The Top-Consultant.com report on salaries in the consulting industry has just recently been published – and confirms what many in the industry have long suspected.
The industry is now polarised between the Haves and the Have Nots.
For those whose skills are in demand, earnings, promotion and bonus prospects have rebounded to the levels seen in the years when the industry was booming. Whilst pay rises have accelerated to 5.6% for those who received one, nearly 4 in 10 consulting professionals received no pay rise this last year. There’s a similar pattern to bonus payments too – with significant bonuses being paid to many, but a sizeable minority receiving no bonus payment at all.
Promotions are also back with a vengeance, the consulting industry having promoted nearly 1 in 3 of its staff this last year. That’s significantly up on 2009, when the fast-track promotions that our industry has come to see as the norm simply dried up.
“Faced with waves of consultants leaving their firms when the hiring market picked up, consultancies have been compelled to act this last year” comments Tony Restell, Director of Top-Consultant.com. “The reality has been that many who stayed put during the downturn were also frustrated by how their careers had stalled. As employers have turned the hiring taps back on, many consultants have been seriously assessing where best to progress their careers to the next level. The resurgence in pay rises, promotions and bonuses has been consulting firms’ primary means of addressing this situation; but it’s been paid for by those consultants whose sector skills are not in demand and whose remuneration has largely stagnated” concludes Restell.
The 23 page report is based on survey data from 1,000+ Top-Consultant readers and is freely available for download from the following URL:
http://www.top-consultant.com/Top-Consultant_Salary_Report.pdf
Consulting career choices: Big firms vs. small firms
Pursuing a career in management consultancy can be a richly rewarding decision, from the perspective of both personal growth and financial reward. The following discussion of the pros and cons of big and small consultancies is part of a serialisation of more than 100 pages of career editorial from The Definitive Guide to UK Consulting Firms. Professionals seriously considering the option of furthering their career in consulting may download the full guide using this link.
Big firms vs. small firms
Given that I come into contact with dozens of consulting firms each week, one question candidates often ask me is: Where would it be best for me to pursue my consulting career? By which they are often looking for steer on whether a career with a large global consulting brand or a small niche practice is going to be the right choice.
In truth, for no two people will my answer be the same.
There are undoubtedly significant differences between a career pursued with one of the majors versus one pursued in a niche consultancy. Some of the differences are firm-specific, so comment can not be made without knowing the exact firms (and offices) under consideration. But many of the reasons to choose one over the other relate to consistent organisational traits of large and small consulting businesses—and the career characteristics inherent in working for each. Which of the two is right for you will very much depend on the importance you attach to various components of the consulting career proposition.
I present below five key considerations for readers weighing up the pros and cons of working for a large vs. a small consulting firm. Only you can judge which of these factors is the most important to you:
1. Work/life balance
2. Earnings potential and remuneration flexibility
3. Career risk
4. Challenge/exposure, sales responsibilities and training
5. Becoming your own boss
Of course characterising what constitutes a small and a large firm is a challenge in itself. You may find yourself presented with the opportunity to work in a newly opened office of a large global firm. If this is the firm's first foray into that geography, then that particular office may display many of the traits of a smaller consulting business. Similarly one can find smaller firms who are extremely specialised but have a very global footprint—and so differ somewhat from the characterisations I present below.
In sharing these five key considerations, though, I provide the foundations for you to assess the options you have under consideration and to determine for yourself where your prospective employers fall in each of these five areas.
1. Work/life balance
Enhancing one's work/life balance is often a key reason why consultants leave a firm for pastures new. I've known plenty of consultants at both large and small consulting firms who've had reason to complain about the work/life compromises they've felt compelled to make. So I would start this piece by stressing that neither type of firm inherently shields you more from this career downside than the other.
Consulting firms predominantly serve clients who have timecritical issues that need addressing. One of the key reasons they pay consulting firms to tackle these issues—rather than dealing with them in house—is that they want to accelerate the timescales in which these issues will be addressed. The very nature of consulting is that staff will be working in time-pressured situations such that compromises will need to be made in order that pressing deadlines be met. These compromises often impinge upon a consultant's work/ life balance.
This is not to say there is a uniformity of work/life balance issues across the industry—indeed I would say quite the opposite. There are some firms where this is a far more demoralising issue than at others. But it's not the size of firm that influences whether work/life balance is a problem or not. Rather the scale of the problem is a function of the individual managers and partners you are working for and the culture that pervades the practice.
In small firms—even those with the best cultures—you'll find you have periods of work/life imbalance simply because in small firms everyone 'pulls together' when it's needed. This isn't peculiar to consulting; it's just the nature of working in a small business where at any point in time you're only a few months of client-order-bookvalue away from the firm going bankrupt.
This aspect of working for a smaller firm is offset by the fact that a closer-knit team will usually have a greater regard for one another's life outside of work and so managers will be more inclined to try and accommodate personal commitments in a smaller firm. But countering this is the fact that the biggest global consultancies have introduced policies to try and make flexible working more viable, to foster parental leave and to encourage mothers returning to work to find a work pattern that fits with their commitments.
So, in conclusion, on this first consideration I would say there is very little to choose generically between firms big and small—but rather this is something that needs looking at on a firm-by-firm (and even office-by-office) basis.
2. Earnings potential and remuneration flexibility
Smaller firms offer some advantages in the sphere of remuneration and career progression. As a general rule, below Partner grade, it is possible to earn more and see your career progress faster at a smaller firm. Firstly, larger firms are often able to attract hires thanks in part to the strength of their brand. A strong consulting brand enhances a consultant's CV and so candidates as a whole tend to be willing to work for the most established brands for less than they would demand to work for a lesser-known firm. To counter this, lesser-known firms often pay more.
Smaller firms often offer more sizeable bonus pools too- tied to the performance of the firm and the contributions of the individual. This is arguably because the firms are more reliant on exceptional endeavours from their staff (as opposed to the pull of their brand) to drive forward the business—and so are more willing to pay for such behaviour.
Lastly—and most notably—are the differences in promotion rates between big and small firms. Most large firms are bound by time in service 'promotion norms' that make it harder for them to make exceptions for exceptional performers. Stephan Butscher, Chief Talent Officer at Simon-Kucher & Partners, says that 'smaller firms tend to promote people primarily on their personal performance rather than some form of quota or the overall company performance.'
