Growing a professional services business profitably can be a considerable challenge, especially when trying to balance scale with employee engagement. Rapid, reactive growth often leads to overworked employees feeling burnt out and ultimately higher turnover.
So, how do service businesses balance the two more effectively?
Understand Supply and Demand
When it comes to professional services, people are the product. And just like any other business, it’s vital to understand how the demand for people changes as the demand for our services change. What used to be highly profitable and in-demand one day may become a commodity the next day. In addition to this, your highly-skilled employees also want to continue to grow and be challenged. In order to retain them and meet the demands of an ever-changing business, it’s crucial to understand the supply/demand mix for services that are:
- Foundational Work: High % of work today, slowing demand, decreasing profitability
- Future Growth Work: Low % of work today, increasing demand, profitability TBD
Generally, mature companies see 60-80% in foundational, 20-40% in growth work.
High-performing digital agencies regularly achieve billable utilization rates of 75-85%. However, what really sets high-utilization businesses apart is how they dedicate the remaining 15-25% of their employees’ time. It’s vital that agencies pair their billable utilization target with productive utilization targets of 100%.
And, by balancing billable expectations and proactively planning how employees spend non-billable time for growth and development, agencies can more effectively innovate to stay competitive, and build a culture that attracts and retains the best talent.
Understand Your Unique Value
Confidence is critical when it comes to employee engagement and happiness – when the organization and leadership team can exude confidence in the service they’re offering and the company’s approach, employees feel a sense of common purpose, and that their contribution is helping to make something extraordinary.
If you aren’t able to quantify what that “something extraordinary” is, you’ll be forced to compete on price and speed.
Mature agencies understand the value of their talent and approach in delivering work, whether it’s domain expertise, efficiencies, risk mitigation, or creativity & strategic thinking, etc. All these factors lead to higher quality outcomes.
Less mature agencies rely on task-based planning, lower prices, or speed of delivery as differentiation. This ultimately leads to commoditized work that is less valued by customers.
The more we can explore the value of our people by involving them in proposals, pricing, planning, and marketing, the better off we all are. It gives leaders and colleagues a chance to cross-pollinate perspectives and experiences overcoming obstacles, working within industries (think healthcare, government, higher education, etc), and see the value they provide beyond delivery.
Understand What’s Ahead
Digital agencies that aren’t able to forecast well and often will continue to spin in a constant cycle of reactivity.
Being able to proactively forecast dips in the sales pipeline and making sure that sales, delivery, and resourcing teams are communicating well can keep you out of the “too much work, not enough work” roller coaster that many digital agencies often face. While forecasting itself isn’t overly complicated or technical, what is difficult is adopting the habits necessary to tend to forecasts, because forecasts are only as good as the data that goes in them. The most powerful, accurate forecasts include input from every single one of your employees — including sales reps, project managers, resource planners, and other individual contributors. Empower your employees to speak up and contribute to agency forecasts, and you’ll be a more strategic agency with happier employees.
It often feels like day-to-day operations and people management keep you from considering the broader, more strategic picture of your business. But the health of your business and the happiness of your employees are actually intrinsically linked. Putting the right talent in place, setting them up to thrive and grow, and empowering them to contribute to the future of your business lead to differentiating value to your clients and lasting positive outcomes for everyone. Well-operated businesses lead to happier and more engaged employees, leading to better quality work and then more valuable growth… and the cycle continues.
Everyone flourishes together.
[To share your insights with us, please write to email@example.com]