Brazil7 reasons why management consultants leave for a rival consulting firm
It is one of the most well-known statistics among partners and recruiters in the consulting industry: on average between 10% and 20% of consultants leave their employer per year. While professionals come and go – as in every sector – in consulting, the next move of a (former) consultant is followed with considerable scrutiny. While most consultants tend to move into an industry position, a move to a rival, especially among direct competitors, is usually frowned upon.
Jumping ship to join a competitor has, for years, been seen as a no-go in the corridors of consultancy. Why actually? From the start of their career in consultancy, newly minted and fresh eyed consultants are told that switching is 'not done', through carefully structured branding and inculcation, for example, by claiming that their own consulting firm is the market leader in the field, the biggest and most specialised firm, or that it is fast becoming the top dog. At the same time most consultants, especially those whom have grown within the ranks from junior to senior positions, are typically bonded with their firms, and are thus, quite loyal to their leaders and fellow consultants.
Among the group of experienced professionals who do decide to switch to a competitor, the situation becomes even more fraught, as experienced consultants are able to take potential clients, projects or intellectual property rights to their new employer. While this is often prohibited through contractual agreement, high profile switchers can cause a great deal of controversy, with some resulting in lawsuits. Examples include the lengthy litigation between AlixPartners and McKinsey & Company in the US; Roland Berger levelling a lawsuit against The Boston Consulting Group in its domestic market Germany; and a recent lawsuit in the Netherlands involving KPMG Advisory and Deloitte Consulting.
However, in practice, consultants switching between competitors happens frequently. A survey conducted by Consultancy.uk last year among 700 consultants, showed that of the 26% of consultants who said they were looking for new work, on average one third said that they wanted to continue working in the consulting industry. The remaining two thirds were leaving consultancy for an industry role, starting their own company or working as an independent consultant.
The question then arises: why do consultants choose to move from one consulting firm to another? To gain insight into their motivations, Consultancy.eu sat down with Frank van Loon, partner at Badenoch & Clark, to gain insight into the main motivators for intra-consultancy moves. With nearly 1,000 employees, and offices in 13 European countries, the headhunter is one of the larger providers of recruitment services in the professional services industry.
1. Inappropriate leverage model
“The ratio of senior, middle and junior consultants (leverage) differs vastly between consultancy firms. Although not realised by many, the degree of leverage has enormous consequences for the way consultants work on projects,” says Frank van Loon. “When working with relatively large numbers of juniors (high leverage), then the work tends to be skewed to big, standardised projects in which a large number of 'templates' are used. It is then much harder for juniors (often still too immature) to do all the work. It therefore provides an excellent setting for a passionate manager. But for an expert, who prefers diving into the most complex and substantive issues with a small group of senior colleagues, such a highly leveraged environment is disengaging. They may, therefore, do themselves a favour by moving to an office with a lower leverage.”
In particular the large consultancies, such as the Big Four (Deloitte, EY, KPMG and PwC), and firms with a ‘pyramid structured’ resourcing model operate with high leverage. “This is one of the main reasons why boutique consulting firms can be successful in attracting top talent.”
2. A glass ceiling
Promotion remains an important aspect in consultancy. If there are too few promotions, then it becomes too congested within a pyramid hierarchical structure. As a result, the careers of ambitious consultants risks standstill. Frank van Loon explains: “Suppose a consultant is one of eight managers in an office, there are four senior managers and there is space for up to one additional partner in two years, then it is very likely that the path to promotion to senior manager for the managers will be a long one. As a manager it could be logical to switch to another office, where there is more room at the top. Such a transition can shave years off the otherwise lengthy promotion cycle.”
3. Firm reputation
The reputation of a consulting firm plays an essential role for consultants, research and rankings find year after year. Internationally the three most prestigious firms in the market, according to Vault’s ranking, are McKinsey & Company, The Boston Consulting Group and Bain & Company; these companies combined are known as the ‘MBB’ and are the globe’s three largest consultancies specialised in strategy & operations.
As their career progresses upwards, a move from a boutique firm to a larger firm with a stronger brand, is seen by many consultants a logical step. “In our discussions with consultants across Europe, reputation is often returned as an important criterion. In some segments, reputation is the most important criterion,” says Frank van Loon. 
4. Expertise no longer core business
It can happen that the executives of a consulting firm – with the best intentions – plot a new strategic course, whereby investment in a service line and recruitment of new people, ends. One possible consequence is that the specialty of consultants at a firm, is no longer part of the firm’s core business proposition. “After a while the consultant will notice that clients are choosing the competitor, which has continued to invest in its service line and propositions. Both the consultant and the firm may then benefit from the transition of a consultant, or even an entire team.”
5. Career development
A recent survey by Consultancy.uk showed that 40% of consultants consider personal and professional development as the most important factor in their deliberation about switching firms, more so than the salary they earn, which is the second main driver. Data from Badenoch & Clark reconfirms this trend: “Consultants whom, at their current employer, notice that there is too little focus on personal and professional development, place such development high on their wish list for their next employer.”
6. Sales pressure
One of the most common reasons for switching is the sales pressure, Frank van Loon remarks. “At one firm consultants might spend 60% of their time engaged in sales, while at another consultancy this might only be 20%. That makes a big difference to how a week is filled out.” He adds that there are many examples of talented consultants that at large firms have “succumbed to the sales pressure”, and, after moving to a smaller firm, have thrived in a different work environment, providing them with a higher job satisfaction. “Obviously this is another consequence of the leverage issue,” Frank van Loon explains, adding “High leverage (many juniors per partner) usually means more sales pressure. There are simply more people, needing a constant stream of work to be found.”
7. Payroll / Financial Benefits
Within consulting, salary scales are usually attached to one of the five to eight levels of rank. Often when consultants switch firms, especially those who are placed in the middle ranks, they are able to take a higher rank at a competing consultancy. By switching, the consultant is able to take a step further up the ladder, and thereby earn more than they would have done had they remained with their own organisation.
Losing face
Transitioning from one consultancy firm to another however brings some challenges. What if the application process is not successful? Or what if a consultant meets the partner with whom they had an interview at a client pitch? In addition, the top echelon of the consulting industry remains a small world, and once it becomes known through the grapevine that someone has applied to be a consultant elsewhere, questions about loyalty might be posed. “When you apply at a rival, you’re basically sticking out your neck,” says Frank van Loon. That is why consultants eyeing a move commonly partner with headhunters. “Recruiters can prevent a loss of face by overseeing the process.”