The above points paint the picture that two similarly gifted candidates are likely to see their careers and remuneration progress at different rates if one joins a major global firm and the other joins a small niche firm. I would hold that—as a generalisation—this is broadly correct. However four important caveats must be made.
Firstly—and covered below—is the fact that with this higher remuneration comes a higher degree of risk at smaller firms. Secondly, the packages offered by larger firms are likely to be more flexible in terms of benefits composition, with less variability in pay, which are factors that appeal to many. Thirdly, a candidate's ability to secure a role with a different employer is likely to be enhanced with a major brand on their CV. Lastly, it must also be said that the ultimate prize for those who do make it to Partner level is likely to be considerably greater at a larger firm—with scope for further career advancement that simply plateaus out in a smaller consultancy. Adds Stephan Butscher: 'In particular the speed at which top performers can achieve full Partner level is appealing at smaller firms; 7-10 years after joining as a graduate is realistic and a lot more attractive than having to wait until you are in your 40s.'
3. Career risk
The flip side of this rosier short-term remuneration picture is the greater risk one takes with a small firm, and being a strong per former doesn't necessarily insulate you from such risk. Whilst it's true that large firms do sometimes have to let people go if a particular practice sees its pipeline of work decimated by a change in the market environment, this is also relatively uncommon. By and large a strong performer is unlikely to find themselves made redundant if they join a large firm.
By contrast, small firms are usually overly-reliant on just a handful of key clients. If just a couple of them slam on the consulting expenditure brakes for any reason, this can cause major problems at the firm. I can think of one consultancy I know that went a full quarter without billing a single billable day during the recent downturn, at which point job losses for strong performers become inevitable.
So the risk side of the equation is undoubtedly higher with a small consulting practice - and if choosing to go down this route, you need to do more due diligence on the strength of your prospective employer's client portfolio, or how much they are focused on one industry or one country. Depending on your personal circumstances, this may or may not be a risk you're happy and able to take. However, even smaller firms can be diversified so things are not always as clear-cut as this. Stephan Butscher states that: 'For example, Simon Kucher focuses on smart profit growth and pricing as a niche. However we do this across all industries and in all regions in the world, so if one market or industry tanks, there are always others with strong growth.'
4. Challenge/exposure, sales responsibilities and training
Joining a smaller firm undeniably makes you a bigger fish in a smaller pond. At a small firm your involvement in lead generation, marketing, proposal writing, etc. is likely to come at a younger age and your exposure to issues facing the firm is also likely to be broader. There is likely to be greater staff contribution to decisions regarding company direction and more scope to be involved in helping to grow and shape the business. You may well feel more like you are 'part of something' in this type of environment.
However sales targets are likely to be foisted on you earlier in your career at a small firm, where a higher rank could potentially be attained at a larger firm before sales prowess needs to be demonstrated. This is clearly a consideration for those who feel they are strong as delivery consultants but weaker on the business development front. This is doubly relevant because the ease with which sales meetings can be secured is significantly hampered when calling from the offices of a less well known consulting business. For those fearful of selling, the weight of having a major brand name behind you may make the difference between your career stalling or progressing as sales competence features in the promotion equation.
Another aspect to consider is your personal development. Fundamental to this is the amount of practice leader/partner/client executive contact you'll have and the calibre of the key individuals you'll be learning from. I suspect a generalisation by size of firm would be misleading here, though it can certainly be said that larger firms will usually have well-structured mentoring programmes in place. It is also likely that a large firm will be able to give you exposure to a more balanced portfolio of consulting engagements—and possibly the engagements sold will also provide exposure to more senior figures within the client organisation. But countering this, general exposure to clients can often be greater in the earlier stages of one's consulting career when working with a small firm.
One downside you will find when working for smaller firms is that the scope to work on international engagements or projects outside your specialist sphere is likely to be more limited. The same is true of the scope for voluntary international relocation. Correspondingly, the risk of you being 'pigeon-holed' in a smaller firm is greater, as you'll probably specialise to a greater degree than with a large firm and the variety of work that the firm will win is likely to be that much narrower.
Training at large firms is almost universally good. These organisations like to deliver consistency of excellence and so employ consulting staff who undergo rigorous and ongoing professional development courses. Many such firms have affiliations with leading business schools for the delivery of aspects of their training. By contrast, the training provision at smaller firms is highly variable—some will have it as a high priority and invest accordingly; others have good intentions but in practice training suffers with the day-to-day demands of delivering on client engagements, whilst some see it as a cost to be avoided wherever possible.
5. Becoming your own boss
It is a well-trodden career path for consulting professionals at the major firms to leave and set up their own consulting practice. As consulting firms essentially sell their experience and their track record of delivering for clients, the route to self-employment is particularly fruitful for those who have worked at a major consulting firm (rather than a small niche practice).
For those unfamiliar with the consulting industry, this is perhaps counter-intuitive. One would expect that those working in a smaller firm and exposed to the day-to-day issues of running a small consulting practice would have the experience profile most suited to starting up for themselves. The reality, however, is that most smaller consulting firms I come into contact with have been founded by consulting professionals who have done a lengthy stint with one of the large consulting brands.
The explanation I would give for this is that such start-ups invariably have a USP that clients love. They are able to sell that they can provide the quality of consulting delivery of a major brand, but at far better value or lower risk. Either they are able to significantly undercut the larger firms in terms of fee rates (2/3 the fee rate is not uncommon), or they are able to commit to delivering the project with a far more experienced composition of team members, thus reducing the risk of project failure. Either way, the resulting sales proposition is far more compelling such that the ability to win work overwhelms any inexperience the consultant may have in running a small business.
Whilst not a factor for many candidates, this is one aspect of the career choice where large firms offer an undoubted advantage over their smaller competitors—albeit not something you will hear them proclaiming to the market for obvious reasons.
