Source: My Consulting Offer’s Spring 2020 Bootcamp at the University of Chicago Booth School of Business. Presenter: Dan Debicella (Chief Strategy Officer, My Consulting Offer; former Engagement Manager, McKinsey)
When an economic slowdown hits the economy, two different things happen:
- Businesses have more trouble meeting profit expectations, and
- Businesses cut back on spending to conserve cash.
What’s the net effect on the consulting industry?
Does demand go up as companies seek help improving business performance?
Or does demand for consulting services go down as businesses cut costs, including the cost of hiring consultants?
And what does all this mean for college seniors, second-year business school students, and others interested in landing consulting jobs during a recession?
In this article, we’ll layout:
- What happens inside consulting firms during economic downturns,
- What that means for hiring by consulting firms during a recession,
- The 7 steps you should take to maximize your shot at getting a consulting firm job during a recession, and
- The 4 things you should do to limit your risk as you recruit with consulting firms during a downturn.
Let’s get started!
What Happens Inside Consulting Firms During Economic Downturns?
In this section, we’ll cover 2 things:
- How is a consulting firm’s work affected by a downturn?
- How are a consulting firm’s finances affected by a downturn?
How Is the Work Inside Management Consulting Firms Affected by a Recession?
At any given point, some consultants in every firm are working on existing client studies (billable work) and some are doing internal work (non-billable). Internal work can include researching new thought pieces/intellectual property or researching potential opportunities for client work.
During good economic years, most consultants are staffed on client work and there are short periods of time in between client studies.
When a recession first hits, client work doesn’t stop all at once. Ongoing client studies continue until the work is complete. In addition, recessions don’t hit all industries, geographies, and companies the same way and at the same time.
Some industries may need to cut costs aggressively during a downturn but others might invest in growth. For instance, while the travel and hospitality industries are suffering from COVID-19 closures, online retailers and entertainment providers are booming.
But over time, some clients will need to cut costs to improve their financial performance. This will mean that certain consulting work, such as growth expansion, will slow down or be canceled.
Other work will increase, for instance:
- Cost-cutting projects where companies expect the cost-savings from working with consulting firms to exceed consulting fees,
- Reorganization projects as companies look to focus on their main drivers of profits and use consulting firms to help re-organize the company, and
- Thought leadership to position the firm for a new phase of business.
For example, consultants not working on active client studies spend time researching and developing materials to support proposals for new client work, or doing research to develop new intellectual property for the consulting firm – ideas that could spur new types of client studies in the future.
Other consultants are currently researching and publishing thought pieces on what the post-COVID-19 economy and workplace will look like.
They’re also researching what effects COVID-19 will have on various industries.
The business challenges companies face as they transition to the post-COVID-19 economy mean that there will be continued demand for consulting services.
As the recession winds down, several things will happen:
- Businesses will want to reposition themselves to be competitive in the new economic landscape or grow market share.
- The number of new client engagements will pick up and the number of consultants on the beach (doing internal work as opposed to billable work) will decline.
- Consulting firms will need more consultants and those that slowed recruiting in response to the pandemic will push to hire.
How Are the Financials of a Consulting Firm Affected During a Recession?
Consulting firms are global private partnerships, which means they are owned by their partners. This ownership structure means that the economic pain of lower revenue is spread out across the partners. It also means that there is no need to worry about meeting quarterly financial expectations of Wall Street or bank analysts.
While management consulting firms still have to manage costs during a downturn, they have the flexibility to optimize their decisions over the long-term rather than the short-term.
What Effect do Economic Slowdowns Have on Consulting Firm Hiring Numbers?
The good news is that during economic slowdowns and recessions, consulting firms continue to hire.
During the 2008-2010 recession, a lot of banks reneged on their offers to college and business school graduates. Consulting firms such as McKinsey, Bain, BCG, and many others did not renege on offers in any office, though they delayed the start dates of some new hires.
Kevin Sneader, McKinsey’s Global Managing Partner, has said that McKinsey should have hired more aggressively during the 2008-2010 recession. Lower numbers of new consultants left the firm scrambling for talent when business rebounded in 2010 and 2011. The firm was particularly lacking staff with a couple of years of consulting experience.
During the COVID-19 downturn, we see mixed news. KPMG and Price Waterhouse Coopers have curtailed their summer internship programs but will extend entry-level full-time offers to all their summer interns. Hiring targets for BCG North America are rumored to be tight. Strategy& is unlikely to be not hiring MBAs this year because of high acceptance of their MBA internship class from this previous summer. In addition, several top consulting firms are pushing back start dates for incoming full-time hires.
On LinkedIn, you can see that the consulting firms are still hiring. McKinsey, Deloitte, and others have posted hundreds of new job openings recently.
People are consulting firms’ competitive advantage and firms realize they’ll need staff when the economy bounces back, which it eventually will.
But during the economic downturn, the competition gets tougher for the roles within consulting. This is because while consulting firms continue to hire, other traditional industries might not.
