UK staff loss at consulting firms is running at 15-20% and both employers and consulting employees expect this figure to deteriorate in 2007, according to Top-Consultant.com's 2007 Retention Report: A key challenge for the Management Consultancy sector, based on surveys of 140 consulting recruiters and more than 700 consultants from a wide range of firms - from the Big Four to niche consultancies.
Commenting on the findings, Top-Consultant.com Director Tony Restell said "These staff loss figures explain why recruitment has become the number one issue for consulting firms. Most major consulting brands are winning work at fee rates that are far less profitable than during the last consulting boom. This has meant they've been unable to reward staff across the board with major pay rises and sizeable bonuses. The knock-on effect of this is that many consultants are now seeing a move to a competitor as the most likely way they will enhance their earnings in the coming year. Hence the significant staff loss figures we have been witnessing. Most are not leaving the industry altogether - simply moving from one consulting employer to another. But the implication for consulting firms is that they need to hire 15-20% of their existing headcount over the next year, just to stand still."
The UK market as a whole is experiencing a median rate of staff loss of 15% to 20% per year. A minority of firms are experiencing worse rates than this, with over 10% experiencing staff loss of 1/3 or more per year.
However, locating an office outside of London brings a noticeable reward in the form of better staff retention rates. Partly this may reflect that there are fewer alternative consulting employers for consultants to switch to out in the regions, compared with a London market awash with opportunities.
In Europe, firms seem to be experiencing a lower attrition rate than the UK with most firms seeing turnover rates of below 15%, the median being 10% to 15%. Attrition rates in the range 20% to 30% seem to be in the minority, however, a significant number of firms saw more than 35% staff turnover.
In North America, most firms lost staff at the rate of 15% to 20%, however a significant portion of the market is seeing attrition rates in the 20% to 35% plus range.
Most importantly, about 80% of both consultants HR managers felt that rates of staff loss are likely to worsen in 2007/8.
Aggravating the problem is the fact that a clear majority of consultants expect to work for three or more consulting firms during their consulting career.
These are just some of the key findings to emerge from Top-Consultant.com's 2007 Retention Report: A key challenge for the Management Consultancy sector.
The full report is available here.