The overall mission of a professional firm and the mission of each partner is to grow the firm (revenue) and maximize partner compensation by selling new work, expanding current projects and effectively managing those projects. Labor is the largest cost component in a professional firm. One of the major challenges in a consulting environment is to maximize the utilization percentages (billable time/available time) of staff. With most professional firms, the project profile and the nature of the clients require a consultant to work on several clients to attain full utilization. Inherently, they have a lot of time related to start/stop situations which proves to be very costly and inefficient. This profile also make scheduling difficult and reduced the consultant’s ability to maximize their billable hours.
The solution is to enhance the delivery model and migrate away from smaller projects to larger projects that enabled staff to work complete days or even weeks on a single client. A defined and implemented strategy of pursuing large scale application development projects is a must. This would minimize weaknesses in the model, enable more efficient use of resources and generate additional revenue.
The proven results from this model change are outstanding. A commission based sales structure, that focused on large clients/large projects will further ignite such an initiative. This will provide significant growth and make a substantial contribution to improved financial performance. Additionally, these items will assist in propagating this change:
- Standardize product offerings
- Lead the development of standard methodologies to optimize delivery model.
- Put procedures in place to effectively manage risks.
- Develop standard rate structure and client contracts.
To reinforce this business model, an incentive compensation system that motivated staff consultants to maximize their individual utilization should be implemented. This incentive program should be based on a combination of performance with regard to chargeable hours as well as client profitability.
