Insights from Engagedly’s State of AI in HRM, 2nd Edition Survey.
Professional services today serve a very important role in the business ecosystem. They deliver core expertise such as legal services, CPA services, and project consultation that can safeguard and transform a business’s success trajectory.
In this context, talent is considered to be a core asset for business success at professional services firms. The exit of even one employee can be detrimental to the business, triggering distrust among clients. Yet, businesses struggle to build a robust value proposition for employees to stay on and grow with the business.
Today, adopting a people strategy in business is emerging as a key strategy to enhance employee experience and retention, and reduce the Cost-to-Company (CTC) per employee.
In this blog, we deconstruct what is a people strategy and how professional services can leverage it to drive business growth and success.
First, let’s understand how a professional services business is distinct from, say, a product business and, hence, requires a unique strategy for business success.
A product business offers a tangible offering in the form of a product. On the other hand, a professional service is an intangible product, and thus, the scope of services can be wide. No doubt, business success for both categories is dependent on employee expertise.
However, human capital is the top asset of professional services businesses because the unique competencies of each talent are a key contributor to success. This is why a people-first strategy is emerging as an important ingredient in the success of professional services firms. Now, let’s understand what this entails.
A people strategy in business is a holistic plan that clearly outlines how a business will manage and cultivate talent. The ultimate aim is to enhance business performance and drive revenues and profitability. Talent is treated as a core asset to the business and thus prioritized in the pecking order.
For example, the caliber, skills, expertise, and reputation of lawyers play an important role in driving growth at a successful law firm. Similarly, the skill set, knowledge base, and experience of a project management consultant play a key role in driving success at a project consulting firm.
The key benefits of adopting a people strategy in professional services are as follows:
Quality of service is the most important deliverable of a service business. An engaged and satisfied workforce has the potential to increase productivity by 18% and 41% enhancement in quality.
High-quality services lead to increased client lifetime value, client recommendations, and increased business and, in turn, revenues. The cost of client acquisition goes down, which increases profitability.
Professional services firms are sorted out for their differentiated problem-solving capabilities. A people strategy in professional services empowers an organization to nurture actionable frameworks where innovative thinking and problem-solving skills are valued, recognized, and rewarded.
A survey conducted with 500 companies indicated that a toxic corporate culture is 10.4 times more effective than compensation in predicting the future attrition rate of a business.
Another survey indicated that 91% of the respondents shared that they were seeking learning and development opportunities. These are just some of the challenges faced by businesses.
Now that we’ve deconstructed what is a people strategy, and its benefits, professional services need to design and deliver a people-first culture that drives business success.
Here’s a snapshot of what strategies are used for successful businesses and why.
There are three pillars to building a sustainable workforce as follows:
Employee empowerment is a great tool to increase engagement and productivity. Here are some key opportunities:
According to a recent mental health survey, 92% of professionals shared that they prioritized working for an organization that values emotional and psychological well-being.
Further research indicates that the incidences of burnout grew from 43% in 2022 to 62% in 2023.
When employees experience burnout, their productivity instantly drops, and this can be followed by long phases of low productivity unless they actively receive the support they need. A lack of work-life balance, stress, poor work culture, and lack of access to mental health support can quickly escalate into diminished mental health.
Professional services firms, in particular, need to invest in promoting initiatives that nudge employees to embrace work-life balance. Another important pillar is to offer wellness programs and mental health support that make practices such as counseling accessible. Active investments in such initiatives remove stigma and encourage employees to seek help early on.
Businesses need to institute a structured, consistent approach to employee recognition and appreciation. However, businesses often tend to only recognize the big wins. They may also lack a structured approach to recognition. Instead, they must prioritize the recognition and appreciation of employees at all levels for wins that may vary in size.
Recognition, however, is not all about compensation. While monetary recognition is important, employees also seek other types of recognition.
For instance, businesses can implement a combination of recognition programs that include public praise, bonuses, and awards for their contributions. The programs must be well-structured and executed consistently to be effective.
A people-first approach, while strongly focused on the individual employee, also has an important team-building component. This is because effective problem-solving for clients demands team effort and seamless collaboration.
Professional service firms must create a collaborative framework that enables teams to work seamlessly together via collaborative technology and other initiatives.
Such initiatives can include team-building activities such as workshops and group getaways. Firms can also benefit from celebrating team achievements as much as they do individual milestones. By doing so, the identity of the team becomes as important as individual employees.
How do you succeed in professional services? A key pillar of success is to invest in building leaders from within the team. Unlocking the leadership potential in employees is a win-win for the workforce and the business. Hence, businesses need to make early investments in training and development programs for managers and leaders.
Superior, sustainable initiatives equip them with the skills to build trust, delegate effectively, and provide constructive feedback. Firms that successfully nurture talent can build a pipeline of future leaders from within the business rather than hiring from the outside.
Talent plays an exceedingly important role in professional services firms because the expertise, knowledge, reputation, and experience of individual employees form the backbone of business success.
Adopting a people-first strategy that prioritizes the well-being and aspirations of the workforce can help firms secure their talent and lay the foundation for sustainable, long-term business success.
Engagedly’s comprehensive people-first solutions enable professional services to turbocharge their talent management strategy and bring data-centricity, inclusion, and business goal orientation to the process.
Through the adoption of people-first best practices, our partner businesses can enhance employee engagement and productivity and boost business performance and profitability.
Professional services firms need to adopt a comprehensive strategy for building an inclusive, transparent, supportive culture that nurtures talent at the individual and team levels.
By adopting a people-first businesses can bring down costs by reducing expenditure on hiring, onboarding, and other aspects of the recruitment process. They can also promote leaders from within the business, as opposed to hiring expensive external resources.
By implementing a people strategy, businesses can become more agile, harness innovation, and respond to client needs and market shifts much faster, thus building a competitive edge.
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