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By Veronika von Strachwitz-Camara - Business Development Senior Manager

Within the broader world of management consulting, so-called economic consulting firms provide services related to economic analysis, forecasting, and litigation support, aiding clients in achieving strategic goals and mitigating risks in evolving business environments.

Economic consulting firms tend to experience increased demand for their expertise during times of disruption and market uncertainty, such as occurred on a global scale and across industries during the COVID-19 pandemic.

Economic consultants have found themselves at the forefront of pandemic response within business, assisting clients in analysing market trends, making informed decisions, and devising strategies to weather the storm. In turn, the increased demand for expert economic insights during uncertain times has contributed to the upward trajectory of economic consulting salaries.

Economic Consulting across Sectors

Economic consultants serve a wide range of industries, and the impact of the pandemic and subsequent global unease has varied by sector. Some industries, such as healthcare and technology, saw increased demand for consulting services, which in many cases have led to salary increases.

Another sector with growing demand for economic consulting, energy and sustainability, has seen increasing growth due to the impact of climate change; as economic consulting services are called on to, for example, predict consequences of investments in certain markets and geographies.

Governments seek economic consulting services to inform policy formulation, assess economic impacts of proposed changes, and ensure data-driven decision-making. The scale and urgency of recent macro-level challenges have propelled government engagement with economic consultants to new heights. National economies faced unprecedented disruptions in the pandemic, as well as with recent geopolitical shifts such as the Ukraine war, prompting governments to seek strategies that could mitigate adverse effects and accelerate recovery or restructuring of business.

At the same time, the surge in demand hasn't been uniform across all sectors. Industries like travel, hospitality, and retail have been severely affected by events ranging from the pandemic to breakdowns in regional security, leading to decreased demand for economic consulting services in these areas.

Growth Trajectory: Economic Consulting Salaries

The overall surge in government and industry demand for economic consulting services has had a direct impact on salaries in the field. Economic consultants with expertise in areas such as macroeconomic modelling, fiscal policy analysis, and public finance have seen their skills become even more valued. Governments are competing with private sector firms to secure top talent, driving up the salaries of consultants with a proven track record in addressing complex economic challenges.

HR-sourced economic consulting salary data collected by Vencon Research as well as numerous discussions with clients in the field confirm the trend, showing in part drastic increases in economic consulting salaries.

This increased demand is not confined to developed economies; emerging markets are also recognizing the importance of economic consulting in shaping their economic recovery trajectories. As governments strive to strike the delicate balance between safeguarding public health and revitalizing economies, they turn to economic consultants for insights that can steer their policy decisions in the right direction.

It's important to note that economic consulting is a highly specialized field, and compensation can be influenced by a wide range of factors. To get a more accurate and up-to-date picture of salary trends in economic consulting, it's advisable to consult industry reports, salary surveys, and reach out to professionals in the field or specific firms for the most current information. Additionally, economic conditions and salary trends can change over time, so it's essential to consider the context of the specific time period you are interested in.

First-sourced Salary Data from Vencon Research Benchmarking Surveys

To get an accurate and up-to-date picture of salary trends in economic consulting, you can consult Vencon Research’s specialised Economic Consulting (ECO) salary surveys for the most current information.

Please feel free to reach out to one of our experts.

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By Veronika von Strachwitz-Camara - Business Development Senior Manager

Many larger consulting firms have not only started integrating sustainability and environmental topics into their services but have also established separate entities focusing solely on these issues.

Growth Trajectory

As the world grapples with escalating environmental challenges, companies and organizations have increasingly recognized the imperative to integrate sustainable practices into their operations.

Consulting firms with backgrounds in mining, energy, or engineering provide expertise to help companies navigate the intricate landscape of environmental regulations and develop sustainable strategies.

These were the pioneers. However, nearly all management consultancies have since incorporated environmental and sustainability into their services, recognizing their growing importance in both business and daily life. Such is the popular recognition of environment and sustainability that the enhancement to brand reputation gained from openly addressing it is significant.

Evolution and Current Trends

While the goals of environmental and sustainability consulting have remained largely similar over the years, there are observable shifts in focus from year to year based on changing requirements and technological possibilities.