Of course, depending on the nature of the consulting firm you join, it may well be possible to 'be your own boss' without needing to branch out on your own. Stephan Butscher adds: 'Not exactly "being your own boss" but related to this is the question of the partnership model a particular consultancy has and if the Partners actually own the company. If this is your career goal then before joining a firm you need to fully understand what it means to become and be a Partner there. Do the founders still hold the vast majority of the shares or have they been able to "let go" for the benefit of the younger Partners who will drive growth? Do you get shares for free or do you have to buy them? Do you consequently get a dividend only or do you benefit from the increase in shareholder value as the firm grows, for example by selling shares you bought at a higher price once you retire as a Partner? Only the latter system is true entrepreneurial partnership.'
Concluding remarks
As I said at the outset, the answer as to what size of consulting employer is going to be best for you will very much come down to personal preferences. Depending on the career trajectory you are looking for—and what aspects of a career are most important to you—the factors I have outlined above will lead you to different conclusions. That there is no definitive answer will probably not surprise you, but hopefully by sharing the above thoughts, I'll have given you the factors you need to take into consideration to reach the right decision for you.
_________________
This piece is reproduced from The Definitive Guide to UK Consulting Firms, a 400+ page careers guide for candidates looking to pursue a career in management consultancy. A free resource, this guide contains over 100 pages of career editorials followed by a directory of consulting firms active in the UK market - with over 380 employers listed and 189 employers profiled.
The guide is free to download in PDF format, with hardback copies also available from October 2011 onwards. Access your copy of The Definitive Guide to UK Consulting Firms (2nd Edition).
Big firms vs. small firms
Given that I come into contact with dozens of consulting firms each week, one question candidates often ask me is: Where would it be best for me to pursue my consulting career? By which they are often looking for steer on whether a career with a large global consulting brand or a small niche practice is going to be the right choice.
In truth, for no two people will my answer be the same.
There are undoubtedly significant differences between a career pursued with one of the majors versus one pursued in a niche consultancy. Some of the differences are firm-specific, so comment can not be made without knowing the exact firms (and offices) under consideration. But many of the reasons to choose one over the other relate to consistent organisational traits of large and small consulting businesses—and the career characteristics inherent in working for each. Which of the two is right for you will very much depend on the importance you attach to various components of the consulting career proposition.
I present below five key considerations for readers weighing up the pros and cons of working for a large vs. a small consulting firm. Only you can judge which of these factors is the most important to you:
1. Work/life balance
2. Earnings potential and remuneration flexibility
3. Career risk
4. Challenge/exposure, sales responsibilities and training
5. Becoming your own boss
Of course characterising what constitutes a small and a large firm is a challenge in itself. You may find yourself presented with the opportunity to work in a newly opened office of a large global firm. If this is the firm's first foray into that geography, then that particular office may display many of the traits of a smaller consulting business. Similarly one can find smaller firms who are extremely specialised but have a very global footprint—and so differ somewhat from the characterisations I present below.
In sharing these five key considerations, though, I provide the foundations for you to assess the options you have under consideration and to determine for yourself where your prospective employers fall in each of these five areas.
1. Work/life balance
Enhancing one's work/life balance is often a key reason why consultants leave a firm for pastures new. I've known plenty of consultants at both large and small consulting firms who've had reason to complain about the work/life compromises they've felt compelled to make. So I would start this piece by stressing that neither type of firm inherently shields you more from this career downside than the other.
Consulting firms predominantly serve clients who have timecritical issues that need addressing. One of the key reasons they pay consulting firms to tackle these issues—rather than dealing with them in house—is that they want to accelerate the timescales in which these issues will be addressed. The very nature of consulting is that staff will be working in time-pressured situations such that compromises will need to be made in order that pressing deadlines be met. These compromises often impinge upon a consultant's work/ life balance.
This is not to say there is a uniformity of work/life balance issues across the industry—indeed I would say quite the opposite. There are some firms where this is a far more demoralising issue than at others. But it's not the size of firm that influences whether work/life balance is a problem or not. Rather the scale of the problem is a function of the individual managers and partners you are working for and the culture that pervades the practice.
In small firms—even those with the best cultures—you'll find you have periods of work/life imbalance simply because in small firms everyone 'pulls together' when it's needed. This isn't peculiar to consulting; it's just the nature of working in a small business where at any point in time you're only a few months of client-order-bookvalue away from the firm going bankrupt.
This aspect of working for a smaller firm is offset by the fact that a closer-knit team will usually have a greater regard for one another's life outside of work and so managers will be more inclined to try and accommodate personal commitments in a smaller firm. But countering this is the fact that the biggest global consultancies have introduced policies to try and make flexible working more viable, to foster parental leave and to encourage mothers returning to work to find a work pattern that fits with their commitments.
So, in conclusion, on this first consideration I would say there is very little to choose generically between firms big and small—but rather this is something that needs looking at on a firm-by-firm (and even office-by-office) basis.
2. Earnings potential and remuneration flexibility
Smaller firms offer some advantages in the sphere of remuneration and career progression. As a general rule, below Partner grade, it is possible to earn more and see your career progress faster at a smaller firm. Firstly, larger firms are often able to attract hires thanks in part to the strength of their brand. A strong consulting brand enhances a consultant's CV and so candidates as a whole tend to be willing to work for the most established brands for less than they would demand to work for a lesser-known firm. To counter this, lesser-known firms often pay more.
Smaller firms often offer more sizeable bonus pools too- tied to the performance of the firm and the contributions of the individual. This is arguably because the firms are more reliant on exceptional endeavours from their staff (as opposed to the pull of their brand) to drive forward the business—and so are more willing to pay for such behaviour.
Lastly—and most notably—are the differences in promotion rates between big and small firms. Most large firms are bound by time in service 'promotion norms' that make it harder for them to make exceptions for exceptional performers. Stephan Butscher, Chief Talent Officer at Simon-Kucher & Partners, says that 'smaller firms tend to promote people primarily on their personal performance rather than some form of quota or the overall company performance.'
The above points paint the picture that two similarly gifted candidates are likely to see their careers and remuneration progress at different rates if one joins a major global firm and the other joins a small niche firm. I would hold that—as a generalisation—this is broadly correct. However four important caveats must be made.
