Consulting Magazine - Best Practices Webinar
  • One on One

Kennedy Corner

  • »Breaking the Cycle of Volatility and Supply Chain Performance Deterioration

    The great moderation that lasted from the mid-1980s through 2007 was characterized by low volatility and strong gains in business performance that combined in the fashion of a virtuous cycle. The supply chain was a significant beneficiary and source of these gains.
  • »Disruption, Financial Services and the Buffalo Bills
    The year was 1996: Alanis Morissette and the Smashing Pumpkins dominated radio—we still listened to radio back then—while your Internet 1.0 experience began when your dial-up modem screeched for 20 seconds and then connected you to your AOL account. You had mail! It was in that year that Episode 7 of the fourth season of the popular SciFi drama The X-Files aired, during which a conspiracy was laid bare in a secret meeting by powerful men.
  • »It’s a Floorwax... It’s a Dessert Topping... Actually, it’s Both!
    There are few sure things in the world. One might cite death and taxes, but only slightly down the list is the inevitable answer a Big Four consultant provides to the question “What is your firm’s strength?” Everything, of course.
  • »Show Me The Money
    Management consulting is a cash business. Now salaries and bonuses within the consulting industry are certainly not at the stratospheric levels enjoyed by their kindred brethren in investment banking. But consultants generally do realize much-better-than-average wages relative to their counterparts in the corporate world.
  • »Will ‘Knowledge Workers’ (Consultants) Be Replaced by Machines? It’s Possible
    The management consulting industry to date has been largely unscathed by the wave of technological change. However, there are signs that digital technologies are now beginning to disrupt the management consulting industry as well, with potentially deep and far-reaching consequences.
  • »A Force in Consumer Banking
    Banks have been stepping up their customer satisfaction game in recent years against the typical market forces at play. The pace of change has been head-spinning for an industry not well known for its swift response to customers.
» View all

Travel Advisory

  • »Survey: Consultants Are On the Road Again
    After years of fits and starts in an uncertain economy, travel is back in the consulting profession, at least according to the results of our annual Best Places to Stay survey.
  • »Marriott Goes Big in NYC
    Marriott International, Inc. and G Holdings opened what they’re calling an “iconic addition” to the New York skyline, a combined 378-room Courtyard hotel and 261-suite Residence Inn hotel in midtown Manhattan. The $320 million, 68-story property is the tallest single-use hotel in North America.
  • »Best Places to Stay: Travel Bounces Back
    Consultants are on the road again, at least according to the results of our annual Best Places to Stay survey.
  • »FAA: ‘Staffing Challenges’ Causing Delays
    In case you haven’t noticed, non-weather related delays at U.S. airports are on the rise. (And I know you’ve noticed that weather-related delays are definitely on the rise.)
» View all

Book It!

  • »Q&A: Keeping It Simple
    BCG’s Six Simple Rules sets out to simplify some organizational complexity.
  • »Review: Leading the Life You Want
    It seems that everyone has an opinion on work/life balance these days, but Stewart D. Friedman’s Leading the Life You Want isn’t necessarily one of them.
  • »Review: The Culture Map
    Globalization led to the rapid connection of internationally based employees from all levels of multinational companies, and now those same employees are expected to collaborate with colleagues scattered all over the world.
  • »Review: Twitter is Not a Strategy
    Today’s digital frenzy has led many to declare that advertising is dead… or at least dying. Is it?
  • »Excerpt: Procurement as Productivity
    The following is an excerpt from the book Procurement 20/20: Supply Entrepreneurship in a Changing World by a quartet of McKinsey & Company consultants—Peter Spiller, Nicolas Reinecke, Drew Ungerman and Henrique Teixera.
  • »Review: The Risk-Driven Business Model
    Most companies focus their innovation on new products.
» View all

Security Check

New Image
  • Home
  • Columns
  • Features
12 2 2011
»Consulting magazine Survey: Long-Term Anxiety Despite Short-Term Optimism

By Jess Scheer

ChartsMost firm leaders remain optimistic about their growth prospects in 2011, but are worried about significant challenges in 2012 and beyond. That’s the diagnosis of the most recent “pulse check” of more than 100 consulting partners and VPs who participated in a Consulting magazine survey in January and then again in July. First the good news: short-term optimism is high and getting higher.

