March 26, 2018
A new industrial revolution is underway, with almost every organisation on the frontline. Executive leaders, notably HR Directors, are grappling with what this means for the structure and design of their companies and the composition of their people. Changing business models, new technologies to access people, skills and capabilities, are common threads, with widespread implications for workplaces. With more people working remotely, flexi-time and on contract, designing workspaces, for instance, has become more challenging. Economic challenges impact every business and reduce appetite for investment, notably in permanent full-time staff. But scratch below the shared surface and every situation is different.
Top-level human capital consulting work is increasingly being done by independent consultants, according to latest research from Source Global Research. Until now, little has been known about the extent or nature of employer demand for independent consultants. It had been seen anecdotally, but as a trend it was largely unquantified. Odgers Connect asked Source Global Research to help analyse employer demands, and have just published the report, based on interviews with senior executives at 250 major companies across Europe.
The report finds that almost half the companies studied – across the UK, Germany, Netherlands and Switzerland – prefer independent consultants over larger consulting firms because the quality of their work is as good or better and they tend to be more agile. Flexibility is a key driver; 58 percent said their business models were changing due to the need to become more flexible as an organisation to futureproof themselves from digital disruptors and changing workforce behaviours. The future of work has yet to be defined.
Companies have previously relied on external support to solve a range of business issues. However with the perfect storm of Brexit, digitalisation, regulatory pressures and changing consumer behaviours, many businesses are rapidly addressing how they hire the specialist talent they need to manage this change. According to the Source report, over one in five organisations for example said they are using independent professionals to exploit new digital technologies, which will only continue to rise as technologies advance.
In such times of uncertainty, where once businesses would hire permanent staff, or mandate mainstream consulting firms, to solve organisational challenges, they now seem to be veering towards the independent market. Businesses are demanding more agility and access to flexible resource on an on-demand basis. Independent, and highly skilled professionals, are seemingly able to offer a more tailored and cost effective approach, versus their permanent counterparts, according to business leaders.
Further rationale for this rise in demand from employers is the capability and often bandwidth constraints of existing workforces. Simply put, companies do not always have the internal skills, or time, to commit to deliver business-critical projects, and if they do, they often require additional external resource to backfill those transferred to deliver the projects. And so the people merry go round goes on!
Business leaders will naturally want to ensure the level of quality of people is maintained. As Brexit looms ever nearer, more specialist experience is sought, whether to manage regulatory change, deliver efficiency initiatives or manage complex organisational change programmes. According to Source, many employers rated independent professionals higher than those from mainstream consulting firms across a range of topics, including human capital and change management. Respondents cited the emphasis on delivery, the seniority of independents and the variety of client experience as key points of difference.
The professional services industry, worth an estimated £215bn in 2016 in the UK alone, is being challenged. Across all four European markets researched by Source, 68 percent of employers said greater flexibility was the primary requirement for their changing business models. They also see this as a major benefit of working with independent consultants, whilst large multi-disciplinary firms often lack the same agility to serve client demands. Their leveraged model structure means they rely on supplying large teams to solve client problems.
Aside from this, Source found that employers increasingly want high quality and specialist capability on an ad hoc basis, without taking on headcount or paying disproportionate fees to large consulting firms. As a result the report anticipates rapid growth in the independent segment of the professional services industry, provided employers can be assured on quality, to mitigate the risk of a failed hire.
With companies like Amazon, Uber and Airbnb transforming their respective markets with online platforms in this growing on-demand economy, it is surely only a matter of time before new solutions emerge at the professional end of the workforce. Improved and fast access to independent professionals from companies going through change feels like a no-brainer. The future of consulting, like many other sections of professional services, is therefore likely to be flexible – and independent.
Adam Gates is Principal, Odgers Connect, which sources independent consultants for organisations seeking support, and is a division of Odgers Berndtson, an executive search firm operating in over 50 offices across EMEA, North and South America and Asia Pacific. https://www.odgersconnect.com/