Services organizations are infamous for grueling travel schedules, lofty utilization targets and employee burnout. Because employees are so integral to service organizations, losing a highly skilled consultant has significant impact on these businesses. Thus, hiring and retaining consulting talent is always top of mind.
On average, it takes 117 work days to find, recruit, hire and ramp a new consultant, and the average estimated cost of replacement is $150,000.1 Losing employees also has a major revenue impact. As attrition goes up, the percentage of annual revenue achievement goes down. For example, with no attrition, service organizations achieve 98.9% of revenue targets. At over 25% attrition, they only reach 87.7% of the revenue target.1
Fortunately, there’s been a major focus shift in the industry towards increased employee morale and improved employee retention. According to an SPI study, target annual billable hours across all roles has decreased by 2.3% and the average billable consultant was targeted to bill 31 fewer hours.2 Management consulting organizations reported the highest target billable hours and utilization, followed by IT consulting, SaaS professional services and software professional services. Although management consulting has the highest target billable hours (75% utilization), this is still below the traditional 80% target typical for most service firms.
Keeping utilization targets manageable is only one piece of the puzzle. The top reasons service employees move on are better opportunity, money, lack of career advancement and management dissatisfaction.
Often, better opportunity means an improved work environment or a more reputable firm. Therefore, culture has a substantial impact on employee retention. The best service companies are implementing several initiatives to foster an exceptional company culture.
Female Career Development
The professional services workforce is predominately male, with men representing 62% of workers in the industry.1 Some forward-thinking service organizations are introducing female career development programs to close this gap by offering specific opportunities for women. These initiatives often involve networking, mentoring, training, guest speaker events and career coaching.
Develop Relationships with Colleges
The Big Four consulting firms are well known for their strong university relations programs at target schools to hire the best talent fresh out of college. Small and midsized consultancies are realizing the importance of forming college relationships and are creating programs of their own. On top of that, service organizations are encouraging employees to join alumni networks to maintain strong network ties to serve as a source of recruiting and referrals.
Rotational Programs & Diverse Projects
When work gets stale or less challenging, employees tend to leave. In response to this, many service firms offer rotational programs that allow workers to experience different roles, projects and challenges while working at the company. Often, workers get the opportunity to experience different cutting-edge technology like AI, IoT and blockchain, enabling consultants to learn new skillsets and stay up to date on the latest innovations.
Employee Summits
About 27% of service employees work primarily from home.1 Given the rising popularity of remote work in the services industry, employees are meeting with their peers less frequently. To create comradery and team culture, service firms are hosting in-person summits to give employees a chance to network and connect with one another.
Bottom Line
The most valuable assets for services firms are employees and their skillsets. Ensure you’re protecting these assets by putting in the proper programs and investments.
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Additional Sources:
1. Service Performance Insight, LLC & NetSuite, “2019 Professional Services Maturity Benchmark,” (February 2019).
2. Service Performance Insight, LLC & NetSuite, “2018 Professional Services Global Pricing, Compensation and Utilization Benchmark,” (October 2018).
