Editor’s note: Editor’s note: You may download the 2021 wholesale, retail and consumer packaged goods severance and workforce transition report here.
Few industries place quite so much emphasis on human expertise as professional services. So it may not be shocking that, following a year in which direct human contact was prohibited, the industry as a whole has been not only shaken up but is undergoing a vast transformation.
How is that playing out in the context of severance and workforce transition in the sector? For answers, we turned to HR leaders (from HR managers to CHROs) at professional services companies across the globe – and what they told us might surprise you.
four high-level trends
Where exactly does this fast-moving industry stand when it comes to severance and workforce transition? Above all, the following four trends stand out in our survey findings:
#1: Changes to severance reflect new talent expectations.
While only 29% of professional services firms reported modifying their severance programs in the past two years, those that did were largely motivated by two things: to meet the new needs – and demands – of talent, and to improve the employee experience.
#2: Substantially more employees are now eligible for severance.
Once reserved for senior-level executives at professional services companies, severance is increasingly being offered to all employees. In fact, that's true of 70% of employers in this space today – a huge change from the 49% that reported the same in our 2019 survey.
#3: Redeployment, while mostly effective, could be even more so.
First, the good news: 70% of respondents believe their redeployment programs are either effective or very effective. The less good news? Another 26% said that partnering with an external consultant would make those programs even more effective, which is double the number (13%) who said so two years ago.
#4: Employer branding remains well behind the curve.
Only about two thirds (65%) of professional services firms have formal programs in place to protect their employer brands (compare that to wholesale/retail and CPG, for example, where the number is 88%). What's more, many in this space aren't carrying out the basics of employer brand monitoring and management, which is one of the topics we'll turn to next.
zooming in on the industry's retention priorities
Keeping high-value employees – and leaders, in particular – from jumping ship during a downsizing is always going to be an organizational priority. And at first glance, professional services organizations appear to have internalized that message – and they're acting on it.
For example, 84% of respondents in this sector indicated their organization is leveraging incentives like flexible work arrangements, bonuses, paid time off (PTO) and more specifically to keep key players on board.
What might surprise you, however, is who exactly constitutes a 'key player' – and who does not – in the context of professional services today. The clear takeaway: skill trumps experience. In fact, 66% of respondents said their companies want to retain employees with in-demand skills. Less than half, on the other hand, said they're using retention incentives to keep senior officers within the fold.
Aside from incentives, more professional services firms are turning to the power of redeployment to retain valuable employees and help avoid layoffs altogether. And those efforts are largely proving successful: Nearly three out of four (70%) respondents rated their organization's redeployment program as effective or very effective – a significant jump from the 57% who said the same just two years ago.
That confidence in redeployment is not only good news for employees who might otherwise face being laid off – it's good for businesses, too. More than half (54%) of professional services firms rapidly redeployed employees to other areas of the organization to address quickly shifting business demands, and nearly the same (51%) shared talent temporarily with outside or partner organizations to avoid layoffs and address new business demands.
And while the resources needed to maintain a robust redeployment program are extensive, there are long-term benefits to pursuing this route. Redeploying employees can go a long way to developing an increasingly agile workforce, as well as preserving jobs and maintaining cultural knowledge. Plus, retaining and redeploying employees saves companies considerable time and cost that might otherwise be spent hiring and onboarding new employees as the economy recovers. That's a win-win for businesses and their people.
as eligibility for severance grows, so do cost concerns
As previously mentioned, a whopping 70% of professional services companies have now made all employees – not just executives – eligible for severance. Across all other industries, by contrast, that percentage was just 64%.
Obviously that's good news for employees. But it also marks a major change of norms in just a two-year span: Our 2019 survey found that all separated employees were eligible for severance at fewer than half (49%) of professional services firms. And perhaps inevitably, given the sheer magnitude of that shift, the result is new cost concerns for employers in the space.
Notably, while severance has been increasingly democratized at some firms, more than one in four actually made changes in the opposite direction – that is, adjusting severance policies in the interest of cost reductions. Considering the ongoing fallout of a wildly disruptive global pandemic, this should serve as a worthwhile reminder that offering severance benefits to all employees will likely remain a luxury for many companies moving forward.
An avowed commitment to the employee experience – together with new employee expectations and demands. Increasingly democratized severance offerings – alongside increasing cost concerns for many. The professional services space is rife with challenges and transformations, for all of the reasons we've discussed. And that's just the tip of the iceberg.
Looking for more insights around the industry's approach to severance and workforce transition in 2021? Download your free copy of our professional services report today.