We are all aware of the tragic toll that the coronavirus is claiming on those with poor health, poor access to healthcare, an unsteady income, as well as on healthcare workers.
At CaseCoach, we focus on helping students and experienced professionals get top management consulting jobs, so our thoughts also go to debt-laden students with shattered professional aspirations and international students stranded from their families.
I joined McKinsey amid the Great Recession and started a headhunting firm in London during the European Debt Crisis. I have seen first-hand what happens to management consulting recruitment in times of economic distress.
In this post, I will shed some light on what to expect and give practical advice on what to do next.
This article was written by Enguerran Loos. Enguerran is the Founder of CaseCoach and a former Engagement Manager with McKinsey’s Boston office.
Consulting firms will reduce their recruitment targets
Management consulting firms are likely to lose between 20% and 50% of their business over the next few months. Entire industries are shutting down and other businesses are cancelling expensive investment projects. Even if some other companies will need help to cut costs or scale up their supply chain, the net impact on consulting firms will be strongly negative.
Not only will consulting firms have less work to do and need fewer consultants to do it, but also the voluntary attrition in their ranks will decrease. Fewer consultants will leave for another great job in these times.
Consulting firms will have reduced recruiting needs in the coming months. In theory, they could even stop hiring altogether and survive.
Hiring will not stop
While it is true that top consulting firms could stop hiring altogether, this would hurt them badly when the economy is back on track — and they know this. If they don’t hire entry-level consultants right now, they won’t have any managers in three years. Stopping hiring for a long period ranks very low on their list of options to weather the storm.
Top consulting firms have many more tools to decrease costs:
- They will cut bonuses. Bonuses account for around half of top consulting firm’s labour cost, which is by far their main expense. And, in these times, they won’t need to give away big bonuses to keep their staff from jumping ship.
- They will cut ancillary expenses. No more training abroad. No more swanky office retreat. No more snacks in the kitchen. Tighter expense policies. Everyone is working from home anyway!
- They will push low performers out. The up-or-out policy is in top firms’ DNA and they will be less lenient than usual.
Recruitment wise, beyond reducing their hiring targets, they will:
- Delay some start dates by a few months
- Reduce candidate attraction efforts
During the Great Recession, top consulting firms cut their recruitment targets by half compared to peak years. This March, we saw half the number of experienced candidates invited to interview than in February.
There are reasons to believe the cut will be less severe this time around. This crisis is seen by many as a temporary blip in an otherwise healthy economy. And even if hiring targets are cut in half, this still means more slots than in a good year a decade ago!
So, if you have an offer from a top consulting firm, rest assured, it is extremely unlikely to be rescinded. But, the situation may be different at Big-4s, tier-2, and boutique firms, which have much smaller bonus pools and ancillary expenses to cut from.
Few full time offers for 2020 start dates will be made
Those still interviewing for full-time roles starting in 2020 are the most likely to be affected.
Each summer, top consulting firms set recruitment targets for start dates in the following calendar year and start hiring immediately. I’m writing this in April and most of the hiring for 2020 is already completed.
Because of COVID-19, firms don’t need as many recruits to start this year as they anticipated. They are slashing their 2020 targets, leaving no open slots to fill. It is extremely unlikely that further full-time offers for 2020 start dates will be extended at this point.
All eyes are now on 2021 start dates, for which targets will be set over the summer.
Breaking into top consulting firms for 2021 start dates will be more competitive than usual
Not only recruitment targets are likely to be reduced for 2021 start dates, but many of the slots will be offered to the large number of 2020 summer interns, who were recruited before the outbreak. This means that there will be a limited number of full-time slots available to new candidates for 2021 start dates. Keith Bevans, Bain’s Global Head of Consultant Recruiting, has already confirmed this publicly.
In addition, top firms will receive more high-quality applications than before. Top candidates who would otherwise have considered industry, banking, or startup jobs that do not exist anymore, or are harder to get, will turn their eyes to management consulting.
The increased competition means that interviews will be harder to get and that fewer candidates will try to wing it. Most will try to be as prepared as they can be.
You should still apply and interview
A question many candidates have is whether firms will stop interviewing.
The truth is, firms are very unlikely to stop interviewing. They still want to see candidates who would not have applied otherwise, so it’s a great time for them to scoop up top talent. And their consultants are not particularly busy with work, so there is no opportunity cost for the firms.
But what’s the point of interviewing if a candidate is to be rejected?
First, targets will be down, but offers will be extended for 2021 starts. Second, all top firms use interviews to identify “high potential candidates” that they may not hire immediately, but that they could bring back later on. So as long as you are well prepared, by all means, apply and interview. If it does not pay off immediately, it may well do so in the future.
If you don’t get in, choose your next step wisely
Top consulting firms typically hire less than 1% of applicants, so getting in is more the exception than the rule.
The candidates truly affected are those who would otherwise get in, but could not because of COVID-19. If you believe you belong to this group and have your eyes set on a top consulting career, avoid taking a role that won’t be well regarded by firms should you reapply in a few years.
This leaves a few options.
- Study. Being at school doing an MBA or a Masters at a top school is a great way to raise your profile while letting the storm pass. Of course, this comes with risk — namely taking on debt in the hopes of landing a job that may never materialize.
- Work. Take a job that will position you well to re-apply as an experienced hire. This means joining a well-regarded employer in another industry or standing out with your performance or achievements at a less prestigious employer. Read our blog post about how to transition into consulting as an experienced professional to find out more.
- Explore. If travel restrictions are lifted, take a gap year, do something remarkable, and reapply as a graduate next year.
These are trying times. But there are still opportunities available to the brave!