515. Chad Oakley, The Current State of the Consulting Job Market

Show Notes:

On May 12, 2023, Chad Oakley, CEO of Charles Aris, a top retained search firm in the US for placing former and current management consultants, spoke to members of Umbrex about the current state of the job market for consultants. Chad gave an introduction to Charles Aris and spoke about their strategy practice. He encouraged attendees to ask questions to make the conversation interactive. The conversation focused on the job market for consultants, including the current state of the market, the opportunities available, and the strategies consultants should use to navigate the market. Chad offered his perspective on the job market and provided insights for consultants looking for positions.

Charles Aris, Executive Search Firm

Charles Aris is a classic executive search firm that has been in business for 54 years and has 90 team members located across 15 states. They specialize in bespoke searches and their five main areas of focus are strategy, corporate development, finance and accounting, engineering, operations and supply chain, and sales and marketing. Their client base is split between private equity firms and non-private equity organizations. They also produce monthly newsletters about their searches and offer reports and compensation studies. Charles Aris has the largest strategy recruiting practice in the United States and their practice is headed by a former consultant from Deloitte Consulting and Wharton MBA. They specialize in placing current and former strategy consultants from firms such as Bain, BCG and McKinsey in various positions from pre-MBA level to partner level.

Increased Demand for Management Consultants

Since May 2022, the United States experienced  unprecedented economic growth during the past year and unprecedented numbers of employees leaving current positions which led to a shortage of staff in many firms. As a recruiting firm, Charles Aris was overwhelmed with search requests and had to implement a 40-day delay on all new searches for the first time in its 54-year history. A pullback started in December, and interest rates were raised to tame inflation, even if that meant driving the economy into a recession. We are now in the middle of a transition from a 100% candidate-driven market to a 75% company-driven market. Despite this, mixed messages are coming from the market causing confusion; major corporations such as Amazon are announcing sizable layoffs, while the monthly labor reports are robust and unemployment rates have fallen. Chad explains what is behind the conflicting reports between the numbers.  He goes on to explain how this has impacted the consulting sector, how numbers of hires have fallen dramatically compared to the previous year. He mentions how major consulting firms are rolling out their playbook, how they are managing people out, and promotions are slowing, taking on fewer hires, and he identifies a common lie amongst top-tier consulting firms when it comes to promotion, and what many firms are offering in terms of “transition payments” to accommodate moving people out of the firm.

Areas of Demand for Management Consultants

However, he also talks about what firms are looking for in terms of remote or on-location hires. He talks about the areas of consulting where there is an increase in demand for transformation skill sets. He explains that companies want to reduce their cost structure and are in need of transformation and cost containment experts. Companies have built up investments during the hay days and now need help unwinding them. Companies need assistance in cost containment as they look to their future and realize they likely won't hit their revenue targets. These transformation and cost containment services can help them reduce their cost structure, allowing them to be successful in the coming years. Private equity firms are facing a challenging time right now, as the cost of capital has increased and deal flow has slowed. To make up for this, private equity firms are investing in their existing portfolio companies to make sure they reach their full potential. There is a spike in demand for individuals who specialize in areas such as transformation and cost cutting, finance and accounting, talent professionals, and operations and supply chain. CFOs are the hardest positions for companies to fill due to a demand and supply imbalance. He recommends that independent consultants should specialize in a few areas to ensure they are able to take advantage of the current market demand with Finance as the highest area of demand.

The Demand for Specialists over Generalists

In the current economic downturn, companies are less likely to take risks on hiring generalists and more likely to hire specialists for projects. Companies want to make sure that their money is being spent in a way that will yield a strong return. Therefore, it is important for people to identify their true specialties and market themselves aggressively as a specialist in those areas. This can be difficult, as it is tempting to present oneself as a generalist in order to secure more work. However, companies in an economic downturn are more likely to look for specialists they can trust to get the job done. Chad offers key tips on how to market oneself in the current down market.

Chad shares that demand is steady across all industries, with insurance companies being particularly consistent in their hiring practices; general financial services, life sciences, and healthcare also show steady demand. Consumer-facing and retail jobs, however, have seen less demand. To illustrate the extent of the downturn, he states that in the first four months of this year, they have enacted 30% fewer searches and that one should prepare for the ongoing downturn by cranking up their marketing efforts and skills. 

Finally, he also discusses some of the challenges consultants may face, such as the importance of having a strong online presence and demonstrating value to potential clients.

The International and Future Market for Consulting Services

Charles Aris represents the U.S. but has 50 partners in other countries. He shares feedback from their annual meeting in Columbia this year that a recession in the U.S. affects the rest of the international community and that a recession is inevitable. To ride the wave, Chad recommends taking proactive steps to deal with an economic downturn. He shares how they have seen a reduction in compensation rises without a decrease in current compensation. He shares how major consulting firms such as McKinsey are managing to maintain their current fees with their clients. In terms of the Data Science market, this is a no-lose career choice moving forward, but in the ESG sustainable market, a lot of companies consider this a luxury and it’s not at the core of their business, Chad forecasts that companies will downplay the focus in this area.

He confirms that corporations will reach out to independent consulting firms especially when they are experts in the fields of Finance, AI, Data Science, and Big Data, in addition to healthcare companies and hospital systems that may need to hire a boutique firm. 

How Independent Consultants Get Noticed by Recruiting Firms

Chad explains that, despite how extremely talented and experienced his clients may be, they can’t always place top talent with a company. The candidate’s skills must be specific in alignment with the company’s demands. When reaching out to an executive search firm, focus on the information on the resume because the resume will be uploaded to the internal database which will be matched with queries. Also, Identify what you are looking for in the initial email, but Chad also recommends that applicants should continue to network. When asked about working for private equity firm’s portfolio companies, Chad explains that it’s advisable to approach the professionals in the private equity firm to gain a better understanding on what the firm wants to accomplish and who to contact. He offers advice on email subject headings, the type of quantifiable information that will get you noticed, and when to follow up. He also explains how consultants who have “been on the beach” for an extended “vacation” should approach firms.

Timestamps:

05:42: Current State of the Job Market

19:44: The demand for independent consultants vs. demand for consulting firms

24:02 Consulting Demand in Times of Uncertainty: Transformation and Cost Containment Skill Sets 

32:31 Quantifying Expertise to Secure Consulting Gigs and Hiring Former Consultants for Full-Time Jobs 

34:56 Impact of Recession on Recruiting and Consulting Services 

37:51 Exploring the Impact of the US Economy on Business Development and Marketing Strategies 

35:18 Bracing for a Tough Year: Insights from International Search Firms 

39:36 Recession Strategies and Fee Levels in the Consulting Industry

54:09 Leveraging Independent Consulting Experience for Full-Time Roles 

Links:

Website: https://charlesaris.com/

Unleashed is produced by Umbrex, which has a mission of connecting independent management consultants with one another, creating opportunities for members to meet, build relationships, and share lessons learned. Learn more at www.umbrex.com.