Public opinion and corporate attitudes towards environmental issues have undergone significant changes over the past decade. Climate change, resource depletion, pollution, and social responsibility have become key concerns globally. Consumers demand environmentally friendly products and services, while investors and sustainable shareholders prioritize them. In response, companies are recognizing the need to incorporate environmental sustainability into their long-term strategies.

Environmental and sustainability consultancies offer expert advice on various issues, including energy efficiency, waste management, emissions reduction, and sustainable supply chain management. They assist in identifying and managing potential environmental risks, helping companies adopt sustainable practices that meet regulatory requirements and international standards.

Factors Driving Continued Growth

Several factors continue to contribute to the steady growth of the environmental and sustainability consulting industry:

1. Evolving regulatory landscape: Governments worldwide are introducing stricter environmental regulations, compelling companies to adapt to new compliance requirements. Environmental consulting firms help companies navigate these regulations and develop effective strategies.
2. Corporate Social Responsibility (CSR): Companies are under increasing pressure to demonstrate commitment to the environment and social responsibility. Environmental consultants help integrate sustainability into CSR initiatives, showcasing environmental responsibility to stakeholders.
3. Cost savings and efficiency: Sustainable practices often lead to cost savings and improved operational efficiency. Environmental consultants identify opportunities for resource optimization, waste reduction, and energy efficiency.
4. Improving reputation and brand: Implementing sustainability can enhance a company's reputation and brand value. Environmental consultants help organizations implement sustainable initiatives, improving brand perception and customer loyalty.
5. Investor demand: Institutional investors and asset managers increasingly incorporate environmental, social, and governance (ESG) criteria into investment decisions. Environmental consultants help companies identify ESG-related risks and opportunities, meeting investor expectations and accessing capital.

Current Trends in Environmental Consulting

Major current trends in environmental and sustainability consulting include:

1. Data-Driven Approach: Accurate and reliable ESG data is essential for providing optimal advice and decision-making. Technological developments allow precise data collection and analysis for ESG decisions.
2. Global ESG Frameworks: ESG consultants are promoting international transparency, addressing issues beyond climate change, such as socioeconomic inequality and human rights breaches, reflecting a push for more accountability and transparency.
3. Impact Investment: Investments are increasingly made with the aim of creating positive social and environmental effects.
4. Decarbonization and "Net-Zero" Aims: Holistic approaches involve switching to renewable energy, decarbonizing supply chains, implementing pricing mechanisms, and promoting circular economy principles.
5. Advancing Sustainability Through 5G: The 5G technology impacts sustainability in various fields, including reducing commuting, promoting 'smart' cities, minimizing resource usage, and precision farming.

Expansion and Opportunity

Environmental and sustainability consulting clearly plays a pivotal role in addressing the escalating global challenges we face today. ESG regulations are expanding as are the opportunities in using data to help find the best decisions for companies to tackle environmental, social, and governance challenges. Consultants need to be on top of national and international ESG regulations as well as know how to leverage the “big-data” being generated in this field and optimally advise on operational and investment decisions that companies need to take.

Amidst these trends, it becomes imperative for consulting firms to stay abreast of compensation levels and comparisons within the environmental consulting services sector. This insight is essential for providing optimal advice and decision-making in an ever-evolving landscape.

If you are keen to delve deeper into pay scales and gain valuable insights into environmental and sustainability consulting services, we invite you to connect with Vencon Research International. Our team will provide you with valuable information to navigate the complexities of compensation in this vital industry.

By Philip Thomas – Advisory

Employee Stock Ownership Plans (ESOPs) in the USA offer benefits for both employers and employees. They have the potential to reshape the traditional employment relationship and contribute to a more inclusive and participatory culture.

For some US consulting firms, ESOPs may be the best and most viable means of allowing employees to become shareholders in the company.

Here we offer an overview of the potential benefits of ESOPs for both the employer and employee.

