Downward hiring trends in professional services have dominated headlines so far this year. But there’s one we’re not yet paying great attention to: this year, it’s out with attrition, in with retention.
Just a year ago, we were looking at a Great Resignation and a candidate’s market, but the environment has changed very quickly. Layoffs are far more commonplace than we’d like, there’s significantly less movement of talent, and I’m seeing a consistent emphasis on core, legacy teams. Why is this?
Current economic conditions contribute to this relative standstill in unique ways which will keep evolving in the next few years, so this is a great time to take a closer look at how it all works together.
In your professional career, you are always assessing risk, even when you can’t tell you’re doing it; in inflationary, uncertain conditions, you wouldn’t favour high-risk/high-reward options, because you know the cards are stacked against that high reward, and your current option feels much safer. Most candidates are thinking this way.
As employers value essential assets and legacy staff with experience in their current teams, joining as a new hire leaves you much more vulnerable to potential layoffs. Firms who are still hiring are also lowering their offers—salaries won’t be as high as they used to be, or won’t have been adjusted for inflation, they are offering fewer benefits, and far less stability. The result is a lot less willingness to change roles, and a lot fewer opportunities.
Stability in consulting
This ties into my first point about economic instability—with it also comes a heightened sense of security in your current position. With the Technology and Financial Services sectors seeing a haemorrhage of staff over the past year, the attractiveness of jumping ship from consulting to industry has decreased significantly. Even though firms like EY, McKinsey, and Accenture have had recent lay-offs, this is nothing in comparison to what we are seeing in Industry.
Further to this, whilst some firms and industries are operating at a loss or standing still, some areas of professional services are taking on more and more work; Restructuring, Turnaround, Supply Chain & Operations, some M&A activity, and Law among them.
Here, people start to belong to their teams like they perhaps didn’t a couple of years ago. They are contributing to the growth of their practice, or maintaining its stance in some regions, and reaping the rewards along with leadership.
These teams aren’t actively hiring to manage costs, and so the teams that exist become key to the company’s success. Employers who reward such talent and their dedication to the brand will stand to benefit in the long run, even after the crisis has passed.
With any project-based work, the years since COVID-19 have been a long process of integrating flexibility into daily life. It’s not necessary to be present in the office every day, or spend weeks on site with multiple clients in a month, or even travel at all in some sectors.
This was bound to lead to better retention. Consultants who would have left the industry at management level, after some six years of experience, will no longer be driven out by terrible work-life balance or draining work hours in the office or on site.
Firms that lean into their employees’ needs and continue to offer this flexibility, even as other industries push for a full-time return to the office, will see the most benefit.
The attrition/retention trends in professional services are complex, with causes factoring in from every corner of the market: economic instability, slower hiring, lower salaries, inflation, and others. For employers, it’s important to be aware of their employee experience during this time, so they can understand how to keep their retention high.
It’s all about management of assets: those firms who know how will weather the storm, even if they are operating in an affected industry, and their people and clients will be all the better for it.