Rise of the relatable organization

Professional
services industry
insights
A Global Talent Trends
companion report
GTT 2022: Professional services industry insights
Outlook for the
professional services
industry in 2022
A compelling career experience and meaningful total rewards are
crucial to retain high-value talent.
Before the advent of the pandemic in early
2020, significant changes were already taking
place across the professional services sector.
There was an increased focus on enhancing
the employee experience, clarifying career
expectations, introducing greater flexibility into
the workplace, reskilling and upskilling workers,
and finding the right strategy for retaining
valued talent.
Professional services firms recognized that although cash
compensation was a key lever for engaging and retaining
client-facing talent, identifying a total rewards solution
was paramount for distinguishing themselves from
competitors. Work generally took place in the office or on-
site at client locations, and long hours, tight deadlines and
frequent travel were all an accepted part of the employee
value proposition.
The onset of COVID-19 was initially met with a combination
of temporary pay reductions, delayed promotions, and the
elimination of merit increases and bonus awards. Firms
were looking for actions to reduce costs and avoid staff
reductions (which were common in the last major recession
in 2008). By the end of 2020, most firms recognized that
they could still be efficient when operating remotely, and
overall performance was surprisingly strong. While the
apprentice model of training and developing staff is still a
staple, there is a new acceptance by partners and leaders
that operating in a hybrid model is not just possible but
highly desirable by staff.
1
Professional services firms are front and center in the
war for talent amid the “Great Resignation” as young
professionals migrate to jobs mainly in the private sector.
However, after taking a conservative approach to pay
in 2020, some major firms administered more than one
organization-wide salary increase event in 2021, along with
annual bonus awards and additional “thank-you” bonuses
to try to stem the tide of higher turnover. Those off-cycle
adjustments have continued into 2022.
Leaders are now challenged to redefine their employee
value propositions and identify the right levers to engage
and motivate client-facing talent effectively. More recently,
major law firms have announced first-year law school
graduates will have starting salaries of $215,000, which has
a ripple effect on pay for all levels of associate attorneys.
There is an increasing realization that the right strategy
to limit the departure of staff will not be through cash
compensation but instead through other total reward
vehicles, which will vary from firm to firm depending on
their particular business and talent strategies.
About the author
Howard Levine
Partner, Career Business
howard.levine@mercer.com
GTT 2022: Professional services industry insights 2

The rise of the relatable organization

As companies seek better ways to engage and retain talent,
employees are scrutinizing the value they create through
their work. Both acknowledge that 2022 will be a year of
doing things differently — figuring out how to work, learn
and laugh together. In an era of increased accountability
and responsibility ushered in by the accelerated
digitalization and disruption of 2021, making this transition
is critical. Mercer’s Global Talent Trends research brings
commentary from more than 10,910 executives, HR
professionals and employees on the talent challenges
companies face and how they plan to make progress on
their people agendas.
Last year, winning companies led with empathy. This year,
our research shows that relatable companies are leading
the way. They are constantly resetting for relevance, seeking
to work in partnership with talent, working hard to deliver on
total well-being and building for employability to harness the
collective energy of their people. This report focuses on the
challenges and opportunities in the professional services
industry. To learn more about the five global talent trends,
refer to the full 2022 report.

Top HR priorities for 2022 in the professional services industry

1 2 3 4 5
Evolving our flexible Improving our total Enhancing the Redesigning Leveraging a variable
working culture rewards packages employee experience HR operations staffing model/the
for key retention gig economy
populations
GTT 2022: Professional services industry insights 3

Insights
Partnership is no longer the career goal for most
emerging professionals
For client-facing professionals, the allure of becoming
a partner in a professional services firm is not what it
was 15 to 20 years ago. The view of work-life balance
for partners is not necessarily favorable. Many are not
interested in the business development responsibilities
associated with being in a leadership role. Staff are
interested in their respective disciplines, which are
intellectually challenging. Increasingly, they are opting
to move to private sector companies to apply their skills
and continue learning. As a result, firms are discovering
that many campus hires are interested in “punching their
tickets” at prestigious professional services firms for two
to three years, updating their LinkedIn profiles and then
moving out of the sector to internal roles in the private
sector. These individuals are trained, highly productive
and profitable on client engagements, which makes their
loss especially painful.

What attracts people to join a professional services firm?

