Monday, September 13, 2010

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

Monday, August 2, 2010

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