Human Capital Planning Strategies & The Future of Professional Services

Written By:

Rick Rodriguez, Senior Implementation Consultant, Projector PSA
Ronni Skerker, Principal Implementation Consultant, Projector PSA

 

What is Human Capital Planning Defined as in Professional Services Organizations?

Human Capital Planning, or a human capital management (HCM) system, is often used by professional services organizations (PSOs) to drive the business processes pertaining to the company’s resources, including:

  • Workforce planning
  • Recruiting and hiring new employees
  • Onboarding employees
  • Terminating employees
  • Tracking employee time off
  • Tracking employee certifications
  • Facilitating and tracking professional development
  • Undertaking and recording performance management

In other words, many PSOs define human capital planning and management as their “HR system,” or Human Resources system. It’s the system where all of those HR functions reside, and this is an understood purpose for this system within the organization.

Why is Human Capital Planning Important to a Service Organization?

To put it simply, services organizations rely on their people and an HCM platform is HR’s bread and butter. Enterprise professional services organizations, and even small- to medium-sized companies, use their HR system for their day-to-day HR functions.

One of the primary goals of strategic human capital management in professional services is to simplify onboarding workflows. A purpose-built HCM, for example, can string together a full hiring workflow that makes it very easy to see what forms have been sent to the new hire, where they are in the process, who the process should go to next and so on.

Given the range of human capital planning systems available, and the varying needs of the organizations using them, it is not surprising that every services organization tends to use their systems for different purposes, and at different points, in an employee’s tenure.

Human Capital Management Strategy in Professional Services

According to the 2022 Professional Services Maturity Benchmark Report, utilizing human capital management “continues to gain in importance as more and more firms realize the benefits of integrating payroll with recruiting and skill building.”

Human capital management software has distinct functions separate from those that a PSA (professional services automation) solution can provide. However, when an organization has a human capital strategy that works in conjunction with a PSA application, it helps to minimize the number of systems and data silos that a company might have. Where a PSA is the source of truth for delivery of a project and project accounting, an HCM is the source of truth around HR-specific functions—with minor overlaps.

For instance, there is some information (like resource skills) that may already exist within an HCM architecture before a PSA is added to the mix. This information is useful for both the HCM application and the PSA system.

Some HCM systems may include time entry, another potential overlap with a PSA. In this instance, the organization must determine which application will be the system of record.

As such, when a PSO develops a strategy of ultimately having human capital planning functionality linked with a PSA solution, it has the potential to optimize operational efficiency even further. But knowing exactly what data to share, and how it will be shared, might even cause more work if not done properly.

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Does Using Both an HCM and PSA System in a Professional Services Technology Stack Cause More Work?

Professional services organizations have expressed concerns when considering using a human capital planning solution in conjunction with a professional services automation tool. While these concerns vary depending on individual company processes, some of the most common issues raised pertain to double time entry and resource-related data such as skills and certifications tracking.

Double Time Entry Example

Some of the most common questions are in regards to whether or not double-entry would be required for things like time-off requests. If an organization is already requiring its employees to enter time into a human capital management system, and there is an established process for employees to request, and managers to approve, time off, moving time entry to a PSA may not be feasible.

However, for project managers and resource managers tasked with project delivery, knowing when a person is taking vacation (and thus will not be available to move the project forward) is essential. Given the fact that a tech stack within a services organization is supposed to improve efficient operations, asking staff to double enter time isn’t ideal.

Fortunately, there are options. Projector’s flexible integrations are available to manage this human capital planning process with organizations generally taking one of two approaches. The preferred approach is to build a custom integration into a PSA platform through an open web services API. The other method that Projector employs is to build a custom program that allows customers to extract data from one system and then upload it to another via a CSV file.

An important note: Both planned and actual time off is needed in the PSA in order to accurately calculate project timelines and financials. The project manager needs to know when their team is planning to be on vacation, but also if the vacation was actually taken. Should vacation plans change, or not happen at all, a record of what actually happened (people worked and generated billable revenue during a time they were not planned to) needs to be present in the PSA in order for accounting to understand actuals to budget, PMs to adjust timelines and managers to know how billable their staff was.

Resource-Based Concerns

Professional services organizations also may use human capital planning and an HCM system for tracking skills and professional development. Questions arise around how they might be able to bring skills over from the HCM system and into the PSA system. Other common questions surrounding resources include how to create or remove resources from the HCM when they are hired or terminated, respectively. For these types of “record-keeping” challenges, Projector often works with customers to accomplish data exchanges through an open web services API.

As a result, a human capital management plan working in tandem with a PSA platform has options for custom applications and API integrations to prevent duplication of effort and the right data flow. This allows for more operational benefits without sacrificing efficiency.

Human Capital Management Strategy

Human Capital Strategy Use Cases for Professional Service Business

Below is a small sample of use cases implemented by Projector PSA to achieve various HCM integration goals and to address common concerns:

  • A life sciences consultancy with approximately 350 resources used a PCloud implementation to inject approved time off into a PSA system.

  • A healthcare consultancy with about 275 resources used a PCloud implementation to import scheduled time off from their HR system into Projector so that the resource would show as not available on those days. This also impacted the revenue forecast as the client did a lot of T&M work. Prior to implementing Projector, they were unable to accurately forecast revenue. With accurate off data flowing to Projector, all departments understood the implications of vacations on projects and financials.

