While the consulting sector has almost bled to death over the past two years, a few individual consultancies have shown explosive growth. This period has had a significant impact on almost all business segments. It is now clear to see whether a particular firm has taken a good or bad turn due to the crisis; it may or may not have been able to respond effectively to the extraordinary events. There has already been much speculation about which companies will emerge victorious from the pandemic in 2022. Of course, some sectors were already positively affected by COVID-19, as they were closely linked to the healthcare sector or directly linked to the product-service sectors needed during the pandemic. However, the consultancy sector was clearly expected by all to develop significantly, as when would there be a need for real professional advice if not during such periods.
A two-faced world
However, the “predictions” of two years ago have not come true. In fact, it could be said that there has been a clear and drastic decline for most consulting firms, and the data are showing that more than 50% of this market has disappeared. The areas most affected are organisational development, business development, and strategic consulting, which is an essential element of the rebuilding process. So you would rightly expect it to be one of the fastest-growing sectors, but it is far from that. It was already apparent in 2020 that the client side had reacted unexpectedly to an otherwise very unique situation: they had stopped a significant part of their ongoing organisational development programmes. The explanation given was that there was a crisis, they could not physically meet, and it was now a time when the focus was on saving the company. The excuse alone is questionable, because how can anyone want to save a company without dealing with its people? Because that’s what good organisational development is all about. Of course, it was obviously important that everyone got their act together strategically, but it is people who will implement the strategy, so human resources are an essential element of the future. But indeed, globally, the phenomenon was noticeable that organisations and the people working in organisations were left on their own in 2020. With a great deal of cluelessness at the management level, many were licking their wounds, not focusing on the fact that employees were in similar states, or even in worse trouble. Obviously, it is up to the leader to decide, but it was a common phenomenon that people were clueless about their future for months. This is, of course, a typical organisational development challenge, where, with the right expertise, you can manage your employees perfectly. That is why experts have started to investigate why companies do not need this type of support. Right now, at this particular time of crisis. Then you read more and more that the situation is not universal and that there are consultancies that work around the clock and are not really able to take on new contracts. Already at the end of 2020, we could see that the traditional business development and organisational development market has become two-faced, and while on the one hand, most companies were crying, on the other hand, many had nothing to complain about. The situation is not surprising in principle, since in every crisis, the economic players experience similar situations, but in consulting, this was a new trend.
Trust and mistrust
Why has this situation arisen? It is true that, overall, the money spent on HR-related development and consulting has fallen significantly. However, it is also true that many consultancies that have grown because they received more business from their existing partners over the last two years. This clearly reflects the confidence that partners have in their consultants. However, it is precisely this lack of trust in the other direction that may have caused the programmes to stop. In this area, it is difficult to measure the results, because how can we show the results of a management development project in concrete figures? Of course, the lack of measurability of the results is a basic cause of mistrust. Therefore, it is not difficult to accept that when cost reduction is an important aspect of business, expenditures with unquantifiable results are immediately cut. That’s the way it should be. “In this area, decision-makers have generally been brought up to accept that you can’t directly measure this ROI. Of course, many on the consultancy side have taken advantage of this. Even with inadequate knowledge, they set out to ‘play consultant’. It was even better if, say, someone became a consultant or coach after a successful career, although this does not necessarily mean that they can give advice to anyone else. But the biggest problem is that often, an individual’s answer to their own career failure was to become a consultant. In our headhunting work, we have also seen people approach interviews with the attitude of ‘I am a coach, but now I am looking for a stable multinational management position’. Unfortunately, we are seeing this trend now, but now they are often calling themselves ‘mentors’ because mentoring has become a trendier solution”, assessed Kevin Vermillion, International Director of Mentors & Partners Group, a mentoring firm. Indeed, it is typical in the marketplace to see executives with some sort of career emerge and sell the belief that what they did as employees they can now do as business owners or external consultants. Although, for a good businessperson, the process itself is questionable: how does an employee-facing person suddenly become an owner-facing decision-maker? “In most cases, these semi-professionals are the most vocal; they spout glib sentences to the outside world and sell themselves very well. Unfortunately, this makes it difficult for the real professionals to progress, as they destroy confidence in the market to a large extent. On the other hand, it is obviously not a bad thing for serious business developers, as they can quickly and spectacularly differentiate their work from that of the charlatans”, added Mr Vermillion. The question is, of course, how to find out who is a real consultant and who is pretending to be one?