In a market where supply and demand for talent is out of sync, how will consulting firms achieve a competitive position in the quest to find quality people?

In an industry where staff loss is endemic and likely to worsen in 20081 consulting firms need to hire at least 15-20% of their headcount just to stand still, before they can even think about expanding. Since the professional service sector pivots on the quality of human capital, finding, recruiting and retaining quality consultants is the biggest operational challenge in 2008.

It’s a difficult task. And one that’s all the more concentrated for middle-tier or niche firms unable to capitalise on a well-known brand. In some ways it’s a catch 22 – a consulting firm’s reputation hinges on having quality people, but how can a firm build a reputation without the brand power to attract quality recruits? And since small consultancies live and breath by the quality of their consultants, these firms risk jeopardising their financial stability if they hire below-par people. Many graduates and inexperienced consultants head straight for the well-known brands which are perceived to give a far better range of exciting career options. So what can niche consultancies do to lure bright new talent?

The simple thing would be to differentiate themselves from competitors by highlighting the advantages and opportunities unique to these companies – whether it’s a different structure, methodology, culture or client mix. But getting this information into the public domain is easier said than done. Branding and marketing of services is traditionally never done on a big scale as most business is won through word-of-mouth, existing relationships or a complex tender process. Therefore the brand of a B2B service provider is often little recognised beyond its business customers, which eliminates any of the brand ‘halo’ effects experienced by consumer brands. The perception of a professional services brand is based on the experience of clients, and is even more subjective to potential recruits – particularly graduates and inexperienced consultants.

What’s more, HR efforts/initiatives employed to attract and retain the right people are often generic across firms. Schemes such as executive compensation, performance management, learning programmes and talent management are now par for the course at the larger consulting firms.

So with recruiters competing to recruit the same set of hires, what should they be doing to make their brand stand out?

To answer this question we must first ask another: where do potential applicants find relevant information? The answer is industry websites, blogs, university open days and contacts within the industry. Common to all these sources is that they are made up of immediately accessible and trusted opinions – those of a firm’s existing employees. Even if they talk to someone in the industry, their opinions of certain firms are likely to be decided through experiences of these firms or acquaintances who have worked there, or still do.

It seems that the answer to both the problem of recruiting new employees and retaining existing ones is simple. Keep your employees happy. Happy enough to convincingly extol the virtues of their company on the web, at open days, and to their friends – and happy enough to stay put despite the lure of famous brands.

Keeping employees happy makes financial sense for a company, while boosting its credibility in the talent pool. Research shows a poor employee experience drives new recruits out in under 18 months on average, a great employee experience extends tenure to over 3.5 years, and in many cases even longer. With an average cost-per-hire of £5,000, a consultancy of 1,000 people would save £2 million per year if it achieved best-in-class retention results2.

Just like clients, if employees with in-demand skills are not getting the job satisfaction they want then they will find it elsewhere – with the competition. And they’ll let other people know about it.

The importance of brand engagement

As mentioned earlier most HR strategies aimed at improving recruitment and retention focus on the fundamentals, but engagement with the brand, which can give the competitive advantage, remains illusive.

Valued employees are like profitable customers. They’re free to make choices, to join, to engage and to commit to stay. In much the same way as we decide to buy consumer products and services, more and more people are taking control of deciding where they work. Therefore firms need to make the same effort to attract and retain employees and to sell the company working environment and culture as they would to attract and retain clients or sell their services.

Increasingly, leading companies are realising that to win the talent war they also need to manage their brand in a way that – just like consumer brands – influences employee choice. The name for this is employer branding.

Because we make the choice of where to work and whether to stay based on functional and emotional needs a strong employer brand is potentially a more powerful weapon in winning the talent war than an assortment of employee benefits.

The role of HR departments

The importance of engaging employee commitment means that expansion in professional services hinges on finding human capital and offering a differentiated employee development strategy and experience that is consistent with the external image of the brand. This means that HR has a more important role to play in delivering business performance and is bringing the discipline in line with the approaches more commonly applied to marketing, including brand management.

Employer branding draws on branding and brand management, with close attention to the needs and aspirations of the target audience, benefits, competitive advantage and creating a coherent and consistent brand experience. The idea is to create an employee experience strong enough to differentiate a company from its competition. Perhaps your company has a structure that’s better for free thinkers, a client base that allows access to the twenty first century’s brightest minds and forward-thinking entrepreneurs, or maybe it’s the friendliness of your staff and the alumni relationships you foster.

Recruiting people who have chosen your particular offering because it suits their needs in itself increases the likelihood of them staying with you for longer. Giving them increased job satisfaction means they will talk positively about your brand throughout the industry, including to potential recruits.

Investing in a clearly defined employer brand will make you stand out in the crowded recruitment marketplace, while focusing employee commitment and loyalty throughout the life of the employer relationship. Whether you have defined it or not you already have an employer brand. Just dip into industry blogs to see what people are saying about you. The challenge is to invest in the culture you want to create and the image you want to portray.




Supporting statistics:
1. In the UK staff loss at consulting firms is running at 15-20% according to the Top-Consultant.com 2007 retention report
2. Top-Consultant retention report 2007