549. Chad Oakley, The Current State of the Consulting Job Market - January 2024

Show Notes:

Chad Oakley, CEO at the executive search firm at Charles Aris, discusses the current state of the consulting job market. He kicks off the conversation by explaining who Charles Aris is and what they do. Chad shares his perspective on three key areas: the market for strategic services, training Chief Strategy officers, and advice for Chief Strategy officers to make themselves more valuable in a down market.

The Market for Strategic Services

He states that the market for consulting services is currently down significantly due to the down macro environment. Major consulting firms like Bain, BCG, McKinsey, Deloitte, and Accenture have experienced a decline in revenues and project counts. However, they are hopeful that the current low watermark will lead to increased demand, but they are not seeing significant improvements just yet. The good news is that the need for strategy never goes away, and the market for consulting services is often a bellwether for how companies think about strategy these days. As the market continues to down, it is crucial for companies to focus on new and exciting strategic initiatives during downturns and outperform competitors when the market rebounds.

He explains that the consulting industry is experiencing a tight market, with more people on the beach than in the last five to five years. Consulting firms are implementing recessionary strategies, such as lowering bonuses, reducing annual raises, and slowing promotions. He talks about delayed start dates, takes a look back at 2023, and how the current situation compares to 2009 and how 2024 is shaping up. He explains that Chief Strategy officers from incorporations are hearing more about companies slowing down strategic projects, special projects, and extraneous growth initiatives. They are also concerned about layoffs and job security, so they want to be on the radar screen for potential opportunities.

Advice for Chief Strategy Officers 

When there are fewer opportunities, Chief Strategy Officers still have the same tasks. He talks about a bright spot for independent consultants and that connecting with these individuals and offering contract solutions can help consultants navigate the market downturn. Private equity-backed companies tend to have more flexibility and are willing to spend money when it will help them make money. He recommends a variety of different companies to consider during this time. He also explains that during a downturn, Chief Strategy Officers (CSO) focus on short-term versus long-term initiatives. In a market downturn, companies tend to retrench to their core products and services, making it more risky for CSOs and consultants working on long-term projects. Instead, they should focus on projects that make a quantifiable impact in the short term, such as increasing revenue or decreasing costs, and focusing on core products or services. Chad mentions a few areas that are profitable in the short term. 

He recommends that CSOs should also create more stability in their roles by taking on more than just strategy. This can include adding other functions to their responsibilities, such as corporate development and transformation initiatives or strategy and communication, AI. Chad also mentions how having a well-managed team helps promote a consultant's value to the company. CSO’s often become known as a feeder for future stars in the business, as they bring Rockstar talent to the company.

Functional Areas in the Current Market

The US is seeing more opportunity in industrials due to a significant onshoring movement and a slowdown in consumer packaged goods and retail sectors. This shift has created more opportunities for companies that are doing more manufacturing internally, with more growth in the industrial space, and they require more support. However, private equity remains a hot and heavy market, with deal flow decreasing. In 2022, the largest year of merger and acquisition deals in private equity history, and 2023 saw one of the lowest deal volumes due to the Fed raising rates and making money more expensive. Private equity firms are still seeking new talent for their portfolio companies, as they believe their existing functions are not reaching their full potential. 

The Impact of AI on Consulting

The conversation revolves around the potential impact of AI on consulting and the types of AI-related projects or roles being discussed. Chad believes that AI is still a new concept, and companies are still trying to figure out how to use it effectively, consequently, it has not been adopted as a rule. However, Chad does share how he has used ChatGPT.

Integrating into a Private Equity Firm

Chad offers tactical advice on how to integrate into a Private Equity (PE) firm. He has completed searches for 100+ firms in the last five years, from top 10 global firms to mid-sized or smaller firms. Each firm operates differently, with deal side and portfolio operations groups responsible for identifying potential acquisition targets, valuation, negotiation, and landing the deal. He suggests that, to approach private equity deal people, it is essential to be specific about your skill set and the specific portfolio company you can help. For example, if you are an independent consultant with experience in vendor negotiation, you can use an email title like "Vendor Negotiation Experts for this Portfolio Company" to get the attention of the private equity partner. This will make them more likely to engage with you and share quantifiable success stories. When partnering with a private equity firm, they are constantly thinking about improving EBITDA by raising revenue, maintaining costs, or lowering cost structures. If you have direct experience in improving EBITDA at a business, they may be more willing to engage with you. 

The Consulting Job Market in 2024

Chad talks about the current job market for full-time consulting roles in the United States. He looks back at statistics from 2022 compared with today. To pivot from contract consultants to full-time roles, he suggests identifying your spikes and ensuring they add value to the organization in the near term. This could include procurement studies, organizations, or vendor negotiations. He also emphasizes that most consultants have two true spikes that they can bring to an organization, and should focus on these areas. Chad talks about the current situation for the global market, but he believes that the first six months of this year will be bumpy, but the market will continue to move slowly and steadily. Chad believes that, whether seeking contract or full-time roles, individuals must be willing to put in more effort to achieve their desired productivity levels. Chad emphasizes the importance of positioning oneself well for a full-time role and how to articulate what they've been doing to achieve this. He believes that there is no time limit that would prevent someone from being a viable candidate for a full-time role. The number one fear clients have when talking about a contract or independent person is their utilization.

How Consultants Can Improve Their Resume and LinkedIn

To position oneself for a full-time role, he suggests having a good story of what they've done and ensuring that clients are happy to share their accomplishments, and demonstrating quantifiable outcomes in your resume and LinkedIn profile. A good resume should include numbers, such as increased revenue, decreased costs, improved cycle time, reduced inventory, and holding costs. As an independent consultant, it's important to have a website with case studies, white papers, or deliverables. However, if you don't have one, don't create one just for finding another job. Companies often think that someone is trying too hard by creating an entire website focused on finding another job. 

How to Find an Interim Executive Role

Chad discusses the importance of interim executive roles in private equity firms. He has had conversations with operating partners and managing directors about the use of these roles, and they all agree that they are crucial for their organizations. The most common areas where private equity firms use interim executives are CFOs, finance specialists, and transformation. To position oneself for these opportunities, one can either work for firms like High Point Associates or reach out to organizations and say, "This is my spike," which can lead to an opportunity presented to them.

Board Positions for Consultants

Chad also discusses board roles. He states that board roles are easier to fill due to the demand for these positions. However, he explains what boards are looking for and offers a few suggestions on how to position oneself. He suggests that individuals should research the industry and consider how their skills and capabilities in the relevant space are applicable. By doing so, they can better position themselves for these opportunities and contribute to the growth and success of their companies.

Timestamps:

10:42 The consulting market and talent acquisition trends

13:13 Market trends for strategic services in a down economy

19:31 The state of the consulting market and its impact on corporate strategy

23:05 Strategies for Chief Strategy Officers in a market downturn

28:23 Trends and strategies for Chief Strategy Officers in a down market

34:58 Private equity market trends and deal flow

36:24 AI impact, consulting job security, and private equity firm partnerships

42:45 Reaching out to private equity firms for business opportunities

46:05 Job market trends and career advice for consultants

52:01 Transitioning from independent consulting to full-time roles

55:01 Resume optimization, interim executive roles, and positioning for job opportunities

1:01:23 Board roles and compensation for private equity firms

Links:

https://charlesaris.com/strategy-compensation-studies/

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