Professional services Total

Job security
37% 38%
Opportunity for career progression
44% 36%
Organization’s brand and reputation
29% 36%
Competitiveness of pay/rewards
38% 35%
Flexible working policy
39% 34%
Opportunity to continuously develop and learn
35% 33%
Fair pay/responsible rewards practices
28% 31%
Medical insurance
30% 31%
Confidence in our strategy/future vision
25% 31%
Pension/retirement options
23% 30%
Employee wellness/well-being programs
39% 29%
Commitment to innovation
28% 28%
Inspiring and trustworthy leadership/culture
25% 28%
Inclusive work environment/commitment to DEI
25% 27%
Vacation/time-off policies
25% 27%
Focus on making a positive impact
30% 27%
GTT 2022: Professional services industry insights
Remote/hybrid work is the new normal
Operating during the pandemic demonstrated to
professional services firm leaders that their workforces
could be highly profitable, efficient and productive when
working in a virtual setting. This finding ran counter to
the long-held belief that staff learned at the feet of more
senior-level practitioners either in the office, on location
with clients or in transit to client meetings.
Although a number of midsize firms have incorporated
some form of flexible work into their operating models for
years, the concept of remote working, especially among law
firms, was new for many. In the future, professional services
will need to offer flexible work arrangements as part of
the employee value proposition to compete for talent both
within the professional services industry and outside it (such
as in the tech industry).
Concerns about moving to permanent hybrid or remote working models
I am concerned that employees will only join
or stay at a company that offers remote/hybrid
working — Strongly agree
I am concerned about resentment building
as groups working from the office may feel
they are working harder than remote
workers — Strongly agree
I am concerned about resentment building as
groups working remotely may feel they are not
able to disconnect — Strongly agree
I am concerned that remote workers will have
a more difficult time getting ahead/being
promoted — Strongly agree
4
Firm leaders received high marks from their staff over the
past two years, especially for their mental wellness and
health efforts. HR leaders expect 43% of employees to
thrive in 2022, which is 12% higher than the all-industry
average. Further, leaders in this industry are focused on
delivering targeted preventive measures to promote long-
term employee health and well-being (39% for professional
services firms versus 31% for the all-industry average).
The cadence of communication from senior leadership to
staff was considerably higher than in pre-pandemic times.
Partners also displayed a sensitivity to the stresses working
from home can bring — such as longer hours, constant
email traffic and the need to care for young children.
Many firms are still formulating a specific flexible working
policy looking to the future. Cultures founded on an in-office
working environment will need to adapt to this new normal
to achieve the desired level of workforce “stickiness.”
Professional services Total
41% 32%
42% 32%
40% 32%
44% 32%
GTT 2022: Professional services industry insights 5

Professional services firms are revisiting total rewards
programs to fit the new work environment
Many actions taken during the pandemic have centered
on cash compensation, as 2021 saw the onset of the Great
Resignation and the departure of staff early in their careers
for higher-paying jobs in the private sector. Although there
is a desire to match the competition, with the introduction
of various benefits and work-life programs (for example,
holiday shutdowns and access to external coaches), firm
leaders recognize that the solutions for their respective
firms may not be simply replicating what others are doing.
Rather, the challenge is understanding the employee value
proposition and crafting an array of customized programs
and options for a firm’s unique workforce. Although pay
gets you in the game, professional services firm leaders
understand that it takes a thoughtful total rewards
approach to attract, retain and engage talent at all job levels
more effectively.

Efforts professional services firms are making to ensure a ready flow of talent in the year ahead

Professional services Total

Increase base pay and/or bonuses for top

performers — We plan to do this in 2022 54% 45%

Adjust internal/external pay equity — We plan to

do this in 2022 55% 45%

Offer a dedicated “return-to-work” package for

caregivers and/or furloughed workers — We plan
to do this in 2022
53% 41%
GTT 2022: Professional services industry insights
Reimagine both the employee and career experiences
Although cash compensation is necessary, firms recognize
that they cannot win in the war for talent on pay alone.
Instead, firm leaders focus on ways to improve the
employee experience with regard to how work is performed,
what can be offshored or outsourced, and how to design
more intellectually stimulating and challenging jobs.
The way work is done in the professional services sector
will be different in the future. Clients may not need (or
want) staff on-site to complete the work as frequently as in
the past, and the need for in-office activities will decrease
through better use of technology. Firms are beginning
to evaluate how work should best be performed in a
virtual setting, and they’re considering staff needs related
to flexibility, use of technology, intellectual challenge,
engagement and workload. On the table are No-Zoom
6
Fridays, meetings that start five minutes after the hour and
are limited to no more than 45 minutes, and more.
Leaders are increasingly looking at how to portray the
whole career experience at their respective firms, defining
what roles entail at each career level and managing total
compensation expectations. There is an opportunity to
reduce attrition if staff have a better understanding of
what they can earn in base salary and annual bonus at
various career levels, including up to partner. Leaders
are considering movement or rotations to other practice
areas to take advantage of their specific offerings for skills
development that will enable firms to retain people that
are searching for new challenges. Eighty-six percent of
the C-suite report in our study that they have relinquished
central control of employee decision-making and moved
toward unsupervised work arrangements. This is 10%
higher than the responses for the all-industry average.
GTT 2022: Professional services industry insights 7

