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9 30 2009
»Best Firms to Work For 2009

Best Firms to Work For

Best Firms to Work For 2009
1. Bain & Company 9. Milliman
2. McKinsey & Company 10. Deloitte Consulting
3. The Boston Consulting Group 11. A.T. Kearney
4. North Highland 12. Alvarez & Marsal
5. Booz Allen Hamilton 13. Towers Perrin
6. AlixPartners 14. PricewaterhouseCoopers
7. ZS Associates 15. Booz & Company
8. Accenture  
Best Small Firms to Work For 2009
1. Impact Advisors 9. SkillStorm
2. Stroud Consulting 10. Cumberland Consulting
3. Marshall-Teichert Group 11. Acquis Consulting Group
4. Jabian Consulting 12. Walker
5. Centric Consulting 13. Infinitive
6. Censeo Consulting Group 14. Caiman Consulting
7. Alpha FMC 15. West Monroe Partners
8. Plus Consulting  

This year’s Best Firms to Work For have truly distinguished themselves as the profession’s premier employers of choice. First, to receive this honor, they competed against the largest ever pool of participants (236 consultancies, up 13 percent from last year’s record high). Second, they are recognized for prioritizing their consultants’ job and their entire workforces despite challenging economic conditions.

This year’s winners are split into two groups: large firms, who employ at least 500 consultants, and small firms, who employ between 20 and 499 consultants. (Firms that employ less than 20 consultants were excluded from this analysis.)

The large firm list is dominated by a lot of familiar names. Bain & Company remains the single Best Firm to Work for the seventh straight year. Its biggest competitors, McKinsey & Company and The Boston Consulting Group are close on its heels.

This year’s ranking may shed a little more light on last year’s split of Booz Allen Hamilton into the government business and the new Booz & Company, which focuses on the commercial business. Speaking of new firms, Towers Perrin is No. 13 on this year’s list. It should be pointed out that the survey was conducted before the merger and therefore, Towers Perrin and Watson Wyatt were treated as completely separate firms.

The top 15 list also includes firms that are ideally positioned in this economy; turnaround specialists AlixPartners and Alvarez & Marsal as well as the Big Four rivals of Deloitte and PricewaterhouseCoopers.

The small firm ranking also has its share of standouts. In fact, the overall index scores of the 10 best small firms were all higher than the best large firm. Obviously there are different challenges facing a 100-person firm vs. that of a 1,000-plus person firm, but it does suggest that the profession’s giants can stand to learn a few things from smaller firms.

What Made 2009 So Challenging?

Across the spectrum of firms surveyed, morale scores fell in 2009. The reasons are not surprising. According to Consulting’s survey of nearly 10,000 consultants, the most notable differences in 2009:

  • Firms reduced their investment in training and development;
  • Consultants worked more hours than the year before;
  • And, about half (46 percent) of all consultants saw no increase in base or bonus compensation, compared to only 19 percent in 2008 who reported no increase.

Morale continues to slip Morale Continues to Slip

The profession-wide slip in morale started in 2008. Last year, 80 percent of consultants rated their firm’s morale as high or very high. This year, that number dipped to less than 78 percent in the survey. However, we suspect that we may actually be underreporting the drop in morale because many of those with the lowest morale were likely laid off prior to the survey. Layoffs, even for those spared pink slips, can be devastating to morale. Approximately 45 percent of consultants said their firm did not do a good job of communicating the rationale for layoffs and 43 percent said their leaders were not adequately prepared about the layoffs before company-wide announcements.

Failing to properly manage the communication around layoffs can heighten anxiety within a firm. And without an adequate heads up to line-level managers, it is difficult to reassure the top performers that the firm is desperate to retain.

Even in the areas where firms generally did better in providing communication around layoffs, there’s still a lot of room for improvement. Just barely three in five consultants (61 percent) agreed that following the layoffs, they now have a clear vision for the firm. While consultants may disagree with the direction their firm is now headed, without adequate communication around the post-layoff strategy, consultants complain that they are unclear whether additional rounds of layoffs are still coming.

Firm have room to improve their layoff communicationsThese management missteps have two bottom-line effects: 1) they lower morale and decrease the odds the consultant will stay once the economy recovers and other job opportunities open up; and, 2) in the near term, they lower productivity and make it more difficult to take advantage of the recovery.

