Managing for Success

Profit Based Management Environment (PBME)
Presented by ReCourses


Many firms suffer from a management environment that has been shaped more by client demand than by careful planning. Ultimately client demands are an inevitable force in shaping the delivery of services, but even clients are not well served with lack of planning, in spite of the appearance (and sometimes reality) that the client is running the firm from the outside.

The management environment at most firms is deadline-based rather than profit-based (or budget-based). In other words, more attention is paid to when something is due than to keeping the project on budget (internally) so that it yields a profit.

As the components of the project move through the firm, what pushes it is an upcoming meeting, deadline, or delivery date. For example, an employee is handed a job and told: "I need this for a meeting at 9:30am tomorrow." In a profit-based environment the same hand-off would be phrased: "I need this for a meeting at 9:30am tomorrow. By the way, we've estimated about 3.5 hours for this section. Keep track of your time and we'll look at it once this project is done. I want to make sure we are estimating correctly, you have the training and tools you need, and I'm not over - promising to the client. " Having a profit-based management environment relates directly to quality of life issues, too. Without one, a) details will frequently slip through the cracks, disappointing clients; b) no one will be able to do a "mind dump" of those details that are slipping through the cracks; and c) your firm will not achieve the level of profitability it could.

Does your firm suffer from this malady? There are two ways to quickly gauge the extent to which your firm is suffering from the lack of a PBME. The first is to check your billable efficiency (choose the appropriate test at by answering six simple questions. The second is to hand everyone in your shop a slip of paper with one question: "Who is responsible for keeping projects on budget" If the answer is not consistent (and preferably a production traffic manager). you have a problem.

The Basis for a Project Based Management Environment

If you want to transition your firm to a PBME, there are several components that will be critical to making that transition successful.

First, and most important, you will need a strong motivator. This is usually anger at the fact that you have been "subsidizing" clients at personal expense to your quality of life. It's accompanied by overwork, underpay, and the realization that client loyalty is thin indeed. Clients are not the enemies, but they are also not friends.

Second, you will need confidence that you are worth every penny of the hourly rate you have set. Though everyone agrees with this verbally, in reality they don't believe it. How else can we explain our charging practices? Confident people get paid for what they do.

Third, you will need to move from denial of the problem to actual measurement of your progress (see the appropriate test at

Fourth, you will need to create a common language - a common vision to keep this quest a corporate priority. Without involvement from all quarters, change will not be as deep or lasting as it could be. For example, communicate the purpose/program very clearly. Build consensus. And consider offering incentives to the entire staff, or at least those most in a position to affect the outcome.

Components of a Project Based Management Environment

A PBME is woven through the fabric of any particular management environment. None of the individual threads are critical, but together they form a strong, flexible, lasting system that brings profit to your company:

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