Interviews
- »One on One with KPMG's Koecher & Rodriguez
KPMG’s Restructuring Services group just got a lot stronger. On July 16, KPMG acquired Grant Thornton’s supply chain advisory practice, effectively doubling the size of its core restructuring team and broadened its service offerings.
- »One on One with Ed Hess
Grow or Die. It’s probably the most common business axiom, and the least accurate, according to the new book “Smart Growth: Building an Enduring Business by Managing the Risks of Growth” (Columbia Business School Publishing). To better understand the book’s implications for firms, Consulting’s One-on-One sat down with the book’s author, Ed Hess, a former Arthur Andersen strategy consultant and current professor at the University of Virginia's Darden Graduate School of Business.
- »One on One with Summit's David Litherland
When prospective employees interview for a job, they obsess over making a good, lasting impression. Firms should do the same. To learn how firms can avoid typical pitfalls, Consulting’s One on One sat down with David Litherland, managing partner of Summit Search Group, an executive search firm specializing in placing professionals within professional service firms.
- »One on One with PwC's Tom Craren
Senior executives are becoming immune to traditional marketing. Marketing consultants tell us that to pierce through the white noise of corporate communication, firms should consider “content marketing”. Instead of more traditional marketing, providing valuable insight and perspective in a blog or electronic newsletter can serve as a more effective door opener. One of the best examples is PricewaterhouseCoopers’ “10-Minute” series. For almost three years, PwC has boiled down complex thought leadership into small electronic pieces an executive can read in about ten minutes. To learn more about PwC’s marketing efforts, Consulting’s One-on-One sat down with Tom Craren, the firm’s brand strategy and thought leadership leader. His team of 20 writers produces between two to three 10-minute pieces each month, along with more detailed white papers.
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2009
»The Hiring Freeze
By Jacqueline Durett
 While the global ecomony’s been going downhill for more than a year now, the management consulting industry had actually stayed somewhat insulated, thanks to the nature of longterm contracts and ongoing projects. But that’s changing. Watson Wyatt says 23 percent of all U.S. firms plan layoffs this year, and some of those firms are consultancies. In fact, some industry giants like Unisys have already reduced headcount. In this environment, layoffs are inevitable, but does that mean firms have turned off the recruiting spigot and capitulated in the war for talent?
Hardly. Smart consultancies realize that there’s more talent available right now than there has been in years. For instance, MBAs don’t see financial services as a safe sector to be in, and financial services firms aren’t hiring anyway. “It’s pretty obvious that the students who were interested in banking have gravitated to the consulting pool, and then the other students who wanted consulting all along feel that they’re facing then a more competitive pool, which they aren’t happy about,” says Carla Edelston, senior associate director at Northwestern University’s Kellogg Career Management Center.
But Bob Damon, president, North America, of executive recruitment firm Korn/Ferry International says it’s still more likely we’ll see more cuts at many firms before hiring picks up. “Generally what happens with service firms is in a downturn, they don’t right-size themselves quickly enough. And so in a downturn, they’re trailing indicators,” he says. And while some firms’ staffing strategies make headlines, it’s hard to know what’s happening at private companies, aside from anecdotal experience. “They probably are all right-sizing,” Damon says of the consulting industry at large.
Some Good News
But the news isn’t all bad. Healthcare, IT services and energy are still growth fields, says Jonathan Phillips, founder of Magellan International, a professional services search firm. “There are happy spikes,” he says. “Healthcare is a going to be a happy spike because people are aging. Smart grids are going to be a happy spike in the energy sector. M&A work in energy will be a happy spike because the industry is going to continue to consolidate.”
In addition, he says, many firms are looking at the success of traditional crisis-management firms Alvarez & Marsal and AlixPartners and are launching restructuring practices. “They filled a niche during a growth period which has given them permanent market share that now some of those strategy firms would like to have,” Phillips says. “So Bain is trying to build a corporate restructuring group. BCG is trying build a restructuring group. They’re all looking at the market share that was gained by AlixPartners and Alvarez & Marsal, and trying to get it back, but they can’t.”
And those sectors and practices could open doors to students who are looking to parlay what they originally planned to do with their business careers into a consulting career instead. Edelston says students are trying to find consulting work that relates to whatever field they initially wanted to pursue, such as private equity. “Firms like LEK and Parthenon might have been on a smaller number of students’ radar screens, but now are on many more, and my guess is they had probably more applicants than they’ve ever had,” Edelston said. “Because for students who couldn’t get private equity, this is the next best thing they could do, work for a firm that has a private equity practice or that does some sophisticated advising related to some aspect of private equity.”
But even though some sectors are growing and some students are getting flexible, it’s all for naught if firms aren’t actually hiring. Edelston says it’s still a little early in the MBA hiring cycle to see how many firms are shifting their hiring strategy, but Korn/Ferry’s Damon is seeing a definite trend. “I think the softness in the professional services has been with us for probably the last [eight] months or so. I think that they’re experiencing the same thing that a lot of service companies are: Corporations aren’t spending millions of dollars for a strategy assignment these days because they haven’t got the money to do it.” And that means an imbalance in supply and demand. “I would say that our professional services industry is a little soft, but I think that when companies like Bain come to us, we feel pretty confident that there’s a pool of talent that is available that we can deliver to them if they need to hire people.”
