By Stacy Collett
Shri Ranganathan vividly recalls the creeping fear, uncertainty, and doubt that consumed his last two months at e-consulting firm Scient.
After 16 months of nonstop assignments in Hong Kong, Dallas, and New York, Ranganathan suddenly found himself "on the bench" for weeks on end. Although executives had assured Scient employees that the December round of layoffs would be its last, Ranganathan had his doubts. "I felt like a person in the hangman's noose waiting for the trapdoor to open," says the 37-year-old project manager with 15 years' experience. Still, with a few successful projects under his belt and several positive performance reviews, he considered himself somewhat shielded. "Surely they can't lay ME off! I've never been laid off in my life!" he thought.
Ranganathan considered joining one of Scient's vertical industry business units, but decided he liked the freelance-type atmosphere of technology and e-commerce design across all industries. Early on, he was reluctant to move from his Atlanta home, where he worked remotely from any Scient office. His last days were spent in one of Scient's regional "war rooms" trying to drum up business for the firm. After two months without a project, on April 13, Ranganathan and half of Scient's 1,350 employees were let go. Another 175 were laid off a month or two later. He now admits, "I should have started sooner" with a plan.
It came as no surprise that Scient, the one-time poster child of e-consulting success, had fallen on hard times by year's end, after Wall Street's bust and a slowdown in tech projects. But when the firm delivered the jaw-dropping news this spring that its consultant utilization rate had slipped to 21% in March, the entire consulting industry was put on notice.
"Across the board — management consultants, the strategy firms, and systems integration firms — there has been a slowdown and a change in the type of consulting engagements," says Alden Cushman, vice president of research for Kennedy Information, parent company of Consulting magazine. As a result, consultants are left dangling between projects, and the most unproductive slide inevitably into the next pool of layoffs.
While most industry watchers agree that the current slowdown, like the one experienced in the late 1980s and early '90s, will pass, consulting firms will continue to respond by downsizing and changing the way they do business. To stay ahead of the curve, industry observers (and those in the trenches) offer 10 proactive steps to keep companies and careers moving forward.
Between assignments? Think vertically.
For an employed consultant, "the sense of creating an area of expertise and a knowledge base in a specific industry is more important today than it was nine months ago when consultants had to proclaim themselves an expert in e-business across all industry lines," says Cushman. Outside the consulting industry, consultants should observe where there are still good pockets of growth and volunteer for projects in those areas. The chemicals industry, utilities, energy, and oil are doing extremely well and continue to grow. Some segments of retail and wholesale industries are also doing well, he adds.
At Scient, Ranganathan recalls that some employees with less seniority at the firm and fewer years of experience kept their jobs because of their experience in telecom, media and entertainment, and healthcare. Some of those were technical staff who traditionally work across business units but volunteered for one vertical business unit after successfully completing an industry project.
Go west! Go east!
The last thing some road warrior consultants want to do is go on another foreign assignment, but the truth is, the grass really is greener on the other side these days. "A lot of firms see potential for growth in India, Asia, and Australia," Cushman says. "Look at different geographies and maybe even volunteer to go out to an office in India, Japan, or South Korea." Even Europe is a possibility, he adds. "It has slowed down a bit, but not as much as the United States."
One top strategy firm is seeing its biggest slowdown in the United States and Canada, while other areas boom. These inequalities have prompted its senior management to take a more proactive approach to opportunities abroad. "We're moving people around. We've become less tolerant regarding arguments about 'I want to live here' versus 'We need you there.' I've actually sent a few people to Asia to work on projects for me because I want to make sure the learning gets back here eventually," one senior partner explains.
Engaged in a project? Manage client expectations.
Customers are emboldened by the consulting industry's turn of events, and the power base has shifted to their camp, according to Cushman. Knowing the situation in the consulting market, "clients can ask for a lot more than they normally would ask for in an engagement," he says. Consultants could be tempted to say yes to get an engagement, then try to fulfill it as best they can. But the practice can be dangerous.
"Don't accept jobs you're not able to fulfill or where you don't have expertise," Cushman warns. Some companies hide behind project failures by publicly blaming consulting firms in court and in trade publications, which jeopardize your firm and your career, he adds.
Bain & Company managing director John Donahoe believes consulting firms will look to leverage their strengths and focus on core client offerings.
"We're seeing consulting segue back to its traditional segments of strategy, operations, and IT, and within the strategy segment, we see that the strategy firms with strong global networks and a track record of getting results for clients are not only being impacted less, but are finding more opportunities, and so we're looking to tap those opportunities," says Donahoe. "Our top goal is to come out of this period of turbulence in a stronger position than we are today."
