Deltek A&E Clarity Deep Dive: Human Capital Management

Posted by Megan Miller on July 23, 2018

Today, Architecture & Engineering (A&E) firms are growing, but according to the 39th Annual Deltek Clarity A&E Industry Study, the industry is facing significant challenges in human capital management that are impacting all other aspects of the business – from financial management and business development to project delivery. 

Here are a few of the key takeaways from this year’s report.

Growth & Turnover

Firms are continuing to grow, but not at the same high rate as they did in the previous year. On average, firms saw overall staff growth of 4.3%, which is a little slower than last year’s growth of 6.9%. The typical firm saw a 16.7% increase in new hires this year, and added 4.5% of their staff as part-time or special employees.

Employee turnover increased 1.8 percent from 11.0% last year to 12.8% this year. Firms that had a higher percentage of employees from mid-career generations (Gen Y and Gen X) tended to have higher turnover, indicating that these mid-career generations may be more willing to shop for a new job than employees nearing retirement or trying to establish themselves in a new career.

Talent Acquisition

For 43% of firms, the average time to fill positions fell in the 31–60 day range, whereas 45% took an average of 61 days or more to fill positions. More concerning, 15% of firms said that they take an average of 90 or more days to fill positions. Compared to last year, there was a 7% decrease in firms that filled positions in less than 30 days, with increases in all other ranges.

KPIs and Succession Planning

Consistent with last year, the top three human capital management KPIs tracked were revenue per FTE, voluntary turnover, and involuntary turnover. Although these are important, firms are not sufficiently tracking many of the other key performance metrics that provide the actionable insights needed to be competitive in the war for talent. In particular, more firms should be tracking lead time from hire to billing. Only 5% of firms said that they track lead time from hire to billing, yet it is one of the most actionable KPIs.

And of all firms, only 43% have a formal succession plan. Large firms were nearly twice as likely as small firms to have a succession plan, but it is important that firms establish succession plans, regardless of size. Without one, firms are putting their future at risk, particularly if something happens to key leadership personnel.

 

Deltek 39th Annual Clarity Deep Dive: Human Capital Management


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Human Resource Systems

The majority of firms – 53% – are using outdated human resource systems that have not been updated in more than five years. If you think of what your mobile phone looked like just five years ago, you can see the challenges with this number. This is an 8% increase from last year and means that firms are using outdated, manual processes to manage their most important assets – their employees. This can be the difference between winning the war for talent and not even having a dog in the fight.

Key Takeaways & Next Steps

Acquiring and retaining qualified candidates remains a top obstacle for A&E firms, which highlights the need for improved human capital management solutions. Firms in the next year should look toward updating outdated human resource systems, offering top professional development and mentoring opportunities, and having career development plans for all employees. Firms can be more desirable to current and new employees by offering benefits that their competitors are ignoring that are appealing to the employees you are trying to not only attract, but retain. These will improve firms’ perception in the marketplace, incentivize current employees to continue employment or recommend their firm to colleagues, and allow firms to successfully address turnover.

It’s time to ask yourself…

  • When is the last time we invested in HR solutions?
  • What is the underlying cause of our turnover?
  • Can we focus on growth goals or are we simply reacting to turnover?
  • What is the best feedback format for our firm?

The 39th Annual Deltek Clarity Architecture & Engineering Industry Report provides critical benchmarks and insight for human capital management, as well as business development, financial management, and project management to help you assess the health of your firm and get it running as efficiently and effectively as possible. I encourage you to download a complimentary copy of the report today and be sure to register for the on-demand version of our deep dive webinar series to get the insights you need for success.

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