4 Ways to Avoid the Talent Cliff – and Boost Resource Utilization
Posted by Maggie Kerr-Southin
Profits and revenue can be harder to predict in Professional Service Organizations (PSOs) than in other businesses, because everything depends on winning projects, then optimizing your resources’ billable hours.
In a 2015 report by SPI Research, managing and retaining good consultants and employees will become more acute as the largest demographic in the workplace moves toward retirement. This trend extends across all PSOs, regardless of industry.
“As baby boomers retire, managing the talent cliff will not be easy. Finding, training and retaining high quality staff will be a challenge for all. PSOs must have the tools to accurately plan, hire, staff and execute services and, on top of that, tools that will assure their talent to work in the most effective way.” (Personnel Performance Planning, SPI Research, 2015)
With baby boomers just starting to retire, the next 10 years will be critical as economists predict a 230,000 worker deficit by 2018 in the US alone.
Another threat to PSOs is the potential for burnout. As skilled employees retire, those remaining not be fully deployed because they have the wrong skills for the project; others may be over-utilized because they are among the few with the required abilities. In either case, your business is at risk.
There is a lot to the saying that your people are your most valuable resource, but how do you manage that resource? The connection between your billable staff and your bottom line is undeniable. When billing for your consultants’ time and talent, it’s important to zero in on making the best use of these finite resources.
SPI recommends making use of technology to plan and optimize your consultants’ utilization rates, and the financial impact of work being sold and in backlog.
- Detect skills gaps – Not all of your resources will have the skills your clients need. Understand which skills bring your company values, and which are only needed occasionally. Track your consultants’ skills in an HR solution and in your project planning software (preferably integrated into one system). With this knowledge, you can give team members relevant, timely training and develop a flexible workforce that allows you to be more strategic when seeking new contracts or placements.
- Communicate for consistency – Change is inevitable in PSOs, making communications a top priority. By having silos of information in emails and text messages, you risk confusion and missed details. Keeping it all in your project management tools ensures team members have the same understanding and makes for good succession planning for the next generation of workers.
- Retain good staff – Showing your staff that you value them is about more than just pay scale and benefits plans. In addition to being challenged, rewarded and valued, people need to know you won’t exploit them or take them for granted. Optimal utilization means getting the most out of your consultants in the most sustainable fashion. Gain visibility of upcoming projects, the percentage of billable hours per resource, match skills to projects, and review your resources’ commitments and whereabouts.
- Only recruit when necessary – There are times when the projects sold result in some employees being billable over 90% of the time, while others sit on the bench because their particular skill sets are not required. Those who are not billable still need to be paid. You may even find you have to hire additional staff or subcontractors to fill the gap. Use a resource management tool that can freeze recruitment and subcontracting, enabling you to ensure utilization is stable for all resources and that you have the right staff.
Resource Managers need to be able to identify training needs, make informed decisions about scheduling, communicate with all team members and ensure billable utilization is optimized. To learn more about how you can optimize resource utilization, download our utilization hero manual.