Firstly—and covered below—is the fact that with this higher remuneration comes a higher degree of risk at smaller firms. Secondly, the packages offered by larger firms are likely to be more flexible in terms of benefits composition, with less variability in pay, which are factors that appeal to many. Thirdly, a candidate's ability to secure a role with a different employer is likely to be enhanced with a major brand on their CV. Lastly, it must also be said that the ultimate prize for those who do make it to Partner level is likely to be considerably greater at a larger firm—with scope for further career advancement that simply plateaus out in a smaller consultancy. Adds Stephan Butscher: 'In particular the speed at which top performers can achieve full Partner level is appealing at smaller firms; 7-10 years after joining as a graduate is realistic and a lot more attractive than having to wait until you are in your 40s.'
3. Career risk
The flip side of this rosier short-term remuneration picture is the greater risk one takes with a small firm, and being a strong per former doesn't necessarily insulate you from such risk. Whilst it's true that large firms do sometimes have to let people go if a particular practice sees its pipeline of work decimated by a change in the market environment, this is also relatively uncommon. By and large a strong performer is unlikely to find themselves made redundant if they join a large firm.
By contrast, small firms are usually overly-reliant on just a handful of key clients. If just a couple of them slam on the consulting expenditure brakes for any reason, this can cause major problems at the firm. I can think of one consultancy I know that went a full quarter without billing a single billable day during the recent downturn, at which point job losses for strong performers become inevitable.
So the risk side of the equation is undoubtedly higher with a small consulting practice - and if choosing to go down this route, you need to do more due diligence on the strength of your prospective employer's client portfolio, or how much they are focused on one industry or one country. Depending on your personal circumstances, this may or may not be a risk you're happy and able to take. However, even smaller firms can be diversified so things are not always as clear-cut as this. Stephan Butscher states that: 'For example, Simon Kucher focuses on smart profit growth and pricing as a niche. However we do this across all industries and in all regions in the world, so if one market or industry tanks, there are always others with strong growth.'
4. Challenge/exposure, sales responsibilities and training
Joining a smaller firm undeniably makes you a bigger fish in a smaller pond. At a small firm your involvement in lead generation, marketing, proposal writing, etc. is likely to come at a younger age and your exposure to issues facing the firm is also likely to be broader. There is likely to be greater staff contribution to decisions regarding company direction and more scope to be involved in helping to grow and shape the business. You may well feel more like you are 'part of something' in this type of environment.
However sales targets are likely to be foisted on you earlier in your career at a small firm, where a higher rank could potentially be attained at a larger firm before sales prowess needs to be demonstrated. This is clearly a consideration for those who feel they are strong as delivery consultants but weaker on the business development front. This is doubly relevant because the ease with which sales meetings can be secured is significantly hampered when calling from the offices of a less well known consulting business. For those fearful of selling, the weight of having a major brand name behind you may make the difference between your career stalling or progressing as sales competence features in the promotion equation.
Another aspect to consider is your personal development. Fundamental to this is the amount of practice leader/partner/client executive contact you'll have and the calibre of the key individuals you'll be learning from. I suspect a generalisation by size of firm would be misleading here, though it can certainly be said that larger firms will usually have well-structured mentoring programmes in place. It is also likely that a large firm will be able to give you exposure to a more balanced portfolio of consulting engagements—and possibly the engagements sold will also provide exposure to more senior figures within the client organisation. But countering this, general exposure to clients can often be greater in the earlier stages of one's consulting career when working with a small firm.
One downside you will find when working for smaller firms is that the scope to work on international engagements or projects outside your specialist sphere is likely to be more limited. The same is true of the scope for voluntary international relocation. Correspondingly, the risk of you being 'pigeon-holed' in a smaller firm is greater, as you'll probably specialise to a greater degree than with a large firm and the variety of work that the firm will win is likely to be that much narrower.
Training at large firms is almost universally good. These organisations like to deliver consistency of excellence and so employ consulting staff who undergo rigorous and ongoing professional development courses. Many such firms have affiliations with leading business schools for the delivery of aspects of their training. By contrast, the training provision at smaller firms is highly variable—some will have it as a high priority and invest accordingly; others have good intentions but in practice training suffers with the day-to-day demands of delivering on client engagements, whilst some see it as a cost to be avoided wherever possible.
5. Becoming your own boss
It is a well-trodden career path for consulting professionals at the major firms to leave and set up their own consulting practice. As consulting firms essentially sell their experience and their track record of delivering for clients, the route to self-employment is particularly fruitful for those who have worked at a major consulting firm (rather than a small niche practice).
For those unfamiliar with the consulting industry, this is perhaps counter-intuitive. One would expect that those working in a smaller firm and exposed to the day-to-day issues of running a small consulting practice would have the experience profile most suited to starting up for themselves. The reality, however, is that most smaller consulting firms I come into contact with have been founded by consulting professionals who have done a lengthy stint with one of the large consulting brands.
The explanation I would give for this is that such start-ups invariably have a USP that clients love. They are able to sell that they can provide the quality of consulting delivery of a major brand, but at far better value or lower risk. Either they are able to significantly undercut the larger firms in terms of fee rates (2/3 the fee rate is not uncommon), or they are able to commit to delivering the project with a far more experienced composition of team members, thus reducing the risk of project failure. Either way, the resulting sales proposition is far more compelling such that the ability to win work overwhelms any inexperience the consultant may have in running a small business.
Whilst not a factor for many candidates, this is one aspect of the career choice where large firms offer an undoubted advantage over their smaller competitors—albeit not something you will hear them proclaiming to the market for obvious reasons.
Of course, depending on the nature of the consulting firm you join, it may well be possible to 'be your own boss' without needing to branch out on your own. Stephan Butscher adds: 'Not exactly "being your own boss" but related to this is the question of the partnership model a particular consultancy has and if the Partners actually own the company. If this is your career goal then before joining a firm you need to fully understand what it means to become and be a Partner there. Do the founders still hold the vast majority of the shares or have they been able to "let go" for the benefit of the younger Partners who will drive growth? Do you get shares for free or do you have to buy them? Do you consequently get a dividend only or do you benefit from the increase in shareholder value as the firm grows, for example by selling shares you bought at a higher price once you retire as a Partner? Only the latter system is true entrepreneurial partnership.'
Concluding remarks
As I said at the outset, the answer as to what size of consulting employer is going to be best for you will very much come down to personal preferences. Depending on the career trajectory you are looking for—and what aspects of a career are most important to you—the factors I have outlined above will lead you to different conclusions. That there is no definitive answer will probably not surprise you, but hopefully by sharing the above thoughts, I'll have given you the factors you need to take into consideration to reach the right decision for you.