A New Breed of Consultant
But Phillips says firms are hiring—it’s just that now they want a different type of consultant. At the beginning of last year, he says, “We suddenly heard from a lot of our consulting clients, ‘Let’s just hire the person we really need.’ So most of our consulting clients began to delay and focus on hiring only those people they really needed, and part of the trend here, especially with globalization, is that the client is asking for a different sort of delivery person.” That person, he says, is a trusted adviser with real content knowledge who can serve in a very specific role. “And those are the searches we’re seeing. We’re being asked for laser-specific people, like retail banking, but someone who worked for the banks during this chaotic period.”
Damon adds that firms also are more interested in candidates who have hybrid experience. “[Consulting firms] would typically like to go into a company where someone from Bain left after four or five years to work for a company, maybe started [at that company] in a strategy role, maybe then moved over to an operating role and has been in that kind of situation for a number of years and they would go after that person to come back into consulting.”
Phillips is seeing a similar type of employee attractive to firms like Alvarez & Marsal and AlixPartners. “We have placed people at [those types of] firms; they’ve all got a combination of strategy consulting and operations work. They’ve worked in the C-suite somewhere in the company, plus they’ve been a strategy consultant. So they’ve bridged this huge gap.”
But for Phillips, the true measure of success isn’t a consulting firm that finds the right hire—it’s when the firm keeps the right hire. “Who you want to hire is the trusted adviser who really owns relationships in either the industry or competency where you want to generate revenue over time. Trust is earned over time; you can’t buy it and sell it, and it’s not as portable as people think. It takes time to develop it,” he says, adding that
it takes about 18 to 36 months for that new hire to integrate, so Phillips cautions that firms understand that before embarking on a search, particularly in this environment.
But while integration takes time, so does actually matching the right candidate with the right firm, Phillips says. For example, if a firm decides to look for a “healthcare wizard,” “however they describe the person, it’s someone who one, is fundamentally a trusted adviser, and two, really understands the healthcare market and is current and can set the CEO agenda. Yes, that person’s hard to find.” But Phillips says databases aren’t the answer. “We will learn what’s going on, we do that by calling consultants in healthcare, by calling chief strategy officers at healthcare companies and we spend six to eight weeks at the beginning of every search [getting] primary data about what’s going on in the market, what’s hot what’s not, who’s good and who isn’t.”
So if a firm wants a key player in place for the end of next year, that search should start now—even though the treacherous economy is at the top of mind for all. Looking ahead, Damon says, “What happens in an upturn [is that consulting firms are] slower to add the resources to match the upturn.” And while some might see that translate into extra capital, it can spell trouble, too, he says. “So when this economy turns, you’re going to see these professional services firms are going to get incredibly busy. There’ll be a pop in revenue, and they won’t have the infrastructure to maybe deliver. So people are going to be working incredibly hard and be incredibly busy, and maybe quality will slip a little bit. Firms have to be mindful of that.”
And Damon says that turn could be just around the corner.
“My personal opinion is that all of the stimulus is getting thrown at our economy and some of it is going to work. For the first time, we’re actually somewhat coordinated on a global basis about how to fix this. I personally believe that the governments around the world aren’t going to let this recession tank the world,” he says. “Given that, my view is that we should see some signs of life in the second half of 2009. If that’s the case and people start to feel a little confident, we may start to see the hiring in professional services maybe pick up at the end of first quarter.”
 Differentiate Yourself to Be a More Attractive Candidate
With a stagnant economy, many consultants may opt to just weather the storm—and some MBAs may start making other plans. But there are some things those who are currently in the profession—and those who hope to be—can do now to position themselves for a better position down the road.
“The best thing to do is work your business school alumni network from years past, the second is to quietly build a relationship with a half dozen or so executive recruiting firms that are known to have a large practice in professional services,” says Bob Damon, president, North America, of Korn/Ferry International.
Those new to the consulting world need to open their eyes—and ears, says Jonathan Phillips, founder of Magellan International. “The best thing you can do as an MBA, or a new person at McKinsey is not sit behind a cubicle and crunch numbers. It’s to sit behind your cubicle, crunch numbers but get out and talk to the other partners. Engage with clients. Don’t be intimidated to sit behind a desk in a client’s office. Walk those halls. Get to know the other young people at the client site. Ask them what’s going on.”
Knowing as much as possible about their client industry is key for young consultants, he says. “You need to broaden yourself immediately. And I mean broaden yourself in terms of developing early trusted adviser skills. If you want you walk into a room full of really smart people in a particular industry, you better know what’s going on in the industry.”
Carla Edelston, senior associate director at Northwestern University’s Kellogg Career Management Center, works with consulting-bound MBAs every day and advises students to say focused and hone those skills. They need a “strong analytical background,” she says, adding that previous consulting experience and technical backgrounds like engineering are especially attractive to employers right now. And conformity is more likely to be rewarded in a shaky economy. “They’re not going to take the nontraditional MBA candidates—[or] they’re less likely to—who came from the Peace Corps or education or something much more random. They want more traditional business experience with strong evidence of analytics, either in the work they did or in their undergraduate degree.”
Damon says taking on the right projects is essential. “I think that having experience helping develop a strategy that required a turnaround would be helpful experience for consultants to have given what’s going to take place over the next couple years.”
And if you want to be on the partner track, start taking every opportunity to demonstrate your skills. “Obviously taking on leadership roles in their firms would be helpful,” he adds. —J.D. |
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