The use of freelance associates by management consultancy firms

Mindbench first researched the associate consulting market for the International Management Consultancy Association (IMC) Annual Summer Conference in 2005.

We were invited to update the findings and present the results to a workshop of MCA members in September 2006.

The following is an overview of the findings – for full details of the study, please contact Richard Stewart at Mindbench.

The UK Market for Associate Consultants* Background and methodology

• We interviewed senior resourcing managers in 25 consultancies
• Respondent firms employed between 2 and 500+ full-time consultants in the UK
• 15 of the respondent organisations work in a broad range of industries and sectors, 10 specialise in particular segments, e.g. IT, telecom’s, consumer products, etc
• We also interviewed over 25 associate consultants concerning their experiences working in a freelance capacity

 

Size of Consultancies interviewed

 

 

 

* The term ‘Associate consultant’ is used throughout the study and refers to all non-permanent consulting staff - temporary, freelance and contractors.

 

The UK Consulting Market

 

Industry estimates estimate that the UK consulting market has grown at a compound annual growth rate of over 20% between 1995 and 2005.
However the market is showing signs of maturing – year-on-year growth rates between 1995-2000 averaged over 24%, whereas 2000-05 this rate had dropped to less than 17.5%.

For more detailed figures on this and other UK market estimates see the MCA Consulting Industry Data report 2006 [www.mca.org.uk].

The significant upsurge in consultancy fee-income between 2004-05 – over 26% - has been driven by a recovery in traditional consulting fees, as opposed to IT or outsourcing services [www.mca.org.uk].

However many consultancies made significant reductions in permanent headcount following the downturn between 2000-03 [Mindbench Study 2006].
Utilization rates amongst permanent staff have averaged around 75% between Q1 2005 and Q2 2006 and in addition to this staff-turnover in the consultancy sector has increased – making it second only to the retail sector for employee-churn.

Some of this increase in staff turnover is almost certainly driven by the aggressive re-hiring of experienced consultants.

 

Staffing Model

 

 

 The result of this concatenation of events has left consultancies looking for a flexible resourcing solution that will allow them to meet client demands, whilst not increasing overhead costs - and many have turned to associate consultants to provide the answer.
In order to meet this demand Mindbench estimates that a UK population of around 10,000 associate consultants has arisen.

Who is using associates?

 

The relative importance of associates quite naturally varies with the size of the consultancy in question – on average the smaller the permanent headcount, the greater the reliance on external staff to meet surges in client demand.

 

Permanent and associate staffing by size of firm

 

 

The Mindbench Study suggests that whilst associates may be more expensive in terms of like-for-like salaries, the cost of employing permanent staff means that associates are actually cheaper to employ over the course of a year, on a FTE basis.

 

Why use associates?

 

The main reasons given for using associate consultants were “to meet surges in client demand”, mentioned by 72% of respondents, and “to access a specialist skill or skillset”, mentioned by 65% of respondents.

Many respondents admitted that during downsizing they had had to reduce the breadth of specialist skills they were able to cover in-house and thus rely on outsourcing those particular abilities.

“Experience in a particular industry or sector” (40%) and language-skills (36%) were the other most common reasons given.

 

What are the main challenges in using associate staff?

 

The single biggest challenge in using associate staff was ensuring that their work met the quality-standards of the consultancy.  Respondents acknowledged that this concern was somewhat mollified by hiring associates who came with personal recommendations, either from other consultants or recruitment firms.
The next biggest obstacle was seen as getting associates to work to the consultancy’s methodology – having them perform “to our working practices and within our culture”.

The only other significant concern was the availability of particular individuals.

 

What do associates want from an employer?

 

In addition to interviewing consultancies we also spoke to over 30 consultants about what they saw as the worst things about working as an associate:

• I don’t feel part of the ‘team’
• I don’t feel supported
• I feel unappreciated

...and what consultancies could do to get the most out of them.  The answers they gave were surprisingly fundamental:

 

1) Get me on board as early as possible

 

• Consultancies should regard associates as part of their resource-management team, not as an external body to be managed
• Keep the ‘chain-of-command’ as short as possible
• Bringing associates in half-way through the project  makes them feel less important and means they will rarely be at their best

 

2) Get me up to speed as quickly as possible

 

• It’s in my best interests to be as informed as possible
• If I have spare time I’d rather spend it getting read
• No need to share confidential information:
   - Trade journals, industry website
• Basic understanding - jargon, key players, associations
    - Get confidentiality agreements signed early on
    -  Include me in all team-meetings

 

3) Get me working as quickly as possible

 

• Desk space
• IT & telephone
• Email, business cards, template
• Guide to office facilities:  photocopier, bathrooms, lunch etc
    ...and resources - subscriptions, search tools, directories, CD-ROMs etc

 

4) Share information, especially about client expectations

 

• Enables consultants to focus on meeting / exceeding client expectations
• Explain how I will be assessed and when
• Give regular feedback to first-time associates
• When employing an associate for the first time, try to give associates a discrete piece of work, with definable targets.

 

5) Payment and admin

 

Pay me as quickly as possible!  The goodwill earned by swift processing of invoices should not be underestimated!

• If a ‘purchase-order’ or other code is required make sure it is easily available
• Make sure your accounts department have all the necessary details to make payment

 

Much of this feedback may seem obvious to any firm - whether using associate consultants or not – and yet 100% of consultants interviewed admitted they had encountered one or more of the above problems within the last 12 months!

 

There are some easy fixes for consultancies to significantly improve the performance they receive from associate staff.