_________________
This piece is reproduced from The Definitive Guide to UK Consulting Firms, a 400+ page careers guide for candidates looking to pursue a career in management consultancy. A free resource, this guide contains over 100 pages of career editorials followed by a directory of consulting firms active in the UK market - with over 380 employers listed and 189 employers profiled.
The guide is free to download in PDF format, with hardback copies also available from October 2011 onwards. Access your copy of The Definitive Guide to UK Consulting Firms (2nd Edition).
So you’d like to secure a new consulting job this Autumn?
Early in January this year, I made a series of predictions about the consulting industry that would impact those pursuing a career in consultancy this year. One of my strongest assertions was that “Changing jobs is probably your best chance of (securing) a decent pay hike in 2010”. As many readers have discovered for themselves these last months, the major firms have indeed been able to offer only meagre gains in pay – largely as a function of the continued downward pressure that continues to depress consulting daily fee rates. By contrast, consultants being poached by a competitor are finding that firms are willing to up the ante to attract those who can help fill the critical gaps appearing within their businesses.
Given that this assertion has proven to be true – and with the Consultancy Careers Fair now only a couple of weeks away – I thought I would provide updated guidance on the job opportunities out there in the consulting market and the actions that readers like you can take to maximise your chances of making a successful career switch.
Let me firstly comment on the sea change there has been in firms’ approach to hiring, which manifests itself in two key ways that should underpin your whole approach to getting hired this Autumn:
1) The candidate “Fit” being demanded by firms is now 95% rather than the 75% acceptable in boom years. That’s to say, the match between candidate CV and requirements profile must be almost perfect. The implication of this is perhaps counter-intuitive. Rather than applying to more jobs to ensure success, candidates should instead be cutting back on the number of applications made. The time saved should be invested in making utterly compelling applications for the handful of roles where there really is that genuine 95%+ fit between yourself and the employer requirement. These are the only ones worth the investment of your time and your emotional capital.
2) Clients are looking to make hires who will be immediately billable. Firms are very much recruiting for specific roles rather than undertaking generic hiring to achieve the growth of a practice. This is a market where you must sell how billable your skills are, rather than trying to “change career direction” or “reposition” yourself through a career move. As a consequence your efforts should be entirely focused on tracking down openings where you are a very billable prospective candidate, rather than making speculative applications to “the types of firms who employ people like me.” If there isn’t a specific billable opening that a firm is looking to fill, chances are nothing will come of an application in today’s climate – even if historically consultancies would have pounced on an applicant that looked “like a good fit for the firm.”
How to secure job interviews in today’s economic climate
It should be apparent from the above points that one of the secrets to securing a new role in this market is a devotion to tracking down and applying for a (small) selection of consulting roles for which you are genuinely a highly-qualified candidate – and ensuring you have positioned yourself as such.
By way of a checklist when job-hunting, ask yourself the following questions:
1. Are you restricting your applications on job boards to just those couple of roles where there is genuinely a strong fit between your experience profile and that being sought by the employer?
2. Having identified the handful of roles for which you are genuinely an ideal candidate, have you then taken the time to craft a tailored CV for each and every one of those applications? (Cautionary note: each employer is looking for a different balance of skills and experience, so the “one CV fits all” approach inevitably results in your application coming across as far less compelling when it hits the recruiter’s desk).
3. Are you working with some reputable recruitment agencies? It often comes as a surprise to candidates, but across our industry some 50%-60% of hires are still made via recruitment agencies – despite employers’ best efforts to hire direct and avoid the expense of recruitment agency fees. Indeed there is a “hidden market” of open consulting vacancies that you may simply never tap into if you have excluded agencies from your career change strategy.
4. Have you leveraged your personal network? One of the surest ways to make it to the interview rounds is to have had a recommendation from within the firm that you are a candidate the firm really should be interviewing. Networking with your contacts at firms may also uncover openings that have yet to be signed off, meaning you could be interviewed and could secure the role without it ever even going out to the market. Ask yourself – have you truthfully researched in depth which of your contacts could assist with an approach to the various firms you are considering applying to? Again – this comes down to putting your efforts into ensuring the quality rather than the quantity of your applications. (Cautionary note: I have yet to meet a candidate who is doing this with the rigour and thoroughness necessary to uncover all the opportunities in their network – so even if you’re an active networker there’s almost certainly lots of room for improvement).
The above list is not exhaustive, but should be enough to highlight the gulf between the actions of a regular consulting candidate and someone who is focused on uncovering and applying only to roles for which they are ideally suited. Make yourself one of the rarer candidates adopting a targeted approach like this and you’ll be well on your way to securing your next consulting role – and in all likelihood a decent pay hike too.
Tony Restell will be answering your questions live in the Top-Consultant Q&A area at this year’s Consultancy Careers Fair on 24th September. To register for your place do visit the Consultancy Careers Fair website today. Tony’s recent briefing on the state of the consulting hiring market and the practice areas with the greatest hiring demands can be watched on Youtube
Consulting industry facing double whammy
Tough times lie ahead for those in the consulting industry, make no mistake. Based on my soundings of both leading global brands and niche consultancies, employees have had enough – and are choosing to show this by walking out the door. All the while, lop-sided client demand means firms can do little to sweeten the pill. I can see only one outcome from the double whammy currently facing the consulting industry – and that’s stagnation in consultants’ earnings coupled with an industry-wide push for scale.
For consultants employed in our industry, the next years will see you presented with a stark choice. Staying loyal to your employer is likely to result in only meagre gains in salary. For those wanting to achieve a hike in rewards, looking elsewhere and securing a job offer represents the only plausible route.
For those running consulting firms meanwhile, greater scale will be needed if acceptable margins are to be achieved – which would explain the dramatic pushes for growth and the M&A courting activity we’ve seen of late.
Consulting: an industry that can no longer pay its way
So what are the key components of this malaise in the consulting industry? I would highlight the following:
o As an industry, consulting is tough on the employee and continuous career progression / gains in reward are needed to retain talent.
o Employee costs typically represent two-thirds of the cost base of your average consulting firm. Universal pay rises therefore have major implications for the cost base of a consultancy.
o Advances in employee reward across the industry are therefore contingent on profit margins being fattened, or shareholders accepting a reduction in the returns they enjoy. The latter is unlikely for any sustained period, so pay gains become contingent on finding ways of enhancing the profitability of the consulting industry.