As a result more people see consulting as a viable option and invest their time, energy, and efforts into landing a secure job in management consulting. This leads to more people going after these jobs.
Natural Attrition and Management Consulting Firms’ “Up or Out” Policies Impact on Hiring
There are a variety of people you can network with in order to better prepare yourself to get a job in consulting:
- Friends who work at the consulting firms you’re targeting,
- Alumni from your college who work at consulting firms,
- Representatives from the firms hosting networking events and meetings at your school or online,
- People who currently work at the firms you’re targeting or who’ve previously worked for them.
For more on networking, see our article on consulting informational interviews.
It’s also important to remember that attrition and many firms’ “up or out” policies mean that there is a constant drain on the headcount of consulting firms.
“Up or out” policies mean that consultants can’t stagnate in a position at any level in the firm. They must continue to move up from Associate to Engagement Manager to Associate Partner to Partner to Senior Partner (titles vary by firm) or they will be asked to leave.
“Up or out” policies ensure there is a constant influx of fresh hires with new and different talents, skills, and ideas. It forces consultants within the firms to constantly learn and grow.
During a recession, the “out” in the “up or out” process is slightly higher.
Attrition happens as consultants are hired away by clients or decide to leverage their consulting experience to land a position outside the industry.
Attrition slows during a downturn but it never stops because the experience obtained from working in management consulting makes consultants attractive hires.
Continued attrition and firm “up or out” policies are another reason why management consulting firms can’t stop recruiting or they will be short on talent.
This is why consulting firms continued to hire during the last recession and plan to continue to hire now.
7 Steps You Should Take To Maximize Your Shot At Getting a Consulting Job During a Recession
Consulting firms will continue to hire, but it’s still competitive to land an offer. During a downturn, it’s more important than ever to make your consulting application and your interviewing skills top-notch.
How can you maximize your shot at getting a consulting offer?
- Write an effective consulting cover letter and resume. Show that you know what skills and experiences consulting firms look for and highlight them in your application materials. Check out our guide to writing consulting cover letters that land interviews for more details.
- Network, network, network. When recruiting numbers are tightened, it’s more important than ever to reach out for informational interviews so that you have a good understanding of what working in the management consulting industry is like and so that you have people in your camp. Network with school alumni, family and friends, and work associates. Also, reach out to recruiters in the offices you want to apply to for the inside scoop on their recruiting plans.
- Attend online events hosted by consulting firms. The management consulting firms host webinars targeted at diversity candidates, women in business, and candidates interested in learning about particular offices or practices. Check out their careers pages to learn about what’s coming up or subscribe to our newsletter and we’ll keep you updated.
- Nail the case interview. Our Ultimate Guide to Case Interview Prep will help. In particular, make sure you know the 4 parts of the case interview and can demonstrate your structured problem-solving capabilities.
- Develop stories for common behavioral interview questions. In this article, we list common consulting behavioral interview questions, provide tips on what to say, and what NOT to say in a behavioral interview, and we tell you how to develop effective stories.
- Check job boards for roles that consulting firms are actively looking to fill. You may have the skills and qualifications to land an expert role that will have less competition than the new generalist classes. We have a list of new consulting job postings.
- Learn about pre-interview screening tests. Many consulting firms now employ video interviews, online cases, and/or online psychometric tests in order to ensure they are interviewing the candidates most likely to have the skills they’re looking for. Find out more in the “Preparing for Pre-screening Interview” section of our consulting interview resources page.
How to Limit Risk As You Go Through the Consulting Recruiting Process During a Downturn.
- Network, network, network. Yes, we’re repeating this. It’s that important.
- Apply to a wide range of consulting firms. A recession is not the time to be picky. Your dream job might be with McKinsey, Bain, or BCG but experience at a boutique consulting firm will still give you the skills you’re looking for in a management consulting job.
- Consider all geographies. Flexibility to work in smaller offices or international offices where you might be wanted.
- Prepare early. Because the competition for consulting offers is higher during a downturn, make sure you invest enough time to ensure your success.
In this article, we’ve covered:
- What happens inside consulting firms during economic downturns?
- What that means for hiring by consulting firms during a recession.
- The 7 steps you should take to maximize your shot at getting a consulting job during a recession, and
- 4 things you can do to limit your risk as you go through the consulting recruiting process in a downturn.
Still have questions?
If you have more questions about what happens with consulting jobs during a recession, leave them in the comments below. One of My Consulting Offer’s recruiting coaches will answer them.
Other people applying to consulting firms during this troubling time found the following pages helpful:
Help with Case Study Interview Prep
Thanks for turning to My Consulting Offer for advice on landing a job at a top consulting firm. My Consulting Offer has helped almost 85% of the people we’ve worked with to get a job in management consulting.
We want you to be successful in your consulting interviews too. For example, here is how Melody was able to get an offer from Bain during covid-19.