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4 key components of talent strategy for professional services

from  April 27, 2023 | 4 min read

Talent remains the most important challenge in professional services, according to SPI’s newly released Professional Services Maturity Benchmark™.

Professional services organizations are judged by the quality and skill of their people. And that means they must place a high premium on attracting, retaining, and motivating their fee earners. Ultimately, it’s the quality of your people that determines the effectiveness of your service delivery, sales, marketing, your financial viability and customer satisfaction.

It should come as no surprise that executing an effective talent strategy produces long-lasting positive externalities for any firm. If your organization is looking to “level up” any of its capabilities and improve effectiveness, you’d be well advised to begin by improving your talent strategy.

Talent trends in 2023

Several important trends in talent strategy emerge from SPI’s research. Most importantly, it is taking increasingly long periods for new hires to become productive (62.7 days vs just 58 three years ago).

This suggests both that the jobs that fee earners are doing are more complex, and that operational inefficiencies are contributing more to holding people back from doing good work. This much is confirmed by the fact that billable utilization has fallen for the first time in several years (from 73.2% on average last year to just 70.7%.)

Headcount growth fell by about 0.6% in 2022 compared to 2021, with rate hikes, geopolitical tensions, and inflation all acting to slow growth. However, SPI predicts an increase in hiring following rounds of layoffs in 2022 – and notes that despite these layoffs, a pronounced post-pandemic labor shortage shows no signs of abating.

An effective talent strategy will be key to attracting and retaining the best talent on the market – especially since its scarcity leaves workers with more bargaining power and more options than ever before.

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What is talent strategy, and how do we improve it?

Talent strategy doesn’t need to be a hugely complicated affair. SPI’s research shows that long-established best practices like providing clear job roles and descriptions, keeping on top of performance reviews, compensating your people fairly, and investing in career planning and skill building can all pay huge dividends in the long term. They improve everything from employee satisfaction and retention to more concrete metrics like billable utilization, on-time project completion, and overall profitability.

But a professional services firm looking to build a program that will allow them to attract, retain, and motivate high quality staff will have to focus on 4 key areas:

1. Recruit and ramp

At the recruitment stage, firms will have to work to not just improve the quality of their hires, but the speed with which they hire and with which they ramp new workers up to productivity. A 6-month recruitment cycle isn’t much use if it takes another 2 months for your new hire to really get settled in. Especially since many promising candidates will drop out of the process long before you can make them an offer.

2. Engage and retain

Reducing attrition should be seen as a top priority. To this end, providing tangible benefits in the form of work-life balance and workplace experience should be seen as essential. Tools that make collaborating and sharing knowledge easier will be a key investment.

3. Develop and perform

In line with (2), firms should encourage the development of a recognition rich culture: giving praise and rewards for good performance in real time, rather than simply once every year (or even several years) during salary review season. This itself necessitates a more transparent and open approach to feedback (which must also be real-time) as part of a modern and open approach to performance management, dispensing with more rigid and inflexible structures in favor of a continuous approach that allows for more flexible feedback at all levels of the company hierarchy.

4. Motivate and reward

People will generally only stay with an employer in the long term if they feel like doing so advances their career prospects in the long term. This means reducing retention meaningfully can only be achieved by investing in employee development, creating paths for careers to grow or change, and by enhancing skill building and knowledge sharing across the organization.

Technology makes this possible

One trend which 16 years of SPI research confirms is that performance against all people related KPIs – from retention to engagement, and even up to and including utilization and profitability per head – are strongest amongst those companies that have most fully embraced technology in their operations. In particular, the highest performing companies use and integrate a variety of business applications, including corporate financial management solutions (or ERP), Professional Services Automation (PSA) and Human Capital Management (HCM) software. It’s only by bringing these tools together to create a real-time picture of project, people, and operational data that firms can create a working environment conducive to long-term retention, and develop talent strategies that account for all four of the pillars described above.

Want to learn more?

If you’re interested in learning more about SPI’s findings in professional service talent strategy, check out our eBook covering their findings here.

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