Business Confidence Lifts
Insight
September 18, 2024
Rising to the occasion: How professional service firms are succeeding
The best of Australia’s professional services firms are meeting today’s challenges head on – and there are plenty of lessons to learn from them, says NAB Head of Professional Services Donald Jamieson.
There are many hurdles out there right now for professional services firms – even as revenues continue to rise across the various sectors.
Take rising costs – in office rents, IT, regulatory compliance and staff. In fact, engaging and retaining staff has been a big challenge over the past few years, and not just because of how much firms need to spend.
Staff challenges are being seen across the breadth of professional services.
Law firms have struggled with a post-COVID exodus of lawyers to the UK and US and still face a tight market – particularly in the competitive space of three to eight years experience. The Australian Bureau of Statistics, meanwhile, has estimated that Australia will require 10,000 extra accountants each year up to 2026. And the insurance broking sector has been scrambling to address the ‘ageing’ of its industry, as risk adviser McLardy McShane COO Meg Long puts it – the tight labour market exacerbating the general shortage of young people.
Keeping staff close
In response, high-performing professional services firms are focusing enormous efforts on engagement and retainment strategies.
Take rapidly expanding national risk adviser McLardy McShane, which has jumped from 20 to 400 people in 10 years. Even as it enjoys a retention rate of around 95 per cent nationally, the firm has prioritised its HR offering.
Part of that has been expanding its leave entitlements, including mental health, domestic violence, IVF and lost pregnancy leave.
It’s also what top-performing accounting and consulting firm PKF is doing to stay one step ahead.
As Melbourne Managing Partner Timothy Bow says, PKF is going to great lengths to ensure its staff feel part of the firm’s future. To this end, PKF have given them more input into decision-making on several fronts and completely overhauled its career pathway processes – from early education for relatively junior staff through to its final course, which is a path into partnership.
Overcoming the exit challenge
Bringing new partners on board comes with its own issues in a market where the price of equity has risen considerably.
For one thing, it’s hard to exit your business if no one can afford to buy it. It becomes tougher still amid the current exodus of partners who delayed leaving their business during COVID.
But there are solutions. We are seeing partners adjust their exit timelines and take a more stepped approach to equity sales, which means a more achievable shareholder transition – for the outgoing and incoming partner.
At the top of their game
It is these issues and more that are the impetus behind our latest white paper, The Performance Era: How Professional Services are Reimagining Best in Class Business Management.
We wanted to better understand what issues professional services firms are facing right now and, more importantly, how they are addressing them.
Many firms are pushing boundaries in new and interesting ways. And it’s working, if recent figures are anything to go by. Accounting and law firms, as well as insurance brokers, have seen a solid rise in revenue – with mid-tier accounting firms recording a jump of 17 per cent, according to The Australian Financial Review’s latest Top 100 list.
Find out just what it takes to stay ahead of the game in NAB’s new report: The Performance Era
