Challenges

The business operated on a fee-for-service basis with prices set in relation to the labour needed to service each customer.  Additionally many valuable resources were being given away for free

Staff numbers and skills were not being matched to needs so in many cases shifts had too many highly skilled staff charging high hourly rates.  Additional staff contracts were not aligned to the business needs with casual staff being the standard staff contract.

Background

The owner and her husband started a career coaching and executive placement firm in 2010 and learnt on the job.  Over the years they had made many good business decisions driven by the advice of the skilled staff they hired, however some of the staff had begun to take advantage of the situation and this was eroding profits.

Solution

The solutions targeted to address the areas causing pain in the business and improve profitsd

2. Product Offering – the organisation had been set-up like a counseling service, pay by the hour, with resources tools and training delivered for free, which limited profit to the number of consultants available.  By changing from a direct service to selling a set-price coaching program which included a mix of class time, online tools and resources as well as some one-to-one coaching  clients were able to get better value, network and progress faster without the need for a consultant’s presence every step of the way.

1. Pricing – The change of product from an hourly service to a program enabled the pricing to be more transparent to customers and also enabled profitable leverage of aspects of the course that did not require a consultant such as the online sections which were already developed and required minimal consultant’s time to , as well as better leverage of profit with classes where only one consultant was needed for 10 students (previously this was all delivered as 1 student = 1 consultant).

3. Staffing – The staff were mostly psychologists and professionals used to working on an hourly basis.  They often scheduled appointments on weekends and after hours which as they were on casual contracts resulted in them being paid higher hourly rates.  Given the people they were working with were primarily unemployed it was generally unnecessary to have after hours appointments.  The firm had been consistently turning away work because it was “at capacity” and the new format with classes enable a greater number of people to be helped using the same number of staff .  Therefore this increased capacity significantly and because the extra revenue had almost no related costs profit improvement was simple.

The standadisation of many parts of the process enabled much of the classroom aspects to be delivered by less experienced staff, creating both cost savings and a training path for additional consultants.

The staff were also all converted to permanent contracts (they were not actually defined as casual under fair work rules) so their salaries were stable and this also improved profit as staff were no longer able to CHOOSE to work on public holidays and charge triple time.  The striking of their wages needed to be done carefully so as to ensure their earnings were reasonably aligned to both the market and their previous income – a careful combination of market salary plus profit based KPI’s made sure both the owner goals for profit improvement and the staff needs were met.

Outcome

An organisation that was hamstrung by a culture of “this is how we do it here” was released from its old ways and updated to become a thriving profitable venture.

This is a true client case study and only the names and images have been changed for privacy reasons.