Professional services firms are unique to other industries. The industry is incredibly diverse, including lawyers, architects, accountants, consultants, advertising agencies, engineers, and financial advisors to name a few. It also provides an intangible product in the form of knowledge, skills, and expertise. People are your number one asset. Because of the unique nature of the industry, professional services executive recruiting requires specific expertise.
In reviewing recent reports on the industry, one thing that stood out was the increase in attrition rates, now at 13.6%, it’s highest in the past 10 years. This is from Service Performance Insight’s (SPI) 2017 Professional Services Maturity Benchmark report. Identifying, onboarding, and training employees is a critical success measure for professional services firms, the fact that attrition rates are up indicates that ongoing learning and growth opportunities are not sufficient.
The SPI report also noted that professional service firms in the technology space including security, cloud, AI, and analytics are realizing more growth than the traditional firms in areas like accounting and architecture. This is not a surprise as we have seen growth across technology verticals regardless of industry. This is also one of the reasons many industries are recognizing an executive talent gap as new fields have emerged that require new skills.
The simplicity and speed brought about by technology has also impacted professional service firms in the form of customer expectations. According to Aberdeen, the number one organizational project challenge today is managing changing customer expectations, followed by poor communications and understanding of client expectations.
Aberdeen also calls out the lack of available resources as noted above. The inability to identify the required skilled resources combined with the increase in labor costs will impact both the ability to deliver projects on time and the profit margin for each project.
In a separate study, Mavenlink identified three trends disrupting the professional services industry…also leading with meeting customer expectations. In addition to higher quality and faster delivery, they note transparency and accountability expectations from clients. 89% of respondents have increased their service offerings to meet client expectations.
The second trend, with 80% of respondents mentioning it, is increased competition in the past year. Digital disruption will continue to play a role and the researchers note, “We believe that customer loyalty and advocacy will increasingly become the one true way to stand out from the competition. The research clearly finds that a new basis of competition is arising. Incumbents must evolve, or risk losing business to more nimble firms with innovative business models.”
Resourcing is the final trend and as we’ve seen throughout, relates to finding the right skill sets. Mavenlink goes a step further to identify outsourcing as an answer to the skills shortage. 81% of respondents have used contractors and sub-providers to meet their client’s needs.
Meeting profit margins through traditional approaches is becoming more difficult for professional services firms. Mavenlink CEO Ray Grainger stated “Service organisations are facing more external pressure than ever before, materialising as increased competition, compressed delivery timelines, and tighter margins. These compounding pressures are driving significant transformation, pushing us into a new era of services delivery – a service level economy.”
If you need help filling an executive opening at your professional services firm, or are considering ongoing training and assessment to identify the skill sets you already have in-house, we can help. Send us a note and let us know what you need. At Sheer Velocity we work with you to identify, screen, onboard, and train the best executives for your firm.