A Scalable Talent Strategy Today Keeps the Behemoth Away

April 10, 2015

 

Scalable talent strategies to keep boutique firms competitive and independent in an acquisitive period

 

Boutique consulting firm acquisitions have been accelerating recently, partially to take advantage of the existing talent acquisition infrastructure of the acquiring firm. Firms that want to remain fiercely independent – and financially competitive – need a scalable talent strategy that leverages talent needs across a fragmented boutique consulting market.

 

A few years ago, we saw acquisitions of mid-sized firms that positioned at boutiques, such as PwC’s acquisition of Diamond. In the last year, we have seen increasingly frequent acquisitions of increasingly small boutiques. In the last year, Parthenon has gone to EY, OC&C to Oliver Wyman, and Studer to Huron. Talent Response has seen 3 of its clients of fewer than 50 consultants – as recently as this week – get acquired by larger consulting organizations.

This acquisitive trend isn’t necessarily a bad thing. Certainly the founders and equity holders of the boutiques have worked incredibly hard and have earned the payout that accompanies the acquisition. The formerly boutique firms also have the opportunity to leverage a broader set of capabilities to supercharge growth. For better or worse, many of the acquiring firms will come with capabilities and there are additional upsell opportunities, for example, to turn a boutique firm's strategy project into an IT implementation project with the parent firm.

 

While this may be a good approach for some, many of our boutique consulting clients remain fiercely independent – after all, there is a good reason that Partners at boutique consulting firms left Big 3 and Big 4 environments. They don’t want to be conflicted out of work with clients after being absorbed by a big firm with big tentacles. They don’t want to lose the quirky, flexible culture that allows employees to thrive despite long consulting hours. And many don’t want to be shilling for IT implementation work.

 

One financial justification by the acquiring firm for making the acquisition is increased efficiency of talent acquisition. It is simply more expensive for boutique firms to attract great talent because they lack scale. Further, there is relatively little marginal effort required to incorporate the new firm into the parent firm's talent acquisition infrastructure. A big firm is already on the MBA recruiting circuit; it has a huge bench of W2s to rely upon when project demand surges; and it has the training infrastructure to turn freshly minted MBAs into successful engagement managers. 

 

Sounds pretty bleak for boutique firms insisting on remaining independent!

At Talent Response, we believe that when efforts are combined across a fragmented boutique consulting market, boutique consulting firms can be highly competitive in the market for talent without getting absorbed by a big firm. Boutiques have fundamental advantages that should make it easier to attract great talent – they offer increased autonomy and responsibility, higher degree of industry/functional focus, and potential lifestyle and culture benefits.

Talent Response works to provide that scale across boutique consulting firms that allow them to keep the behemoth at bay - at least for firms looking to stay independent. Our MBA recruiting initiative represents boutique consulting firms collectively at the top MBA programs around the country. Our project-based staffing efforts allow firms to staff up quickly when project demand surges and there isn’t a bench of W2s in wait. And our Engagement Manager model allows boutiques to identify EM-level candidates that have already been trained, tested, and proven by other consulting firms.

 

By working across needs common to all boutique consulting firms, we believe we can create a boutique consulting infrastructure that lowers talent acquisition cost, reduces the recruiting effort required by otherwise billable consultants, and lowers risk of making bad hires.

 

We’d love your feedback about your strategies to remain independent and financially competitive. As always, reach out to us to discuss strategies to keep the behemoth away.

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