Management consultants haemorrhage staff

Jun 15 2007 by Nic Paton Print This Article

They charge huge fees for telling you how to run your business better, but perhaps management consultants should look in their own back yard. Because consultancies in the US, UK and Europe are haemorrhaging staff, with some losing more than a third each year.

The booming market for consultants has led to a severe talent squeeze in the industry, a poll by recruitment firm has found, and staff turnover rates are, if anything, set to get even worse this year and next.

Attritions rates in Britain were averaging 15-20 per cent, with a tenth of firms losing a third or more of their consultants each year.

It was much the same story in Europe and the U.S. Europe was, overall, slightly better than the UK, with most firms reporting turnover rates of below 15 per cent, although a significant minority were recording rates of 35 per cent or higher.

And in North America, most firms lost staff at the rate of 15-20 per cent, however a significant portion of the market was seeing attrition rates in the fifth to 35 per cent or higher range, said

Just as importantly, more than eight out of 10 of both consultants and HR managers felt attrition rates were likely to get worse in 2007 and 2008, something emphasised by the finding that a clear majority of consultants polled said they expected to work for three or more consulting firms during their career.

Intriguingly, relocating the consultancy could have a significant impact on the attrition rate, the poll found.

Consultancies that had located to an office outside London found this brought noticeable rewards, partly because, with so much of the market located in the capital, there were fewer alternative employers for consultants to switch to in the regions.

Tony Restell, director, said the situation was also have a knock-effect on the sorts of benefits and bonuses consultancies were now using to attract and retain key staff.

"These staff loss figures explain why recruitment has become the number one issue for consulting firms," he said.

"Most major consulting brands are winning work at fee rates that are far less profitable than during the last consulting boom. This has meant they've been unable to reward staff across the board with major pay rises and sizeable bonuses.

"The knock-on effect of this is that many consultants are now seeing a move to a competitor as the most likely way they will enhance their earnings in the coming year. Hence the significant staff loss figures we have been witnessing," he added.

Most consultants who jumped ship were not leaving the industry altogether, simply moving from one consulting employer to another, he stressed.

"But the implication for consulting firms is that they need to hire 15-20 per cent of their existing headcount over the next year, just to stand still," he said.