Variable work force Featured

8:00pm EDT June 25, 2007

When faced with mergers and acquisitions, new systems, process changes or a project that might be outside of a management team’s expertise, a professional service firm can often provide the specific skill set your company needs to proceed with clarity.

“I see companies going forth with a lot of that work and trying to do it in-house with their existing staff, and then using professional service firms or consulting firms strategically when they need certain experience or knowledge that’s maybe not in their existing organization,” says Martin J. Dorfner Jr., managing director of Resources Global Professionals.

Smart Business asked Dorfner about the ways in which a variable work force can meet a company’s needs.

When might a company consider bringing in someone from a professional service firm?

Professional service firms are typically engaged when companies are going through a great deal of change and also when companies want to get some external influence or project management.

There are different approaches from the various professional service firms. The traditional consulting model is used when companies want to push project ownership, risk and control out of the organization. Our service delivery model is to work from the inside out, integrating our team with a client’s project team, thus enabling client management to retain control and ownership of a project.

Some typical areas to consider using a professional service firm can be for acquisitions, divestitures, bankruptcy, compliance (Sarbanes-Oxley, HIPPA); new accounting, financial reporting, human resources or supply chain applications; and loss of key people in an organization caused by a leave of absence or traditional promotions or job changes.

What benefits can a company derive from a variable work force?

Companies are always trying to manage head count or FTEs (full-time equivalents), and using professional service firms can help. So as companies grow or downsize, they are constantly evaluating how many people are really needed in every department or business to sustain the current business state and then manage growth. Strategically using professional service firms can allow you greater flexibility in accessing specialized skills and experience, handling projects and increased workloads, and transition of key positions.

As companies invest in growth through acquisitions or implement new systems leading to process automation, one of the big areas of focus and efficiency is the reduction of head count or FTEs. This is one of the big metrics that companies have to report on and that publicly traded companies are watched on. Maintaining or dropping that number plays very well for those companies with investors and the capital markets.

What are some of the perceived downfalls of a variable work force?

One of the big worries when any kind of outside professional service firm or consulting firm is brought in is that the knowledge leaves when they disengage from the project. Once someone from a professional service firm works in a company’s environment, helping put in their new system, helping integrate an acquisition, or backfilling a key management or executive position, he or she gains a great deal of knowledge about the company. Training then becomes important and typically occurs in the middle or the end of the project when one of two things is going to happen:

  1. When people come off a project back to their role, we’ll spend time with them to make sure that any changes to the role — new systems or processes, for example — are clearly communicated and they’re up to speed before we walk out the door.

  2. And if it’s a situation where we’re filling a void for an open position — interim controller or CFO or other high-level person — we’ll make sure that he or she is acclimated to the business and the day-today responsibilities in order to function more seamlessly when we leave.

What are the cost implications?

As companies go through the big projects of mergers and acquisitions or new systems, one of the big ROI pieces of the calculation is head-count reduction. So if they can, companies will push hard for efficiencies through process automation or eliminating duplicative efforts.

When you think about the cost of traditional employees versus using experienced professionals from a professional service firm, it’s not as simple as comparing salary costs of $90,000 to hire this person. There are also the benefits cost associated with that — which could be anywhere from 25 percent to 40 percent of the salary — and training costs. You also need to evaluate whether your organization needs this experience/skill on staff for the foreseeable future or if it’s a short-term requirement. It may make sense to evaluate all costs — training, salary, incentive, benefit and, possibly, severance — before deciding on a traditional employee or utilizing experienced professionals from a firm.

MARTIN J. DORFNER JR. is managing director at Resources Global Professionals in Pittsburgh. Reach him at (412) 263-3303 or mdorfner@resources-us.com.