Firms Have Room to Improve Their Layoff Communications

Roughly half of consultants surveyed came from firms that had layoffs. The cuts appear to have been deep enough that, despite the overall drop in demand in 2009, the average consultant is billing slightly more hours than in 2008.

From a firm profitability perspective, billing more hours, without incurring significantly higher compensation costs is a good thing. However, it also risks burning out the very consultants firms will need when the economy improves.

Consultants, at every staff level, working more
hours in 2009Consultants, at Every Staff Level, Working More Hours in 2009

On a percentage basis, the biggest increase in work is falling to entry level/analysts. In 2009, they are working 10 percent more hours than they did a year ago. This is, perhaps, a response to pricing pressure. If clients want to pay less for certain projects, one way to maintain profitability is to dump a larger share of the work on those making the smallest salaries. If junior consultants can carry a bigger load, this potentially frees up time of more senior consultants to pursue other assignments.

Another interesting note is the increase in billable hours among partner/VPs. They are working, on average, about an extra hour per week (up from 54.6 hours to 55.4 hours), but the number of billable hours is up six percent. This may, in part, be explained by a need to put more senior time on projects. Additional partner/VP time can help to offset the perception that more is being done by relative rookies. And it also helps to maintain or build client relationships. While tweaking the leverage ratio to maximize profitability is important, retaining and expanding client relationships is crucial.

Biggest Increase in hours experienced by entry level/analystsBiggest Increase in Hours Experienced by Entry Level/Analysts

Consulting firms need to be careful about overworking their consultants. In the last downturn (2001 to 2004), those at the bottom of the pyramid reported feeling overworked and underappreciated. The vast majority of the layoffs occurred among the bottom ranks and, when consulting demand improved in mid- to late-2004, there was a material spike in voluntary attrition at the bottom of most firms. Given that most firms also did very little hiring during the downturn, the combination of these factors contributed to a shortage of talent at that level following the recovery. Fast-forward to the present and most firms report a real void of consultants with between five and nine years of experience.

Based on survey data, firm leaders appear to be making the same mistake. As one survey respondent shared:

“I am frustrated that our firm seems to be taking the same steps that they took to deal with the downturn in 2001 to 2004 (i.e., laying off entry level consultants and project leaders). They have said for many years that they regretted these steps in 2001 to 2004 and would never do them again, because they are now struggling with the low number of upper-level managers and junior partners (who would have been the laid-off entry level consultants/project leaders in the last downturn). My office in particular, however, is taking the same steps again—which will leave them, once again, completely unprepared to take advantage of the next upturn.”

Average Utilization Rates Continue to ClimbA repeat of that mistake could be worse this time around for two reasons. First, firms are already dealing with a talent void among their middle ranks and can hardly afford to deal with both issues simultaneously. And, second, the workload on entry level/analysts has only gotten worse since the last downturn. Across all service lines, consultants at the bottom ranks are now averaging utilization rates north of 86 percent.

In 2004, at the beginning of the last recovery, utilization rates spiked above historic levels. There was an increase in demand and a relative shortage of consultants. However, utilization rates didn’t fall as pent-up demand subsided and hiring picked up. Instead, firms have continued to drive utilization rates higher and higher.

For now, consultants are willing to invest more time into their firms. But many consultants are expressing frustration that their firms are cutting back on investments in them. Specifically, the survey revealed that, on average, consultants received 15 percent fewer training hours than they did a year ago.

Annual Number of Training Hours Plummets 15 percetn in 2009 As a result, the survey found that consultants’ satisfaction with their firm’s training and development offerings took a modest hit in 2009. And there was also an increase in the share of consultants who say that more training and development would be an important factor in their decision to leave their current firm. The impact of training cutbacks can probably be quelled if firms reinvest next year, but firms will likely be mistaken if they think retention will be unaffected by permanently curtailing training expenses.

The survey also showed that the ways in which consultants received training also shifted a bit between 2008 and 2009. Generally, there was a decline in the amount of training that occurred in formal settings, such as on college and university campuses, and an increase in informal and in-house training programs.

Average consultant now travels less than two days per weekThere is some good news. For the second consecutive year, consultants’ average travel requirements has fallen; down to less than two days per week. Historically, one of the biggest complaints that consultants have about their job is the grueling life on the road.

This modest dip in travel is, in part, a reason why greater flexibility between work and family life was less of a concern than in prior years.

However, if travel requirements spike again next year and 2011 as client demand increases, expect some road-weary consultants to once again grow frustrated with work/life balance issues.

Best Firms to Work For

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