Resource Management critical for Consulting

Date: 15-06-2008
Source: Management Consultancies Association

Two thirds of consulting firms see resource management as one of their most important business processes.

A new Management Consultancies Association (MCA) white paper, based on a survey of over 80 consulting firms and interviews with senior consultants and operational managers has found that two thirds (66%) of consulting firms consider resource management as either the most or second most important business process in their firm. For the survey interviews were conducted with those responsible for resource management in consulting firms.

The MCA white paper, sponsored by Maconomy, a global provider of business solutions for professional services companies, also found that resource management as a business function is becoming increasingly important for professional services firms, as they have found themselves squeezed between clients unwilling to accept fee increases and spiralling salary costs. Many firms are therefore striving to professionalise this function and look set to make considerable progress in the next few years.

Key areas preoccupying those responsible for resource management are: recruiting consultants with the right skills (27 per cent) and getting a balance between project delivery and business development (22 per cent). However, over half of respondents (55 per cent) are only able to plan their resources for the next three months and 26 per cent are only able to plan for the next four weeks. Other frustrations for resource managers include integration with other business processes and providing visibility of resources across the organisation.

Neil Davidson, Managing Director at Maconomy UK comments: "Today's professional service firms are facing increasing pressure on a number of fronts: they have to deliver continuous results with lower margins; retain customers in a highly competitive market and, not least, develop and retain the talent in their company. Effective resource management can make the difference between profit, break- even or loss."

Other key findings from the MCA white paper and survey included:

* Utilisation rates are still the most common way of recording and forecasting capacity with two thirds (67 per cent) of respondents using them to monitor their resource management

* While nearly all firms (96 per cent) are able to consider individual consultants' skills and experience - a fundamental requirement of resource management, not all firms are able to take charge out rates (73 per cent) into consideration - something which is vital if profitability is to be managed.

* Less than half of the firms are able to consider individual consultants' preferences, skills and knowledge transfer or work/life balance. Less than a third (29 per cent) were able to factor in the training requirements of consultants.

* Less than a third (30 per cent) of firms are able to take bids and tenders into consideration when managing resources.

Sarah Taylor, author of the MCA white paper comments: "Resource management should not just be a support function which reacts to short term needs. It is a highly strategic issue, which needs to be understood by everyone in the firm and supported from board level down.

"As we enter a period of economic uncertainty with increasing pressure on margins, capacity planning is going to become even more crucial to the survival of the consulting firm. The danger is that most of the learning and best practice in this area will be jettisoned as firms batten down the hatches and reduce the horizon of their planning cycles."

Effective resource management:

1. Resource management should be regarded as a strategic issue not a support function and appropriately represented within the firm. It needs to be understood by everybody in the firm and supported from board level down.

2. All consultants need to understand the importance of accurate and timely data recording to the profitability of the firm. Resource management metrics such as utilisation and billability should be an integral part of performance management.

3. Avoid creating islands of information in the organisation by integrating resource management with project management, recruitment and financial management.

4. There should be visibility across the organisation of resource information in real time. This will encourage people to think more corporately and to manage their utilisation proactively.

5. Resource management should work closely with human resources and talent management to ensure resource gaps and development needs are met.

6. Don't look at utilisation rates in isolation. The following should also be considered: charge out rates and project profitability, client satisfaction, consultant development, business development.

7. Build in flexibility at both an organisational level, using for example the bench or associates/contractors, and at an individual level by balancing billable work with training and business development.

8. Think about the resourcing implications of bids and tenders before they happen. Qualify each bid realistically and involve resource management in the forecasting process. This will inform recruitment and development plans.

9. Good systems and data are not enough on their own. If the resource manager doesn't have a personal knowledge of individual consultants' strengths, weakness and personal preferences; then they should have regular contact with someone who does, such as a team leader. This requires good communications between resource management and project/team leaders.

10. Use professional communities and interest groups to share best practices.

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