PAC on Professional Services – exploring the future of talent management in your industry
Research undertaken by PAC (a Teknowlogy Group company) on behalf of Unit4 – based on the views of leaders at 250 firms – sheds light on both recent performance and priorities for the futures of Europe’s 2 million service-based businesses. Professional service firms are having to adapt to new ways of working, shifting client demands, and evolving commercial models. All of which means lasting changes to business structures, talent strategies, and the way in which they harness technology.
In this blog, we’ll look at the report’s findings with a focus on talent management: the expected growth of the workforce, new sources of competition for talent, and how aging technology is intensifying the talent issue. We take a forward-looking view on how to tackle the challenges and issues that will reshape the sector over the next five years. How will flexible working models evolve? And with the region’s talent shortage set to worsen, how will people-centric firms attract and retain the best and brightest skills?
Three key takeaways
- Europe’s professional services firms are in hiring mode, but workforce attrition could be a big problem for the sector.
- There are new sources of competition that are threatening the ability to attract top talent, and is the talent available being utilized in the right way?
- Homeworking will continue, and a greater emphasis will be given to enhancing employee experience.
Talent recruitment and management will be a critical success factor in 2022
Mid-sized professional service organizations are struggling to recruit in the numbers they would like. Yet despite this, over 80% plan to expand their headcount, which indicates an upbeat outlook for the future. The data shows that firms in France, the Nordic region, and the UK are the most determined, and IT services and management consulting sectors look set to be the most active, with more than 30% of firms in these two sectors looking to grow their people numbers by over 10%.
Interestingly in financial services, one-fifth (21%) expect to reduce headcount over the next year. It’s a mature sector, and many long-established firms are making big changes to their core propositions and skillsets to adapt to changing customer behavior.
Attrition rates suggest that while many firms are staying on top of the situation, others are not faring so well. The greatest stability was found in the architecture and engineering sector, where 80% of firms have an attrition rate of less than 20%. Financial services and other professional services firms are also keeping the level below the 20% mark. The DACH region leads the way with the lowest attrition rates, while overall, IT services and management consultancies appear to have the highest rates.
While mid-size firms may struggle to match their larger competitors, who are seriously recruiting, in terms of salary and benefits, they can often be more creative in other areas. Now is the time to think outside the box to attract the best talent. Some are already doing this by implementing new working patterns such as four-day weeks; others are looking to ride the wave with the rise of talent management platforms that help connect freelance consultants and IT workers to specific clients and projects. The likes of European freelance consultant providers Weem and Malt are helping professional services organizations recruit skilled freelance consultants for specialized projects at a time of acute skills shortages in order to build capacity.
People utilization has never been more important
Although it’s a struggle to recruit the expertise needed to meet customer demand, many professional service firms are also failing to get the most out of their existing teams. Staff utilization dropped significantly when the pandemic first hit, but the study found that plenty of firms in Europe are still operating below optimal level. While over half (59%) reached a utilization level of more than 80% in their most recent financial year, there were 19% that failed to reach the 70% mark in the hardest hit areas of the sector.
This is a huge problem for many firms as they try to balance keeping headcount levels up while skilled resources are in short supply, with profitability being impacted by underutilization.
Resource management has become an increasingly complex issue, and organizations are now taking advantage of a diverse blend of resources, complementing existing teams with contractors, freelancers, and partners. Professional service companies across Europe face increasing pressures not only to reduce costs but also to better manage risks and optimize business performance. Taking a strategic approach to offshoring or global sourcing, including captive offshoring, third-party outsourcing, joint ventures, and other hybrid models, may be helpful for some firms.
The increasingly important aspect of the employee experience
There are multiple paths that business leaders can take to tackle the talent shortage problem, and it is great to see that many are now seeking a more rounded approach to measuring and improving the employee experience, which should help identify potential problems before they turn into talent loss.
The study suggests that many professional services firms are hoping to strike a more even balance between office-based and remote working. This will allow organizations to drive talent acquisition and retention by creating more attractive work environments and rebuilding the social and cultural elements of their business.
And it’s clear that hybrid working is here to stay, even in the areas of the industry that hadn’t fully embraced it before the pandemic. Successful firms will be those that can deliver an impressive employee experience enabling them to maximize their productivity and potential, regardless of their location.
The concept of the “employee experience” has been a hot topic for some time, but it has also now evolved. The study found that most professional service companies are taking a well-rounded view of the day-to-day experience of their employees, tracking measures ranging from basic productivity to health and wellness and customer feedback. Organizations in the Nordic region are ahead, with 84% tracking employee satisfaction and more than three quarters (78%) monitoring employee wellness.
Dependence on aging technology is a problem for many in the sector, especially for mid-sized firms, and it is exacerbating the talent issue. Resource management is one area where mid-size firms, in particular, continue to wrestle with legacy systems. Many firms are still managing resources and projects using spreadsheets, and the case for investment in more robust applications is increasingly attractive. For example, a firm with 100 professionals running 20 projects at any one time, the issue of matching the best resources to the right job at the right time is a big one.
More than 70% of survey participants said that legacy applications are holding back innovation. From a sector perspective, it is felt most keenly in architecture, engineering, and financial services. Recent disruption has uncovered the limitations of aging systems and the lack of integration between key applications, and without the technological insights provided by modern, unified technologies, it is difficult to create new services or offerings that are in tune with current customer demand or internal capabilities.
One of the critical challenges for digital and technology leaders at professional services organizations is dealing with the highly fragmented software landscapes developed through years of M&A activity and practice-specific projects. The increasing readiness of standardized, cloud-based enterprise application platforms provides solutions that will play a critical role in boosting operational resilience and has the potential to enhance both resource and project management by taking an integrated, calculated approach to planning schedules, matching the right resources to the right jobs, and helping to avoid burnout for already over-stretched talent. The growing uptake of the use of intelligent automation will help free people to focus on the most pressing work while providing business leaders with insights to make the right calls swiftly.
Ready to learn more?
To read the full report and understand the complete picture of the professional services sector as we move into 2022, check out the PAC Research Study, Professional Services in Europe: A Benchmark for 2022, which you can download here.
To learn more about how Unit4 can transform your operations, check out our dedicated professional services industry page or click here to book a demo of our products.