Herein lies the rub. Profitability gains through offshoring have been largely exploited. Downward pressure on fee rates remains intense. Public sector consulting demand has collapsed. Even the rebound in private sector work can only partly compensate. So we find ourselves faced with an industry where staff are restless but employers cannot afford to do anything about it. Readers of our consultants’ forum will have seen this play out over the last months in a series of disappointing pay rounds.
The situation for employers is made all the more acute by the resurgence of the financial services / banking sector and the changes to remuneration that have taken place there. The shift to higher basic salaries and lower bonuses means that compensation at every level looks far more attractive in the City. Consultancies are fighting a losing battle to retain their stars in the face of this remuneration gulf.
The upshot of this all is that firms are adopting a two-tiered approach to rewards. For the general consulting population meagre pay awards and slow or “virtual” career progression are the order of the day (and by “virtual” I mean firms offering progression in job title but with the corresponding remuneration gain postponed or phased in so that a period of higher margin can be achieved). By contrast, new hires can be enticed with more favourable pay offers as these are small incremental costs rather than awards that must be applied to the firms’ whole cost base. A similar story is unfolding for those able to secure a counter-offer. Put bluntly, firms can afford to buy off incremental hires and counter offerees; but they cannot afford to buy off the whole workforce.
Of course across a whole industry a surge in staff churn is costly to address. One of the majors this month announced that employee churn had risen from 8% of staff a year ago to 17% today. That’s a lot of additional hiring that needs to be undertaken just for firms to stand still – and correspondingly a very hefty rise in recruiting costs for any business to swallow, which explains why firms have been making as much noise as they possibly can about their intentions to increasingly hire via social media. The latter of course is low cost and so reduces the financial impact of greater staff churn. But as all seasoned recruiters know, attempts at direct hiring only ever get a firm so far and inevitably significant additional hiring costs will be incurred as staff churn worsens.
All of which leaves individual firms with a narrow set of options. Try to carve out a niche or unique approach that allows some premium to be achieved on fee rates: unlikely. Try to tap into new markets: if only a new fad would present itself. Try to gain share and scale the business so that employee remuneration gains can beat those of the overall market: possible, but mostly at the expense of others in the industry.
The major players in consulting are all making a play to gain share and scale their businesses. Look at the lofty growth aspirations that have been published this last year and it’s clear to all that they can’t all be achieved simultaneously. Pick the employer that wins this battle and you’re likely to be at the upper end of the remuneration curve. But for the industry as a whole, only when client demand surges to the extent that fee rates can truly recover will we see sizeable remuneration gains across the industry. Until then you’re in the realms of either “picking the winner” or of changing employer to secure a rise in earnings. I know which option I would have more confidence in.
Related link: Business-critical market intelligence for Consulting Practitioners
For consultants employed in our industry, the next years will see you presented with a stark choice. Staying loyal to your employer is likely to result in only meagre gains in salary. For those wanting to achieve a hike in rewards, looking elsewhere and securing a job offer represents the only plausible route.
For those running consulting firms meanwhile, greater scale will be needed if acceptable margins are to be achieved – which would explain the dramatic pushes for growth and the M&A courting activity we’ve seen of late.
Consulting: an industry that can no longer pay its way
So what are the key components of this malaise in the consulting industry? I would highlight the following:
o As an industry, consulting is tough on the employee and continuous career progression / gains in reward are needed to retain talent.
o Employee costs typically represent two-thirds of the cost base of your average consulting firm. Universal pay rises therefore have major implications for the cost base of a consultancy.
o Advances in employee reward across the industry are therefore contingent on profit margins being fattened, or shareholders accepting a reduction in the returns they enjoy. The latter is unlikely for any sustained period, so pay gains become contingent on finding ways of enhancing the profitability of the consulting industry.
Herein lies the rub. Profitability gains through offshoring have been largely exploited. Downward pressure on fee rates remains intense. Public sector consulting demand has collapsed. Even the rebound in private sector work can only partly compensate. So we find ourselves faced with an industry where staff are restless but employers cannot afford to do anything about it. Readers of our consultants’ forum will have seen this play out over the last months in a series of disappointing pay rounds.
The situation for employers is made all the more acute by the resurgence of the financial services / banking sector and the changes to remuneration that have taken place there. The shift to higher basic salaries and lower bonuses means that compensation at every level looks far more attractive in the City. Consultancies are fighting a losing battle to retain their stars in the face of this remuneration gulf.
The upshot of this all is that firms are adopting a two-tiered approach to rewards. For the general consulting population meagre pay awards and slow or “virtual” career progression are the order of the day (and by “virtual” I mean firms offering progression in job title but with the corresponding remuneration gain postponed or phased in so that a period of higher margin can be achieved). By contrast, new hires can be enticed with more favourable pay offers as these are small incremental costs rather than awards that must be applied to the firms’ whole cost base. A similar story is unfolding for those able to secure a counter-offer. Put bluntly, firms can afford to buy off incremental hires and counter offerees; but they cannot afford to buy off the whole workforce.
Of course across a whole industry a surge in staff churn is costly to address. One of the majors this month announced that employee churn had risen from 8% of staff a year ago to 17% today. That’s a lot of additional hiring that needs to be undertaken just for firms to stand still – and correspondingly a very hefty rise in recruiting costs for any business to swallow, which explains why firms have been making as much noise as they possibly can about their intentions to increasingly hire via social media. The latter of course is low cost and so reduces the financial impact of greater staff churn. But as all seasoned recruiters know, attempts at direct hiring only ever get a firm so far and inevitably significant additional hiring costs will be incurred as staff churn worsens.
All of which leaves individual firms with a narrow set of options. Try to carve out a niche or unique approach that allows some premium to be achieved on fee rates: unlikely. Try to tap into new markets: if only a new fad would present itself. Try to gain share and scale the business so that employee remuneration gains can beat those of the overall market: possible, but mostly at the expense of others in the industry.
