Practices with defined job descriptions, regular appraisals and clear objectives earn higher profits.
Practices that provide staff with clear job descriptions, objectives and appraisals are earning profits considerably higher than those that do not, according to independent advisory firm Business Health.
"Businesses that provide the majority of staff with written job descriptions earn an average profit per principal of $181,672, while those that do not earn an average of $80,576," Business Health partner Rod Bertino said.
Practices that provide the majority of staff with personal objectives also earned more, with the average profit per principal $178,021 compared to $101,233, Bertino said.
Similarly, profit variations are also dependent on the regularity of performance reviews.
"Practices that conduct reviews within six months earn an average profit per principal of $166,366, while those that conduct reviews more than 12 months apart earn $123,574," Bertino said.
Business Health figures showed practices that provided the majority of staff with clearly written job descriptions had increased from 61 per cent in 2004 to 78 per cent.
"This figure still indicates that role clarity could well be an issue in almost a quarter of Australia's advisory practices," Bertino said.
Data revealed it was at least 12 months since a review of position descriptions was conducted in 21 per cent of practices and 31 per cent had not done staff appraisals in the past six months.
"Thirty-four per cent did not have documented individual performance objectives for the coming 12 months," Bertino said.
"The enormous changes that have swept the industry of late will have no doubt resulted in changes to most of the operational roles within Australian advisory firms.
"When viewed against the profitability potential, it is a surprise that a third of businesses neglect this aspect of their people management process."
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