Setting Realistic Targets and KPI's for your Team in 2026/27

Setting Realistic Targets and KPIs for Your Team in 2026–27

Setting effective targets for an accounting team is about much more than choosing a number and hoping people achieve it. The most successful firms understand that productivity, utilisation, and profitability are related metrics, but they measure different aspects of performance. Establishing realistic KPIs requires a clear understanding of these differences and how they influence business outcomes.

One of the most important concepts is productivity, which can be measured as the proportion of billable time compared to total working time. This provides a practical way to assess how much of a team member's effort is being directed toward client work. However, productivity is often misunderstood. Activities such as taking annual leave do not reduce productivity because no working hours are recorded during that period. Similarly, rework should not automatically be classified as non-billable or unproductive time. Rework is still client-related work and should be recognised appropriately when evaluating performance.

Many firms also fall into the trap of focusing solely on utilisation or time-based metrics. While these measurements can provide valuable insights, they do not always tell the complete story. A highly utilised team is not necessarily an efficient or profitable team. Firms must consider the quality of work being completed, the amount of work written off, and the overall value being delivered to clients.

Effective KPI frameworks should therefore balance productivity expectations with broader business objectives. Targets need to be achievable, transparent, and aligned with the firm's operating model. Unrealistic expectations can reduce morale and encourage behaviours that improve metrics without improving outcomes. Conversely, well-designed KPIs help team members understand what success looks like and provide managers with meaningful information for coaching and development.

Strong Accounting Practice Management depends on measuring the right things and using those measurements to support decision-making. When firms understand the relationship between productivity, recoverability, workflow capacity, and revenue, they can make better hiring decisions, improve resource allocation, and create more sustainable growth.

As firms plan for the 2026–27 financial year, reviewing existing targets and performance measures can be a valuable exercise. Clear, realistic KPIs create accountability, improve visibility across the practice, and help teams focus on activities that genuinely contribute to firm success.