How have consulting firms changed their employer value propositions (e.g, salary, work-life balance etc) following COVID-19? And – based on Movemeon’s data – what does this mean for employers of all types (from startups to corporates to consulting firms themselves) trying to recruit strategy and management consulting trained professionals in 2022?
Movemeon’s co-founder, Rich answers these questions below and looks into Movemeon’s data & experience supporting 4,000+ organisations and 60,000 professionals in strategy & transformation recruitment.
- Why did COVID-19 create a perfect storm for consulting firms?
- What impact did this perfect storm have on the consulting workforce?
- How the Great Resignation impacted consulting firms & strategy recruitment…
- How did consulting firms respond in order to retain their talent?
- Why does the freelance consulting market matter?
- How can you win the war for strategy recruitment in 2022?
Movemeon Co-founder, Rich Rosser
Why did COVID-19 create a perfect storm for consulting firms?
I remember April 2020 vividly – it felt like tumbleweed was blowing through our office (well, as I was working from home, it may well have been). Our monthly revenue fell 90%, as every employer around the world focused on getting their workforces set up to work effectively from home.
Fast forward 3 months to July and we were the busiest we’d ever been. Some sectors were benefiting from COVID-19 and two of these rely on Movemeon for support: tech businesses and consulting firms.
- Firstly, they say that consulting firms win in any economy. When everything’s growing, companies need support growing even faster. When there are problems, they ask for help to address them. Covid was a very big problem for many and a growth super-turbo-charger for some.
- Secondly, Private Equity funds (one of the consulting industry’s mainstay client groups) pounced through the latter part of 2020 and into 2021. The COVID-19 pause of Q1 and Q2 had built up even more dry powder and the economy had created some new buying opportunities.
Naturally, the flood gates opened and consulting firms were inundated with due diligence work.
What impact did this perfect storm have on the consulting workforce?
Compared to some other careers that consultants will have considered (e.g. financial services), consulting has never been well paid (particularly from Analyst to Manager level).
Movemeon surveyed consultants as to why they joined consulting firms, the main reasons are:
- Variety of work
- Travel opportunities
- Learning from inspiring colleagues
During 2020, each of the main reasons for joining a consulting firm was either totally removed (travel) or substantially chipped away.
Let’s face it, while we’ve all learned to live with Zoom calls, when it comes to learning and getting energy from your colleagues, it doesn’t come anywhere near being in an office around a whiteboard with your team.
The consultants of late 2020 were stuck at home, working even longer hours (there was LOTS of work) and generally doing less varied work. Some projects are impossible to do well if not at a client site; oh and there was all that well-paying PE due diligence work to get through too…
Cue the Great Resignation…
Yes, there were pull factors at play; many of us took COVID-19 as an opportunity to reassess what was important and kick-start a career pivot. However, if you were consulting at the time, the push factors covered above were very hard to ignore.
There was arguably no other sector more affected by the “Great Resignation” than professional services
All the while, plenty of attractive companies (e.g. e-commerce) were growing like wildfire and recruiting consulting-trained professionals.
Through platforms like Movemeon, the freelance consulting market had boomed and become more accessible than ever. Also, consultants typically make ~3x the day rate when working for themselves.
How did consulting firms respond?
There was no better time than late 2020 to recruit out of consulting firms into roles like strategy, inights, Chief of Staff, transformation, commercial management and other classic post-consulting homes. Or more smaller consulting firms to attract people from the larger ones. Sadly, those days were short-lived.
Consultancies are only as good as their people. So, you guessed it, they weren’t going to sit back and let their talent walk out the door without a fight.
It’s been widely discussed that one US strategy consulting firm changed their pay at below Partner level three times during 2021. While that may be at the far end of the spectrum, compensation at consulting firms was drastically reviewed during the course of that year. Much of this was planned (i.e, during the standard annual review cycle).
However, an astonishing 40% of consultants reported via a Movemeon poll that they’d also been given an ad hoc pay increase of some description (e.g, salary rise and “thank you” bonus) during the 6 months leading up to the end of 2021.
Consulting firms addressed compensation, and also took a long hard look at their wider employer value proposition.
- Firstly, travel & client site work came back online, but in a more flexible way. Everyone, consulting firms and also their clients, accepted that working from home was as productive, if not more productive, for certain “focus” tasks, like building a model. This change was particularly welcomed by the Manager to Associate Partner cohort, who widely appreciate being closer to home (this is most typically the demographic with young families).
