By the end of my tenure as CEO of Gensler, we had 2,400 people in 25 offices around the world, so we had to come up with some methodologies and metrics to keep us all informed – a dashboard of sorts. ZweigWhite publishes an annual Financial Performance Survey that provides a snapshot of important metrics in monitoring performance. But sometimes these numbers are hard to get your arms around – a little like reading tealeaves. A meaningful and useful dashboard is only helpful if, at a glance, you and your colleagues can quickly gain a sense of how you're doing and what you should be doing to enhance your fiscal performance. As CEO, here's what I wanted to know:

Labor costs – My biggest concern was how much billable time we were generating compared to time we were paying for. That means knowing the ratio between time we could invoice to our clients for work under contract (and expected to be collectable) versus overhead hours (administrative staff or technical staff time that didn't generate a bill to a client such as vacation, illness, training, and research). You'll have to generate your own metrics since each firm measures time a little differently. I can only suggest that you start monitoring ratios at your current level of profitability in order to understand where you are today and to develop a sensitivity to trends in billability. Labor is your highest cost. Small movements in your ratio of billable time will have a disproportionate impact on profitability. Monitoring and comparing your effective multiplier is interesting and helpful, but it won't help you develop that feel for where to push to enhance your financial performance.

Indirect expenses – With multiple offices, gross numbers for rent or telephones didn't help me much, so we converted our numbers to a "cost per person" by office in each category in our chart of accounts. This allowed me to scan across multiple offices to look for best practices versus offices that could learn something about managing things such as reprographics cost or the budget for their holiday party. It also was a great tool to communicate to our staff how much it costs to run a business – made people a little more frugal about how they spent the firm's money.

Direct expenses – I wanted employees to think of costs for which we were reimbursed by our clients as if the charges were coming out of their own pocket, so we made reprographics and messenger charges visible to project managers so they would be a little more careful with how we spent our clients' money. Our clients appreciated it.

Accounts receivable – Our contracts called for clients to pay our bills within 30 days of receiving our invoice, so getting the bill into the clients' hands early in the month was a whole lot better than the end of the month. Every day that a bill sat on a project manager's desk rather than on the client's desk represented dollars that we had to add to our capitalization – the funds it takes to bridge the time gap between when we had to pay salaries and rent and when clients' checks made it into our bank account. Every dollar we had to add to our retained earnings cost us nearly two dollars by the time we paid taxes for the privilege of keeping it. I wanted to know which project managers were "sitting" on our invoices.

Collections – I also wanted to know which clients were paying their bills in a timely fashion, so I monitored invoices by days outstanding. I wanted my team to start calling clients as soon as bills were sent: "Did you receive our bill? Was it prepared properly? Do you have any questions?" If we didn't receive a payment within 30 days, I treated it like a bad report card and expected the client relationship manager – whether it was the principal, project manager, or designer – to call the client to find out what we were doing wrong. If the answer was, "nothing," then the next question was, "Is there any reason why you can't pay our bill right away?" After all, it's our money, and I'd far prefer it to be in our bank account than theirs.

Ed Friedrichs is chairman of ZweigWhite. He previously was president of Gensler, Architecture Design and Planning Worldwide. During his tenure at Gensler he established the firm's successful practice areas in entertainment, transportation, urban and master planning, and strategic facility consulting.
He can be contacted at info@zweigwhite.com.