The major players in consulting are all making a play to gain share and scale their businesses. Look at the lofty growth aspirations that have been published this last year and it’s clear to all that they can’t all be achieved simultaneously. Pick the employer that wins this battle and you’re likely to be at the upper end of the remuneration curve. But for the industry as a whole, only when client demand surges to the extent that fee rates can truly recover will we see sizeable remuneration gains across the industry. Until then you’re in the realms of either “picking the winner” or of changing employer to secure a rise in earnings. I know which option I would have more confidence in.
Related link: Business-critical market intelligence for Consulting Practitioners
Meltdown in the UK consulting market?
With everyone trying to figure out what the economic downturn means for the consulting sector, I thought you might appreciate me sharing the insights I’ve gained from a series of meetings I’ve had these last weeks as part of the roll-out of the ConsultancyRoleFinder service?
Certainly since my last blog post the recession has started to hurt the UK consulting sector - and to impact the amount of recruitment that's taking place. It's also brought about a not insignificant number of redundancies, particularly in the strategy consulting sector which seems to have been hardest hit.
I wouldn't say there's been a meltdown in the UK consulting market or the recruitment space - but certainly we're facing the toughest trading conditions since the dot-com crash and not everyone will emerge from 2008/9 unscathed...
Order pipelines healthy but staff utilisation worryingly low
The usual drop in staff utilisation expected over the Christmas period seems to have struck early, with many consulting firms attesting to lower-than-expected staff utilisation from mid-November onwards. As you might expect, it seems to be the strategy consulting practices that have been hit hardest in this respect with significant numbers on the bench. Where an unexpected drop in utilisation has been seen, this has naturally translated into some hesitancy in terms of hiring activity. Delayed start dates for new hires, a dragging out of interview processes and recruitment freezes have all become increasingly common in the weeks since the demise of Lehman.
On a more positive note, the hiring activity being planned for Q1 2009 does look markedly higher than what we’ve seen in the latter part of Q4 2008 – with expectations that improving order books will translate into higher staff utilisation in the New Year. That in turn will mean an increased need to bring on board new blood. There’s also some evidence that firms are shedding staff in the underperforming parts of their businesses right now but will need to recruit for the stronger parts of their businesses as 2009 unfolds.
So overall we’re expecting some recruitment pickup as we enter 2009, though the caveat here is “provided nothing further happens to prolong the period of low staff utilisation”.
Recruitment agencies the winners and the losers
There’s also a real polarity in behaviour amongst consulting employers as far as I can tell in terms of the recruitment strategies being adopted in light of the tighter economy. At some firms there’s now a massive focus on bringing down the average cost per hire in 2009, so a drive to generate far more direct hires. At other firms the focus is very much on ensuring all recruitment spend is tied to a successful hire – ie. there’s a drive to switch all recruitment to contingency-based recruitment agency assignments and away from direct advertising and retained work. On balance I would say my meetings favour recruitment agencies being busier in 2009 than they have been in the last months.
However the fly in the ointment is whether all the recruitment agencies will have survived to serve this need. Certainly the delayed start dates and recruitment freezes of the last months have hit recruitment agencies hard from a cashflow perspective. Whilst most still have plenty of assignments to work on, it’s clear that the conversion to successful placements has suffered – and that delayed start dates are pushing back the payment timescales for those success fees that are being generated. Many hitherto successful businesses have been left very stretched by these factors and I fear there will be the odd firm going out of business as a consequence. Hopefully not.
Your thoughts on the above? Please do share via comments below.
Tony Restell
Certainly since my last blog post the recession has started to hurt the UK consulting sector - and to impact the amount of recruitment that's taking place. It's also brought about a not insignificant number of redundancies, particularly in the strategy consulting sector which seems to have been hardest hit.
I wouldn't say there's been a meltdown in the UK consulting market or the recruitment space - but certainly we're facing the toughest trading conditions since the dot-com crash and not everyone will emerge from 2008/9 unscathed...
Order pipelines healthy but staff utilisation worryingly low
The usual drop in staff utilisation expected over the Christmas period seems to have struck early, with many consulting firms attesting to lower-than-expected staff utilisation from mid-November onwards. As you might expect, it seems to be the strategy consulting practices that have been hit hardest in this respect with significant numbers on the bench. Where an unexpected drop in utilisation has been seen, this has naturally translated into some hesitancy in terms of hiring activity. Delayed start dates for new hires, a dragging out of interview processes and recruitment freezes have all become increasingly common in the weeks since the demise of Lehman.
On a more positive note, the hiring activity being planned for Q1 2009 does look markedly higher than what we’ve seen in the latter part of Q4 2008 – with expectations that improving order books will translate into higher staff utilisation in the New Year. That in turn will mean an increased need to bring on board new blood. There’s also some evidence that firms are shedding staff in the underperforming parts of their businesses right now but will need to recruit for the stronger parts of their businesses as 2009 unfolds.
So overall we’re expecting some recruitment pickup as we enter 2009, though the caveat here is “provided nothing further happens to prolong the period of low staff utilisation”.
Recruitment agencies the winners and the losers
There’s also a real polarity in behaviour amongst consulting employers as far as I can tell in terms of the recruitment strategies being adopted in light of the tighter economy. At some firms there’s now a massive focus on bringing down the average cost per hire in 2009, so a drive to generate far more direct hires. At other firms the focus is very much on ensuring all recruitment spend is tied to a successful hire – ie. there’s a drive to switch all recruitment to contingency-based recruitment agency assignments and away from direct advertising and retained work. On balance I would say my meetings favour recruitment agencies being busier in 2009 than they have been in the last months.
However the fly in the ointment is whether all the recruitment agencies will have survived to serve this need. Certainly the delayed start dates and recruitment freezes of the last months have hit recruitment agencies hard from a cashflow perspective. Whilst most still have plenty of assignments to work on, it’s clear that the conversion to successful placements has suffered – and that delayed start dates are pushing back the payment timescales for those success fees that are being generated. Many hitherto successful businesses have been left very stretched by these factors and I fear there will be the odd firm going out of business as a consequence. Hopefully not.
Your thoughts on the above? Please do share via comments below.
Tony Restell
Where did all the consulting jobs go?
"Where did all the consulting jobs go?" -- it's a headline I've had filed away to use whenever the current banking turmoil started to spill over into the consulting sector.