- Secondly, more and more firms adopted flexible working policies – in particular permitting staff to take a period of extended leave (e.g, up to 4 weeks) per year. Logistically, this is easier for consulting firms than most businesses as the work is project-based.
Why does the freelance consulting market matter?
Not only did consulting firms improve their employer value propositions, but more and more organisations looked to benefit from the “professional gig economy”.
Businesses were facing unique opportunities/challenges and needed to solve them with particular expertise they wouldn’t need forever. Other companies in highly growing segments, and also consulting firms themselves, had so much to do that they looked to the freelance consulting workforce, via services like Movemeon, in order to rapidly increase their workforce capacity.
So put yourself in the shoes of a consultant: my current employer has really upped their game, and this new option to safely try self-employment and earn lucratively has also emerged.
What does this mean if you’re looking to hire consulting-trained talent in 2022?
Fortunately, recruiting people with a consulting background is still perfectly possible.
- Large businesses – Consulting trained talent fits neatly into strategy, transformation and CEO office teams.
- PE-backed portfolio companies – They are equally famous for joining on a growth/transformation journey, filling mid-senior roles (e.g, Chief of Staff, Transformation/Strategic Initiatives Director) or bringing freelance consulting expertise or horsepower.
- Startups and scaleups – The third common home, relying on the consulting skill set (often honed outside of consulting in another startup first) to fill General/Country Manager roles, COO, Right Hand to CEO, and so forth.
- Consulting firms – last but not least, around 25% of consultants looking to make a job move are seeking to stay in or return to consulting.
How to attract consultants requires more focus than ever.
In terms of compensation, fortunately, it’s a small minority of consultants who are looking for a large pay increase when leaving consulting, and they largely focus on joining PE funds. Our data shows that the great majority of consultants are happy to make a sideways move in terms of pay.
However, following that logic, the reality is that you will need to pay higher salaries than would have worked even 6-9 months ago.
The big plus is that the main reasons (according to the 60,000 Movemeon users) that make consultants want to leave (and they often have gone into consulting always planning to leave) or leave their current consulting firm in search of a new one, have not been changed by COVID-19 or consulting firms’ EVP revamps.
- Work-life balance. Let’s face it, very few people enjoy working 60+ hours a week and often on the weekend. But that is the reality still for a lot of consultants.
So what? If you’re a company – and I very much include consulting firms here – with a more sustainable workload, it’s important to highlight that in your job description.
Nobody ambitious resents working hard and rarely are consultants seeking a pure 9 to 5, but some consulting takes that to an extreme.
- Start doing, stop advising. Coming in a narrow second behind working hours, the main reason to leave consulting firms is to be able to describe to your grandmother what you do and who you work for.
Tired of PPT decks sitting on shelves getting dusty, consultants want to be closer to – and often in startup and scaleup roles directly responsible for – getting stuff done. They seek the kick of seeing the results of their labours.
Also, this changes slightly depending on the type of company you’re recruiting into:
- Corporate firms, it’s vital to show consultants a career path into and then out of the classic post-consulting strategy/transformation teams that you will recruit them into. Some consultants will be happy to stay there (don’t worry), but the majority will need it to be an 18-36month stepping stone into a more “operational/commercial” role. The most successful recruiters talk openly about strategy, transformation, internal consulting and Chief of Staff / CEO Office teams being a talent pipeline and can showcase various people across the business who have proven that to be the case.
- Consulting firms, many previously pure “strategy” firms have added capabilities for implementation. This can often be overlooked as a conversation to have with someone who may be looking to leave. Equally, many strategy firms are thinking about flexing up and down their capacity and using the newly expanded freelance workforce to do that, while often in-so-doing, adding to their diversity (e.g, this option is particularly favoured by parents who wish to pick and choose work to accommodate school holidays).
- Startups & scaleups, these top 2 reasons for leaving consulting – work-life balance and “doing not just thinking” – really play into your hands. Don’t be scared about consultants who haven’t been in a startup before. They are typically fast learners and just because their job to date hasn’t given them the opportunity to “do”, doesn’t mean that they can’t.
If you can demonstrate the market potential, seasoned former consultants who also have startup experience will relish the opportunity of a senior role making that growth happen.