine your value in the market.
How this information might be used
I see three uses for qualitative measures of a pension (or any) consultant
- To pay them
- To hire them
- To fire them
If performance related pay means anything, it should take into account the quality as well as quality of work done.
If you are mindful of the value of your practice, you will pay your consultants on the satisfaction their work brings as well as its contribution to your p/l. Satisfaction is measure by goodwill which sits on the balance sheet (and has always been judged as the quality of earnings).
Hiring people who can prove consistently high client feedback scores is as important as hiring on work rate or “chargeable’.
Firing people who destroy value is tough, especially when you have no evidence they are doing so. A poor quality score on client feedback is the evidence needed to make the crucial decisions on who to retain .