Yet after 2 days spent with 500-odd consulting recruiters, I have to conclude that the consulting sector hasn't yet been that badly impacted. With the exception of a few isolated hiring freezes and practice-specific redundancy programmes, there's been no bloodbath for the consulting industry thusfar. Indeed, within a couple of hours of the doors opening at our Consultancy Careeers Fair, word spread that one of the firms had already made an on-the-spot offer to a candidate visiting their stand. Towards the end of the event, a tour of the exhibitors confirmed each firm had earmarked dozens of candidates who were a perfect fit for roles they were currently looking to fill. So it's hardly all gloom and doom in the consulting market and readers would do well to remember that we've never experienced an absolute recession in consulting - only ever periods of below-average growth!
Clearly no sector is going to escape unscathed from the current economic turmoil - but it seems at least that the consulting industry has learnt its lesson from the dot-com crash and the over-expansion that necessitated mass-redundancies back then has not been allowed to occur this time round. And for now at least, new consulting jobs are still in relatively good supply...
Yet after 2 days spent with 500-odd consulting recruiters, I have to conclude that the consulting sector hasn't yet been that badly impacted. With the exception of a few isolated hiring freezes and practice-specific redundancy programmes, there's been no bloodbath for the consulting industry thusfar. Indeed, within a couple of hours of the doors opening at our Consultancy Careeers Fair, word spread that one of the firms had already made an on-the-spot offer to a candidate visiting their stand. Towards the end of the event, a tour of the exhibitors confirmed each firm had earmarked dozens of candidates who were a perfect fit for roles they were currently looking to fill. So it's hardly all gloom and doom in the consulting market and readers would do well to remember that we've never experienced an absolute recession in consulting - only ever periods of below-average growth!
Clearly no sector is going to escape unscathed from the current economic turmoil - but it seems at least that the consulting industry has learnt its lesson from the dot-com crash and the over-expansion that necessitated mass-redundancies back then has not been allowed to occur this time round. And for now at least, new consulting jobs are still in relatively good supply...
The price of dubious advice - £100bn a year
Just seen a piece that appeared in the Observer this weekend, "The price of dubious advice - £100bn a year".
I'm once again incensed by the reporting of our industry as one built on false promises and deception. Take a read of the article and do post your thoughts on the following forum thread which I've created to allow us to discuss and rubbish this. For what it's worth, here's the reply I've sent to Simon at the Observer - though not holding my breath to see them publish it...
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Simon
Congratulations on an interesting piece in the Observer this weekend. However consultant-bashing articles do tend to miss one key argument when pointing the finger of blame at consulting firms – and you have overlooked it too. The trade body (MCA) figures show that 66% of each consulting firm’s cost base is the cost of its staff. So allowing for some profit margin, it would still cost Britain plc at least 50% of the current spend on consulting services to just kill off the consulting industry and employ these people in the corporate and public sectors instead.
More often than not, cost over-runs and project failures result from senior management bringing in consultants on a flawed brief. The outcomes are not properly defined; key milestones not established (or constantly revised as the brief is allowed to evolve mid-way through a project); internal resources not dedicated to the project such that the consultants’ meters are ticking but the required access to client staff is being denied. All these management failings would be exacerbated considerably if the pain of a significant bill and ongoing public scrutiny were not ever-present to concentrate the mind.
The current NHS IT investments are a case in point. Richard Granger was able to negotiate with consulting firms a series of risk-reward contracts that saw the firms face severe financial penalties if key milestones and objectives were not met. These financial penalties have now been triggered and at least some of the spend on this ambitious project has now been recouped. Are we really to believe that thousands of extra employees hired by the NHS could have achieved a more favourable outcome than that achieved by the consulting firms? That if employed by the NHS these consultants would suddenly have developed project management skills and capabilities that they were lacking from years spent working in the private sector?
No – the project would have had none of the public scrutiny and been able to recoup not a penny of the costs incurred if the consultancy route had been avoided. The consultants just make a convenient scapegoat and the headline figures of monies spent are always portrayed as an expense that would otherwise not have been incurred.
-------------------------------------
Interested to read your thoughts and hope this turns into an interesting forum thread
Tony Restell
Top-Consultant.com
I'm once again incensed by the reporting of our industry as one built on false promises and deception. Take a read of the article and do post your thoughts on the following forum thread which I've created to allow us to discuss and rubbish this. For what it's worth, here's the reply I've sent to Simon at the Observer - though not holding my breath to see them publish it...
-------------------------------------
Simon
Congratulations on an interesting piece in the Observer this weekend. However consultant-bashing articles do tend to miss one key argument when pointing the finger of blame at consulting firms – and you have overlooked it too. The trade body (MCA) figures show that 66% of each consulting firm’s cost base is the cost of its staff. So allowing for some profit margin, it would still cost Britain plc at least 50% of the current spend on consulting services to just kill off the consulting industry and employ these people in the corporate and public sectors instead.
More often than not, cost over-runs and project failures result from senior management bringing in consultants on a flawed brief. The outcomes are not properly defined; key milestones not established (or constantly revised as the brief is allowed to evolve mid-way through a project); internal resources not dedicated to the project such that the consultants’ meters are ticking but the required access to client staff is being denied. All these management failings would be exacerbated considerably if the pain of a significant bill and ongoing public scrutiny were not ever-present to concentrate the mind.
The current NHS IT investments are a case in point. Richard Granger was able to negotiate with consulting firms a series of risk-reward contracts that saw the firms face severe financial penalties if key milestones and objectives were not met. These financial penalties have now been triggered and at least some of the spend on this ambitious project has now been recouped. Are we really to believe that thousands of extra employees hired by the NHS could have achieved a more favourable outcome than that achieved by the consulting firms? That if employed by the NHS these consultants would suddenly have developed project management skills and capabilities that they were lacking from years spent working in the private sector?
No – the project would have had none of the public scrutiny and been able to recoup not a penny of the costs incurred if the consultancy route had been avoided. The consultants just make a convenient scapegoat and the headline figures of monies spent are always portrayed as an expense that would otherwise not have been incurred.
-------------------------------------
Interested to read your thoughts and hope this turns into an interesting forum thread
Tony Restell
Top-Consultant.com
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