More than 80 percent of firm leaders anticipate that their firm’s revenue will improve this year. In fact, 51 percent anticipate double-digit improvements. Similarly, about four in five firm leaders also say their firm is on pace to grow their net profits in 2011, including four out of ten who predict that their bottom lines will improve by at least 10 percent.

Compared to an identical survey conducted in January, the share of consultants anticipating double-digit improvements in their top and/or bottom lines is up in the July survey. However, that optimism may be short lived. The majority of firm leaders also reported that it is becoming more difficult to retain existing clients and 70 percent reported no improvements in attracting new clients. Most firm leaders also report it’s taking longer to sell smaller and smaller projects—projects that are coming under ever-increasing pricing pressure.

Meanwhile, the majority of firm leaders also see no improvement in meeting compensation expectations, better managing utilization rates or curtailing voluntary attrition—internal challenges that will likely only be exacerbated by the external client environment.While there is little firm leaders can do to change the macro-economy, and clients’ precautionary reaction, there are proactive steps that can be taken to address some of the internal issues.

If consultants aren’t bringing in more per hour—because of lower hourly billing rates or reduced utilization rates or both—it’s going to be increasingly difficult to afford higher salaries. Instead of entering a salary war you can’t win, change the battlefront. Especially in a time of uncertainty, it’s crucial to be as transparent as your firm can culturally accept when it comes to firm performance and how that translates to compensation.

The wave of pent-up demand that firms are currently navigating through can give rank-and-file consultants an incomplete and inaccurate view of the long-term horizon. If you’re considering curtailing first-quarter bonuses, even just a little, to preserve cash (a pragmatic move many firms will likely consider adopting), it’s all the more important to share that thinking throughout the firm. Annual reviews and bonus awards should not come as a surprise. When they do, consultants worry that their firm is in worse shape then they thought or firm leaders aren’t recognizing their individual contributions. Either scenario will increase the coming spike in voluntary attrition.

Based on our detailed study of employee satisfaction, compensation satisfaction has less to do with the size of one’s paycheck or bonus and more to do with how they are being acknowledged for the work. In other words, firm-wide thank you emails or other cost-effective steps can do more to improve morale than an increase in salary.

Firm leaders may also want to consider the frequency and timing of variable compensation to discourage the annual wave of departures that often come after bonuses are paid. Over the last five to seven years, in an attempt to better manage profitability through lean times, bonus pay has increased as an overall percentage of most consultants’ compensation packages. As a result, it’s become a milestone for consultants planning on defecting.

One alternative might be to pay bonuses twice-annually or even quarterly. While not changing the size of the compensation pool, it does diminish the annual uptick in attrition following annual bonus distributions. It also gives firm leaders the excuse to have more regular, and transparent, firm performance conversations.
»Related Articles
  • Features
  • Operations
  • Strategy
  • Platinum Sponsors:


    Gold Sponsors:


    Ernst & Young

    Silver Sponsors:


    Alix Partners

  • Register

    Gold Sponsors:

    Ernst & Young

    Silver Sponsors:

  • Featured Speakers:

    Joseph Kornik

    Joseph Kornik
    Publisher and Editor-in-Chief,
    Consulting magazine

    Brian Murphy

    Brian Murphy
    Chief of Staff, Point B

    Brian Jacobsen

    Brian Jacobsen
    General Manager, Slalom Consulting

    Tom Rodenhauser

    Tom Rodenhauser
    Managing Director, Advisory Services, Kennedy Consulting Research & Advisory

    Sponsor Speaker:

    Drew West

    Drew West
    Director, Product Marketing,

    Sponsored By:

    Deltek Logo


page loading