Recruiting and The State of The Consulting Industry

The good, the bad, and the ugly.

The up-or-out culture at Big three management consulting firms is well documented.

The impact on companies trying to attract Management Consulting talent, is not.

Each year, a percentage of the partner track consultants is promoted, and a percentage of the class is counseled to leave. This is true for each “Class” of consultants, for each promotion, and for each office.

I’ll use round numbers to illustrate the point.

In an average year, an incoming class of 100 consultants will have 50 promoted to Engagement Manager (CTL or PL is you speak Bainese or BCGish). That will be 10 of 20 Consultants in the New York Office, 5 of 10 in the Chicago office, 2 of 4 in the Atlanta office, etc…

But that number is not always 50. And it the distribution isn’t always even between the offices.

In 2009, McKinsey, Bain, and BCG all promoted a small percentage of the 2007 class. Their forecasts indicated that business would be down across the industry in FY09, and didn’t justify the cost basis of carrying the salary and overhead of an underutilized average sized class.

This meant that 70% of the class of 2007 was not promoted. If you were ranked 31st in your cohort, you were counseled out that year, but would have comfortably earned promotion had been hired two years earlier or later. That Summer, many qualified consultants left the firm at once, flooding the market with talent, and dropping median compensation for an accepted offer. It was a good time to recruit consultants.

That same year, the firms recruited smaller than average classes due to the economic downturn. By 2011, the internal forecasts projected strong growth in the Consulting industry. To meet that demand, they had to promote an exceptionally high percentage of a much smaller class. To accomplish this, bonuses and raises were generous, and exceptional accommodations were made for lifestyle concerns.

At the same time, the economy was rebounding, so industry was beginning to look to accelerate hiring. The results was fierce competition to fill a large number of roles with a smaller than average number of active candidates. Additionally, companies had to use their interview process to more carefully vet potential hires. That year a bottom quartile performer may have been promoted. A company was no longer able to assume that if a candidate was promoted, he was a top performer.

As a result, average industry offers skyrocketed, and it became very difficult to attract talent with average wages or a second-tier geography.

At the micro-level, this is also true on an office by office, or industry by industry basis. If the forecast for Industrials is strong, The Detroit office may promote aggressively in the same year that New Jersey office is selective because the healthcare industry is trending down.

If you want to hire a consultant, you need to know if Mckinsey is promoting aggressively, if Bain has a good forecast in your industry, and if BCG is planning to promote in the office closest to you.

Hawkes Peers can help.

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