Professional Services
Maintaining quality of revenues
Professional services operations are 'people' businesses. The key to achieving profitable growth is to maximise the utilisation of professional staff whilst maintaining appropriate levels of customer satisfaction and employee motivation.
Many professional services businesses set specific targets for operational gearing, the proportion of additional revenues that drops through as additional profits. Staff costs are the biggest component of operating expenses and managing the ratio of staff costs to revenue is crucial in driving operating margin improvements and, in turn, operating profit growth.
Bonuses can also be a significant area of employment cost, which should be used in the most productive way. Most investment banks aim to keep compensation and benefits below 50% of revenues but they are notorious for losing control of this ratio in boom times. They can learn from industries such as advertising and media where companies have structured their bonus systems so that employees are more focused on targets set centrally at the board level and provided with an incentive to turn down new business if it is not likely to be profitable.
Key questions that might be addressed with Metapraxis techniques include:
Maintaining quality of revenues
Professional services operations are 'people' businesses. The key to achieving profitable growth is to maximise the utilisation of professional staff whilst maintaining appropriate levels of customer satisfaction and employee motivation.
Many professional services businesses set specific targets for operational gearing, the proportion of additional revenues that drops through as additional profits. Staff costs are the biggest component of operating expenses and managing the ratio of staff costs to revenue is crucial in driving operating margin improvements and, in turn, operating profit growth.
Bonuses can also be a significant area of employment cost, which should be used in the most productive way. Most investment banks aim to keep compensation and benefits below 50% of revenues but they are notorious for losing control of this ratio in boom times. They can learn from industries such as advertising and media where companies have structured their bonus systems so that employees are more focused on targets set centrally at the board level and provided with an incentive to turn down new business if it is not likely to be profitable.
Key questions that might be addressed with Metapraxis techniques include:
- What are the trends in revenue and profitability by client?
- How do utilisation and realisation drive our revenues?
- Are we meeting or exceeding our operating profit growth targets, and what drivers can we influence to create further improvements?
Client benefits
"Being able to flex things interactively in meetings with business stream leaders, and being able to answer their questions on the fly is a real bonus. I really like the way that I can see how another chargeable hour per day would impact on revenue."
Financial Controller, Major Accounting Practice