  • Another customer, an information technology and services company with 310 resources, optimized capabilities by linking HCM functionality with Projector PSA by using Projector’s web services to build their own customized integration with ServiceNow to push resource skills into Projector.

  • A different information technology and services company with 450 resources used web services to develop an integration that allows updates to their resource RDC (Resource Direct Cost) hourly rate on a monthly basis. Thus, information is flowing from their HR or HCM system into their PSA.

Human Capital Planning + PSA: Challenges and Solutions

The 2022 Professional Services Benchmark released by SPI Research notes that, “Talent management is central to professional services’ performance as the skills and attitudes of the consulting workforce provide tangible evidence of consulting value.

“And with better management of personnel, PSOs can ensure talent is on staff and available when needed, which helps the organization grow faster. HCM solutions, in conjunction with PSA, drive greater billable utilization, which results in higher revenue and profit per employee.”

Human Capital Planning
HCM applications are playing a more important role in services organizations with good reason. Putting the employee central to the organization and enabling them to work more efficiently just makes sense.

HCM applications are playing a more important role in services organizations with good reason. Putting the employee central to the organization and enabling them to work more efficiently just makes sense.

There’s an important distinction to make here – working “in conjunction” with a PSA means something different to every organization. Simply put, the challenge comes down to the variety of needs each company has when it comes to their people and their projects.

Most, if not all, enterprise-grade PSAs will allow some amount of data flow between HCM and PSA through the methods described above. Working with your PSA vendor to understand the most efficient solution for your organization, from both a time and cost perspective, is the only way to truly understand what will be the best approach for your teams.

Strategies a PSO Should Consider for Optimal PSA and HCM Success

So, based on the noted insights and available industry technologies, what strategies should professional services organizations have in place to implement integrations and expanded technology stacks as they scale? An organization’s human capital strategy can be approached from a maturity model standpoint, where the amount, frequency and complexity of data varies by phase and integration.

Here’s a phased systems integration strategy we recommend for customers and prospects looking to take a “crawl, walk, run” approach to integrations:

  • Phase 1: ERP/Accounting Integration with PSA – This is typically the first integration with the PSA system to ensure data flow and reporting are in place to build the foundation for optimal efficiency improvements. The data involved here is critical and complex and needs to essentially reflect real-time status.

  • Phase 2: CRM Integration with PSA – The second phase for growing service organizations would be integrating the CRM system with PSA. This allows the organization to get beyond reporting of day-to-day business and into sales pipeline forecasting tied to visibility into projected revenue and staffing needs.

  • Post-Phase 2 Recommendation: HCM in Conjunction with PSA as Needed – This process is more of a recommended consideration as opposed to a phase, based on the benefits it brings to a PSO. Often by the time a company is at a maturity where connecting the data between these systems is considered, the perceived need for overlapping data has decreased and creating synergy between the two systems is a more simple and affordable task.
Human Capital Strategy for Professional Services

Summary

Overall, both organizations and customers stand to benefit when human capital planning and management functionality is linked with a PSA platform in project management. And while human capital planning and management can mean different things to different organizations, it serves an essential purpose within business operations.

In order to optimize its capabilities as a professional services organization experiences growth, an organization should have a high-performance plan in place, executed in the right order, based on its maturity model. By implementing a strategy based on a phased approach, proper integrations and data connections allow the company to maximize operational efficiency without adding too much too soon:

  • Phase 1: ERP/Accounting Integration with PSA
  • Phase 2: CRM Integration with PSA
  • Post-Phase 2 Recommendation: HCM in Conjunction with PSA

Ultimately, HCM systems and human capital planning should indeed play a key role in the future of professional services, as they can reliably provide data that affects human capital and allow business performance to soar to new heights. When working in conjunction with a PSA solution, the potential for a more “people-centric” organization is formed, taking that performance to the next level.

There are numerous use cases for successfully connecting human capital planning data with PSA data to enhance operations, and firms should consider leveraging their human capital at every level of maturity—one process at a time.

To discuss your goals and how Projector can fuel your human capital planning strategy, contact our team today or schedule a demo to learn more.

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Frequently Asked Questions About Human Capital Planning

What is the purpose of human capital planning in professional services organizations?

Human Capital Planning, or a human capital management (HCM) system, is often used by professional services organizations (PSOs) to drive the business processes pertaining to the company’s resources, including:

• Workforce planning
• Recruiting and hiring new employees
• Onboarding employees
• Terminating employees
• Tracking employee time off
• Tracking employee certifications
• Facilitating and tracking professional development
• Undertaking and recording performance management

What is a strategic human capital plan for professional services?

A professional services organization’s human capital strategy can be approached from a maturity model standpoint, where the amount, frequency and complexity of data varies by phase and integration:

• Phase 1: ERP/Accounting Integration with PSA
• Phase 2: CRM Integration with PSA
• Post-Phase 2 Recommendation: HCM in Conjunction with PSA as Needed

Why is human capital management important?

To put it simply, services organizations rely on their people and an HCM, or human capital management, platform is HR’s bread and butter. Enterprise professional services organizations, and even small- to medium-sized companies, use their HR system for their day-to-day HR functions.

What is the different between HCM and PSA?

Where a PSA (professional services automation) is the source of truth for the delivery of a project and project accounting, an HCM (human capital management) is the source of truth around HR-specific functions—with minor overlaps. When they work in conjunction with one another, there is potential to further optimize operational efficiency.

Projector PSA Logo 2020

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