Project managers also must rethink implementation planning, according to Dan Gruber, a senior partner at Deloitte Consulting. "Companies in tough times are less willing to make commitments on a $50 million consulting project," he says. "But they're more willing to accept several million-dollar programs to feel comfortable that each step is delivering value." He also suggests that projects be broken further into pieces "so that every month something will be implemented and be a proof of concept. It will be self-funding, and you'll have the confidence you're not putting money and resources at risk."
Go the extra mile.
Sometimes the fundamentals bear repeating. Project teams need to go above and beyond the level of service they would have given nine months ago, Cushman advises. "If a project team senses the client isn't 100% satisfied, put in an extra week or month to make sure they're happy with what's presented." A little extra work could not only benefit the firm, it could also keep a consultant off the layoff list. Without positive client feedback, "it could be that much easier to let you go."
Rely on senior partners for morale-building.
Senior-level managers and partners can be extremely valuable in maintaining the morale of younger consultants, not only by advising them on career decisions during rough times, but also through acts of dedication to the firm.
In May, DiamondCluster announced that its 107 partners had unanimously agreed to take a 10% pay cut to keep the company from having to lay off any of its employees. Michael Krauss, a partner in the Chicago-based firm, says the move protects the firm's people, clients, and investors, and will keep it "well positioned for growth when the economy rebounds … and we need to have our people."
The firm also instituted a hiring freeze, but will honor job offers already accepted by 120 college graduates. Their start dates will be delayed by three to four months, but all will receive stipends for living expenses and have already received signing bonuses.
The gestures have buoyed many DiamondCluster employees. "I viewed it very positively," says manager Kellogg Mathie. "It was completely in line with our culture. We're team players." Mathie and many of her colleagues are also taking pay cuts under a voluntary, nonpartner compensation reduction program that began June 1. Partners and nonpartners will receive stock options at current market value in exchange for pay. The company's stock will have to improve before they'll break even.
At Deloitte Consulting, senior partners are assigned mentoring roles to keep morale high. "If I went to a younger person and said, 'Don't worry, it will get better,' he would probably tell me to take a flying jump. But if I could go to him and say, 'Based on my experience, here's what you personally could do to survive and prosper during this period,' that's what they listen to," says Deloitte's Gruber.
Cushman advises all firms to develop partner guidelines for helping maintain good work ethics, career management tools, and morale strategies in a downward market.
Get a sponsor.
An economic downturn is no time to stay away from the office and work remotely. When the ax was falling at Scient, Ranganathan was a lone warrior. "I was in Atlanta and there was no assigned office there. I had no equity in Dallas [our closest office] and had nobody to sponsor me," he recalls. "Even though I did a really good job, I worked for disparate engagement managers and there was no one person to look after my interests."
Staying under the radar is NOT a good idea during a slowdown. Stay in touch with mentors and senior executives and ask for their advice.
Don't wait.
Ranganathan admits he made a fatal mistake by waiting too long to ask for work options within the firm.
One month before his dismissal, Ranganathan e-mailed one senior executive asking for advice. The exec offered him phone numbers of other execs to call, but nothing came of it. Two weeks before D-Day, he volunteered to be transferred to Scient's Dallas engineering center, or even to New York or Hong Kong.
He got no response.
Seek advice and options at the first signs of trouble.
Consider cost-saving "perks."
Some firms are offering lifestyle "perks" that can also reduce costs for the firm. DiamondCluster is offering an extended vacation program during the summer months in which employees at or below the manager level can take an extended break with full benefits while earning 25% of their current salary. Stock options continue to vest during that time. "It gives our people a chance to enjoy the summer while maintaining their employment with the firm," Krauss says.
Keep your options open.
It never hurts to keep the resumes up-to-date and an ear to the ground. "A lot of people at Scient were interviewing [at the beginning of the year]," Ranganathan says. "I started getting my resume out around March 15. I should have started it sooner."
Conversely, one of his colleagues — an engagement manager — heeded warnings that Scient wouldn't do well in the long run. In February, he began actively pursuing a new job and landed a position at Sapient as head of its media business unit.
If the ax still falls, take your experience and go!
Despite his roller-coaster ride, Ranganathan has not soured on the idea of joining a start-up. "I'm looking for the next big thing. It has also made me think of becoming an entrepreneur myself," he says. He and three colleagues have started a new business outsourcing IT services to India and China through partnerships with two companies in each country. But so far business has been slow.
In the meantime, Ranganathan wants to join a "strong, brand-name environment" for at least a year. But this time, he wants to trade his technology expertise for a role closer to his war-room days in client development. "I thought it was great experience. I want to pursue it as a full-time career."
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