Three key practices to support the success of your consulting firm in 2022
Tweet it:'With 2022 on the horizon, consulting firms are evaluating their business practices, resetting goals, and retargeting where they want to go'
by David Hofferberth, P.E., Founder of SPI Research
Over the last year, consulting firms have learned what it takes to keep up with the ever-changing marketplace and have made adjustments when needed to ensure continuous growth. With 2022 on the horizon, consulting firms are evaluating their business practices, resetting goals, and retargeting where they want to go. I’ve spent the past 20 years working with professional services organizations on benchmarking and diagnosing areas for continuous improvement. During this time, I’ve learned that it’s essential to take advantage of this time late in the year to look ahead so you can prepare your firm for what’s to come. Here are three key practices that firms should focus on heading into the new year to set themselves up for success.
1. Hire judiciously to balance skills supply and demand
It is a great time to be in Professional Services - consultants are in-demand. The global economy is changing faster than ever. Between baby boomers retiring and the rise of the millennials, the focus of how firms operate is changing. Throw in the events of the last year, and there is no wonder why so many companies have hired professional services organizations (PSOs) for strategic and tactical guidance.
Now, what do you do to attract, educate, and retain the right talent for your firm? Professional Services leaders must balance all the challenges in front of them with all of the opportunities to create an environment where they can grow profitability, while ensuring both client and employees are happy. It is not an easy feat to accomplish.
By better balancing skills supply and demand, consulting firms will maximize quality and margin. With the rise in attrition, services organizations must self-evaluate and determine who they want to be and what they want to do. That is why it is important to watch the skills you’re hiring versus the skills you’re selling. Understanding the demand for services, the revenue generated and the level of people needed to do the service will help consulting firms know who to hire to keep up with the ever-changing marketplace.
Here are key indicators to keep in mind when evaluating your firm’s skills supply and demand:
- Determine staffing issues, will they hinder growth?
- Monitor and adapt to skill change and trends
- Monitor attrition trends
- Understand skills mix, cost and versatility
- Improve employee development
- Invest in training
- Optimize (balance) resource pool
- Manage employee cost
- Reduce staffing cost
6 Best Practices for Your Consulting Firm to Achieve Success in 2022
2. The Plan-to-Profit Process Cycle must be optimized to ensure goals are met
With all the change happening in the marketplace, firms have to think about how to sit down and do the planning to make sure goals are met. With the help of the Plan-to-Profit Process Lifecycle based off SPI Research’s Service Performance Pillars, firms can use this lifecycle as a guide for how to get them there.
To achieve organizational goals PSOs must work to optimize each area of their firm. Organizational success is only attained when they focus on each area – from organizational planning through sales, talent, delivery, and collections. You need the information of all areas to learn where your firm stands. Leading firms do well at each due to a focus on the key performance indicators (KPIs) that show them where to improve.
There are KPIs to measure for each step in the lifecycle, and it is important to start with the first stage: Plan. Here are the KPIs to measure leadership high performers:
- Revenue growth > 15%
- PS Profit > 15%
- Client satisfaction > 90% references
- Employee satisfaction > 3 (15 scale)
Benchmarking is essential. There are specific best-practices to follow in each phase, but without the data to compare and trend, they may never achieve optimal performance.
3. Leading firms focus on continual improvement
Consulting firms must leverage information to improve. Most PSOs drive revenue growth and profit. The best firms are never satisfied and work to consistently improve. Success in one year does not translate into success in the future. By understanding where the firm performs well, and where it does not, goes a long way to driving future success. And because the Professional Services market changes rapidly to economic and social change, the best performing firms dissect and analyze data better than others to ensure their success going forward.
A big part of this is visibility into all this information. The results of PSOs having a higher level of visibility are having happier employees, delivering projects on time and are driving more profit. Creating visibility in your firm can be done by integrating technology solutions across the organization. All companies should consider using information-based tools that include CRM, HCM, PSA, and BI. When the PSO has an integrated solution, it leads to many benefits, including better positioning within the marketplace.
Want to learn more best practices to win in 2022?
Check out the webinar I’ll be hosting, where I’ll discuss 3 other key industry benchmarks to focus on as your firm plans for the next year. I’ll also reveal some adjustments you can make right now to finish the year out strong and stay ahead of the competition.
About the Author
David is the Service Performance Insight founder, Managing Director and licensed professional engineer who has served as an industry analyst, market consultant and product director. He is focused on the services economy, especially productivity and technologies that help organizations perform at their highest capacity.
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