The new labor market reality: How controlled growth can drive success
ARTICLE | April 26, 2023
Authored by RSM Canada
Sometimes, it is helpful to take a step back.
Professional services companies often find that to remain nimble, they need to control the growth of their workforce. But this does not have to be a negative experience. In fact, controlled growth can be accomplished even while maintaining a high-performing workforce. The key is to eliminate inefficiencies while bringing out the best in employees.
Stay ahead of the cycle
For many professional services companies, the ups and downs of the economy dictate their goals, their processes, and even the size of their workforce. Successful firms are proactive as they face economic headwinds, reducing the chance that they will have to adjust their workforce abruptly.
To be prepared, leaders must have clear insight into the external factors—the labor market, the economic forecast, and more—that can have a direct impact on their organization. Companies should identify what skills and capabilities will be needed within their firm, based on realistic predictions.
An understanding of both internal and external factors will help companies avoid unpleasant surprises in the future. And in the present, it can help organizations avoid overhiring, lessening the odds that staff will need to be scaled back.
Of course, companies must be brutally honest about their needs and capabilities.
Leaders must answer key questions, such as:
- How well is the firm operating?
- How efficient are the different lines of business?
- How can the stress and workload of employees be eased?
- What processes are causing inefficiencies in day-to-day operations?
- Can those inefficiencies be solved by creating new policies that reduce red tape?
- What is the forecast for each workstream?
- Who is overworked?
- Can we outsource or automate key business functions?
- Who is sitting on the bench for extended periods?
Organizations must gather accurate information on their resources and how they are utilized. And once they have this data, companies must measure progress and results to ensure that their strategies are working and driving value for the organization. This means tracking metrics such as employee satisfaction, retention rates, and productivity levels. The resulting feedback loop can help firms refine and adjust their approach to continually optimize employee performance. Firms can also leverage tools like professional services automation to automate processes, produce real-time project health updates, and refine margin reporting and forecasting to support informed decision-making.
Take care of your talent
Professional services companies may not always like what their metrics tell them. But even if performance indicators are lagging, leaders should not view scaling back talent as the only option to course-correct.
Instead, organizations should address the more likely sources of inefficiency: their processes or systems. Analyzing employee productivity is important, but firms should also examine the efficiency of their technology. Is the company leveraging the right technology stack for its needs? Are systems and applications up to date and customized for the firm’s unique niche?
Often, employees are not able to do their best work because they spend too much time struggling with antiquated systems or glitchy software. Investing in technology can free up employees to focus on high-value tasks that a computer is less likely to handle.
Artificial intelligence is indeed changing the way professional services firms operate. In some cases, controlled growth may mean reducing staff in favor of AI solutions. However, technology is far more likely to assist people than it is to replace them.
Collaboration tools make it easier for teams to communicate effectively and stay on task, regardless of their location. Automated systems streamline processes and make the organization more efficient.
In such cases, employees spend less time on tedious, robotic activities and more time innovating and developing solutions with their colleagues.
Another way to improve productivity is to outsource nonessential functions. As with AI solutions, the goal is not to replace staff members.
For the most part, outsourcing to a third party allows in-house staff members to elevate to a higher skill set. Employees can focus on core functions rather than have their time swallowed up with administrative tasks.
If a company has embraced these solutions but still needs to adjust growth, there are innovative solutions. Offering sabbaticals or changing full-time employees to part-time status may allow staff members to stay with the firm. Also, moving employees into different career paths could preserve their institutional knowledge and help staff members thrive through challenging times.
In this way, controlled growth can benefit the company without penalizing the employees.
Keep it all in balance
Professional services firms that effectively control their workforce can position their company for the next stage of growth. To do so, companies need to be honest about how their organization is functioning, and then use accurate data to guide their decisions.
Additionally, investing in the right technology and embracing outsourcing can help support dynamic teams. By ensuring that staff members focus on top-level tasks, businesses can create an agile work culture in which employees develop their skills without becoming overwhelmed. This ultimately provides teams with greater autonomy and capacity to problem-solve quickly and more effectively—all of which lead to increased productivity, greater employee satisfaction, and a successful firm.
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This article was written by Michael Gerlach, Sonya King and originally appeared on 2023-04-26 RSM Canada, and is available online at https://rsmcanada.com/insights/industries/professional-services/the-new-labor-market-reality-how-controlled-growth-can-drive-success.html.
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