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As a result of conversations with our clients in the professional services sector over the past 12 months, three key concerns have been highlighted:
These themes are reflective of the unique challenges the industry is facing but there are also similarities with some of our other key industries, with risk and regulation clearly a concern or major focus for the majority of our clients – thanks to political uncertainty and increased regulatory requirements.
We have heard from our clients that recruitment, employee retention and leadership are some of the key issues professional services organisations are facing, along with difficulties recruiting people with the right skills and experience.
When looking at addressing these issues it’s important to consider cause and effect – if employee retention and leadership are the outcomes, firms need to focus on how they can be more proactive to create a different outcome in the first instance.
Employees feel connected to an organisation when they understand their significance and how their work contributes to the scheme of things, resulting in the belief that their actions are making a difference. One practical thing leaders can implement to help reinforce this and to start shifting the culture, is to make it a discipline to walk the floor, put in more face time and make sure staff understand how their work has helped achieve certain outcomes.
Firms also need to look at new ways of working to keep up with new technology solutions and to be a ‘firm of the future’. Prospective Partners and employees want to work for firms with tax effective remuneration models, new technology, sustainable structures and most importantly, who are innovative and flexible and adaptable to external factors driving change.
Compliance, personnel risk and management reporting, changes in laws, tax structure and operations across various locations are all areas of focus.
Risk and regulation have been discussed notably in 2018, particularly with the Royal Commission into the financial services sector and the introduction of GDPR. Professional services firms should be ensuring that they’re complying with existing industry regulation and up to date with any changes to regulation around reporting and data privacy.
Cyber security is an area that was not previously governed by legislation but is now subject to federal laws – firms have previously had an obligation to report but no legal requirement. The professional services industry faces a growing threat of cyber-attacks, and firms who don’t have sufficient structures are particular at risk. We have been working with our clients to ensure they are as prepared as possible for any potential breaches including cyber security threat/risk reviews and response planning to IT strategy, risk and assurance and data security compliance reviews.
Stakeholder management and maximising shareholder value are the key issues that we have heard. A number of firms are considering bringing in more shareholders and/or buying out minority shareholders to transition their organisation. Firms are also keen to develop strategies to recognise value for shareholders and address their returns.
A change in government in 2019 could impact some structures, with Bill Shorten’s Labor party calling out that an area of focus under a key policy will be closing loopholes to stop the use of family trusts. Whilst we don’t know if this will happen, or when, knowing it could be an issue creates an opportunity for organisations who do not have structures that are robust enough to cater for these changes in legislation to address this before it does become an issue.
Thank you to all the firms we have had strategic conversations with in FY18. If you have any questions about the trends impacting the professional services sector or how we can support your growth strategy, please feel free to get in touch.