The reskilling and upskilling of client-facing staff is a
significant focus
Like other industries, professional services firms are laser-
focused on upskilling and reskilling their client-facing team
members to enhance their value — both at their current
employers and throughout their careers. In addition to
increasing the market value of the individual, a higher-
skilled workforce can be more effectively deployed on client
engagements, leading to higher margins and more robust
performance. Firms are devoting resources to identifying
the most relevant skills for development and determining
how this impacts career advancement, compensation and
assignments for client engagements. The more progressive
firms are evaluating the value of those skills in the external
market and are looking to apply a pay premium to staff
who can acquire those skills and then deploy them on client
work. The challenge is to avoid training individuals on skills
that quickly become obsolete in the marketplace.

The most impactful ways professional services firms are addressing skills gaps

Professional services Total

Targeting learning — tailored upskilling/reskilling

for identified skills gaps in our current workforce 43% 42%
Rewarding skills acquisition — compensating
employees who complete courses or certifications 37% 40%
Experiential learning — using internal rotations,
short-term projects or internal gigs 38% 39%
External learning — offering assignments with
partners, suppliers, customers, JVs, etc. 36% 37%
Buying skills — hiring new talent with the
required skills and/or experience 42% 37%
43% 35%
Transferring skills — resourcing work with
multidisciplinary teams

Peer-to-peer learning — learning from colleagues

36% 34%
Borrowing skills — leveraging the gig economy to
“borrow” the skills we need 24% 30%
Acquiring skills via M&A — obtaining skills
through an acquisition or merger 30% 30%
Paying for learning — providing tuition
reimbursement 34% 28%
None of the above — we do not have
significant skills gaps 3% 2%
GTT 2022: Professional services industry insights 8

Recommendations
The challenge for professional services firms is
understanding their employee value propositions and
crafting an array of customized programs and options
for their unique workforces and cultures. Firms are all on
a journey to revamp their total rewards approaches and
identify the “secret sauce” that will meet the specific needs
of their workforces. Creating a compelling career experience
and meaningful total rewards packages will go a long way
toward attracting and retaining high-value talent.

Recommended actions for the professional services industry in 2022

Get ahead of the trends toward greater pay transparency
by sharing career earnings potential. Provide a career
roadmap for staff that shows what each career level is
about, including work challenges, responsibilities and the
impact staff can have on a client’s business. As part of that
picture, share potential pay opportunities for base salary,
annual incentive/bonus and other specific benefits, such as
taking a sabbatical at a particular level of job, special bonus
awards, etc.
Revisit HR programs and processes for an increasingly
virtual workforce. The reality is that your current methods
and programs may be ill suited to a more virtually deployed
workforce. Understand how the HR function is structured
and equipped to serve staff no longer in the office, and
determine how to deploy technology. Create a change
management strategy for performance coaches and staff
for how the new normal will operate, and provide proper
training and coaching.

Craft a total rewards strategy geared toward your firm.
What’s suitable for one of your competitors is not necessarily
the right approach for your firm. Instead, use more advanced
employee sensing tools, such as digital focus groups and
conjoint surveys, to evaluate what your staff believe is most
important and how your current offerings are perceived
internally. Introduce more variability and choice into
those offerings, and don’t assume an increasingly diverse
workforce requires a “one-size-fits-all” approach.
Invest in thoughtful upskilling and reskilling. Reevaluate
your talent strategy to gain a better understanding of
the skills needed on engagements both today and in the
future. Consider which skills to acquire via midcareer hires
at higher job levels versus those for which you aim to train
current staff for deployment on client engagements and
longer-term individual development.
Reimagine the employee work experience. In conjunction
with ongoing efforts to redesign how work is performed, give
equal consideration and focus to the employee experience.
This is the opportunity to put all ideas on the table and apply
a design-thinking approach to push the envelope on what’s
possible and innovative. Staff are departing the industry
because they don’t view the career model as attractive in the
long term. Identify what’s lacking, and pilot specific programs
and approaches in targeted practices to determine whether
they are viable for your firm.
For more insights or recommendations, please see the full
2022 Global Talent Trends report.
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