By Amanda Gee, HR Coach at Paychex, Inc.
Professional services leaders are under immense pressure as they face a reshaped workplace, a dramatic shift in the employee-employer power relationship, and changing business models for a more digital environment. Managing people is both rewarding and challenging. One burden that impacts almost all managers is HR administration, which can be costly in terms of time and money.
As a result, professional services business leaders and HR managers must be agile and innovative to help their organizations remain competitive. This presents opportunities to improve talent management, promote operational efficiencies, and foster employee well-being and career advancement through increased investment in the right tools and technology.
The current economic landscape is another major source of stress for business owners and HR professionals. After years of shallow labor pools, the market is finally starting to stabilize. Still, the relief a growing labor force is bringing may not be enough to counter other pressures — like ongoing inflation, rising interest rates, and the threat of an economic slowdown.
These concerns are especially pressing in staffing and professional services, where overhead costs tend to be high, and turnover is a top concern. In fact, according to a new Paychex survey of staffing and other professional services leaders at businesses with 5-500 employees, the average organization spends $403,000 annually on HR administration — nearly double the cost in other industries.
Furthermore, the survey found that one in three (36%) professional services leaders said they struggle to hold on to good employees, and 37% foresaw attracting dedicated staff being a top challenge in the next 12 months. With the average cost of hiring a new candidate sitting around $4,700 and operational spending already sky-high in the business, it’s easy to see why inflation (63%), the threat of a recession (52%), and the labor crisis (35%) were among staffing leaders’ top concerns.
Retaining staff in the staffing world
While turnover can spell trouble for businesses of any kind, the professional services sector’s significant overhead costs and consistently high administrative workloads make retention more critical to long-term stability. In the report, 36% of respondents shared that minimizing turnover was a top priority and winning new customers (44%) was a top challenge.
To succeed in today’s landscape, staffing industry leaders need to implement strategies that support satisfying employee experiences to aid recruitment, raise retention, and model best practices for clients. However, knowing and acting are two different things.
Critically, leaders will need to:
Employee engagement is critical to retention, and prioritizing communication can be one of the best ways to ensure employees feel connected to their workplace. Some staffing leaders already understand this, as 40% of respondents in the above survey indicated that communicating goals and progress to employees was a priority in their quest to improve employee engagement. Still, that leaves 60% — a healthy majority — that haven’t yet put in the work to open lines of communication.
It’s simple: putting communication — about goals, progress, expectations, and everything in between — at the center of your organization’s values may help foster inclusion, improve morale, and ensure decisions are guided by employee feedback. All these things can be building blocks to the kind of working experiences that keep employees happy, productive, and on your team rather than on the hunt for a new position.
Providing employees with access to training and educational offerings can be critical to successful retention strategies. While many employers see these options as an added expense, the return managers get from up-leveling existing staff members’ skills far outweighs the cost.
In a 2022 survey of employees at small businesses, 63% said they would be more likely to stay at their current organization if they were offered better career advancement opportunities — and that number jumped significantly for hybrid employees (78%).
Critically, employees indicated that the most desirable opportunities were those that prepared them for new jobs or promotions within their company (58%), illustrating the close correlation between investments in training and employee retention. In short, it shows employees that you are invested in their career trajectories and personal growth while also helping to grow teams’ skill sets and fill knowledge gaps.
In every relationship, appreciation goes a long way — and that goes for managers and their teams, too. It’s human nature. Recognizing the good work employees do day-to-day can significantly improve retention efforts.
Appreciation can mean many things — from a simple “thank you” or “nice work” to awards, rewards, added flexibility, and perks. Managers can benefit from asking what kind of recognition their employees value. The key is making certain that their hard work does not go unnoticed. Employees are more likely to stick around longer and be more eager to put in the effort if their contributions are regularly acknowledged.
Though communication, recognition, and training can go a long way, the fact remains that competitive wages and benefits offerings remain the most important aspects of career decisions for many. At the end of the day, compensation is at the core of every working relationship, which means increasing tenured workers’ pay and improving their benefits are a necessity for companies that want to keep valued employees around.
While raising pay and improving benefits for employees you already have can feel unnecessary due to growing financial concerns, this view is misguided. Yes, you may be able to get away with only increasing existing employees’ wages by the bare minimum for a time, but employers that take this route in the long term are putting their employees on a fast track to resignation.
When asked what companies are doing to hold onto staff, the Paychex survey found that those in professional services roles indicated that increasing pay (43%) was the top retention initiative to invest in employees.
5. Automate and outsource
Overwhelmingly, staffing leaders indicated that their biggest barrier to HR success is time. The relatively low emphasis industry leaders are putting on pursuing automation and outsourcing boiled down to, in large part, not having the time to devote to these advancements.
In the report, leaders cited giving employees the training, coaching, and support they need to perform effectively (51%) and balancing management with other tasks (39%) among the top challenges they face in their roles. Furthermore, a significant portion of these respondents shared that they spend more than 16 hours a week on HR administration, and 31% said they are extremely or very stressed out by their responsibilities (only 4% said they had no work-related stress).
Investing in partnerships and tools that streamline HR processes — like onboarding, compliance management, payroll, and more — can alleviate some of the burdens on staffing industry leaders. The Paychex staffing industry survey found that leaders who engaged with professional employer organizations (PEOs) to support HR administration (only 24%) reported increased productivity, improved accuracy, and reduced costs.
The proof is easily seen that automating and outsourcing can help leaders find more time to focus on managing and mentoring their teams—both of which are critical to keeping talented workers around.
Investing in what you know
There are many unknowns in today’s staffing world. Your current staff shouldn’t be one of them. That makes existing employees the best investment you can make in uncertain times. As the world of work continues to change, leaders will have to do the same. By shifting focus to retention and engaging with the above strategies, staffing industry leaders will be well on their way to reducing turnover and costs. Even better, they’ll be modeling best practices that will help their organizations and their customers succeed in today’s market and prepare for tomorrow’s world.
Amanda Gee is an HR coach at Paychex with 15+ years of human resources experience. Her credentials include a Senior Professional in Human Resources (SPHR) certification, a SHRM Senior Certified Professional (SHRM-SCP) certification, and a Life, Accident and Health (LAH) insurance license in Michigan. In addition, she has obtained the Association for Talent Development Coaching certificate, holds a bachelor’s degree in Business Administration/Human Resources and a Master of Human Resources and Organizational Development degree from Eastern Michigan University.