Nearly all companies strive to grow revenue and earnings. Entrepreneurs and executives like to put points on the scoreboard, and the way you do that in business is through growth. In professional services, revenue and earnings growth require additional sales, employees, and processes. While most firms focus on sales and recruiting, many underinvest in process development and eventually pay a penalty for doing so.

Revenue potential in services firms is tied directly to the headcount of the service delivery organization. Since firms are essentially selling the expertise that their employees bring to a unit of time, the only way to grow services revenue is to increase either bill rates or billable capacity. This correlation between headcount and revenue potential is more pronounced in professional services than in any other industry.

The result of the “people-heavy” revenue structure is that professional services firms often have more employees than companies in other industries with similar total revenue. As an example, a SaaS software company could conceivably get to $10M+ in revenue with 20 or fewer employees. Once the product is built, the company can sell it many times while needing minimal additional personnel. But a professional services company with 75% billable utilization and a $125 hourly effective bill rate, would need more than 60 employees to reach the same $10M in revenue (assuming 50 billable employees and 10 non-billable). So, the services company would need three times the headcount of the product company to reach the same revenue amount.

The amount of process definition needed within a company is not a factor of the revenue being generated; it is a factor of the headcount. Companies with greater headcount, regardless of the industry, need more process rigor. A 20-person company can get by with minimal processes but won’t be able to scale to 100 employees without process maturity. For a professional services firm to scale, it must define and follow processes that will foster operational consistency across the organization.

Employee Handbook

It is useful for professional services firm leaders to codify the firm’s key information, policies, and procedures within an employee handbook. The handbook could be a physical document that is provided to each employee, or it could be an online resource (which is easier to update regularly). The handbook becomes the primary resource that employees refer to when they have common organizational questions.

The employee handbook is particularly valuable to new hires who are often “drinking through a fire hose” to learn what is expected of them. During their orientation period, new hires should be walked through the entire employee handbook to ensure all common practices are clearly understood.

A good employee handbook usually contains some or all of the following information:

• What the company does and the types of clients it serves
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• History of the company
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• Background of the founders
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• The mission, vision, and values
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• Philosophies and points of view
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• Description of primary products and services
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• Organizational structure including departments, practices, and job titles
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• Performance evaluation process
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• Vacation, holiday, and sick leave policies
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• Legal policies (such as EEO or FMLA)
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• Benefits and perks
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• Overview of internal tools and systems
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• Bonus plan details
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• Employee referral incentives
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• Work from home policy
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• Expense policy
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• Training programs
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• Payroll process
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• Employee code of conduct
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• Facilities information (office locations and related details)
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Delivery Methodology

A delivery methodology is simply a set of processes and artifacts that a professional services firm uses to deliver its projects. The purpose of a methodology is to ensure consistent service delivery and deliverable construction across different teams within the firm. When service delivery is consistent, so are project outcomes, in terms of quality and budget attainment.

An established set of delivery processes also makes it is easier to move personnel from one project team to another or to form entirely new teams with employees who may not have worked together previously.

Process Library

Some professional services firms become highly-disciplined in their process definition and opt to move all operational processes into a standalone system (and out of the employee handbook). These firms often have hundreds of process artifacts that get cataloged in a “wiki” structure (similar to Wikipedia). This can be an excellent step for services firms that are looking to scale to hundreds or thousands of employees. Since wiki systems are easily searchable, they become the “go-to” source for employees who need to answer operational questions.