Advantages for the employer

The following are some of the key potential positives from an employer perspective:

• Increased employee retention and motivation - Employees with a stake in the firm are likely to be more committed and engaged.
• Increased productivity - Employees may well feel a stronger sense of responsibility and ownership in their work.
• Recruitment advantages - Potential employees may be attracted to the prospect of becoming owners and sharing in the company's success. In addition, ESOPs provide employees with an opportunity to accumulate wealth over time, especially as the value of the company increases, which can be an important part of an employee's overall compensation package.
• Tax advantages - In the United States, there are tax benefits for the employer as contributions to the ESOP trust are tax-deductible.
• Improved long-term company performance - ESOPs help to promote the goal of long-term success but not at the cost of short to mid-term success.
• Reinforcement of positive corporate culture and values - Employees are more likely to embrace a culture of teamwork and collaboration when they have a stake in the firm's performance.

Advantages for the employee

The following are some of the key potential positives from an employee perspective:

• Gaining an ownership stake - When employees become partial owners of their firm, it can create a sense of pride and loyalty, increase job satisfaction and strengthen connections to the organisation.
• Increased financial rewards - As the firm performs well, the value of the ESOP shares may increase, providing employees with financial rewards and the potential for wealth accumulation.
• An additional stream of retirement savings - ESOPs can serve as an additional and significant retirement savings vehicle. They allow employees to accumulate further wealth over their tenure with the company and help to offer a diversified set of incentives.
• Job Security - Employees may feel more secure in their jobs as the firm’s ultimate success will be more likely given the additional financial incentives for all individuals.
• More desirable culture - Employee-owned companies often foster a unique company culture based on shared ownership values, teamwork, and collaboration. Employees may find this culture more fulfilling and supportive.
• More transparency from the firm - ESOPs often promote transparency in financial matters and firm performance, as employees have a vested interest in understanding the factors affecting the value of their ESOP shares.

ESOPs for mutual growth and success

Through the alignment of individual and organisational interests, ESOPs pave the way for a future where shared ownership values fuel mutual growth and success.

While not all US consulting firms will be in the position to offer an ESOP, those that can’t would be well advised to consider covering many of the potential positives that ESOPs offer via mutually beneficial and well-balanced remuneration structures.

We are at your disposal for further questions and suggestions regarding how to optimally design your company’s compensation package and implement ESOPs or other compensation elements.

Contact us here.

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Vencon Research International is a leading provider of compensation benchmarking and research as well as of compensation and performance-related consulting services for professional service firms, especially for audit and tax, management consulting, and IT services firms. Vencon Research International provides services to a full range of clients in more than 75 countries worldwide and is proud to name more than 85% of the world’s major consulting and/or professional services firm its clients.

By Yao Tang - Business Development

The goal of effective benchmarking is to ensure that an organisation's compensation structures align with the skill levels and expertise of their employees as well as promote internal fairness and competitiveness in the external job market.

In our last article we looked at the significance of acknowledging in-demand talent, or employees and candidates who possess so-called “hot skills”. In this article we’ll be taking a closer look at the role of skills at a broader level, to find out their relevance in the benchmarking process.

The role of skills in determining compensation

A basic framework for approaching skills in compensation benchmarking should consider the following steps:

1. Identify key skills: determine the essential skills and competencies needed for each job role.
2. Define skill levels: establish a clear framework for categorizing skill levels, such as beginner, intermediate, and expert.
3. Job role mapping: match specific skills to corresponding job roles to create a comprehensive skill-job matrix.
4. Gather compensation data: collect data on existing compensation packages for employees in each role.
5. Skill-based compensation analysis: analyse how compensation aligns with skill levels to identify disparities and opportunities.
6. Internal assessment: evaluate if the current compensation structure adequately rewards employees for their skill levels.
7. Adjusting compensation: make necessary adjustments to compensation packages to ensure they reflect skill-based benchmarks.
8. Competitor analysis: compare your organization's skill-based compensation with competitors to stay competitive in the talent market.
9. Regular review: continuously monitor and update compensation packages to adapt to changing skill demands and market trends.
10. Communication: effectively communicate compensation changes to employees to promote transparency and understanding.

While many of the above steps are the bread and butter of any efficient HR department, there are key steps that will also require external input. Finding a reliable and effective benchmarking provider is essential when it comes to establishing the market value of specific roles, related skills, and the rates paid by competitors in the market.

Skill-based benchmarking

What emerges from our experience in regards to how special competencies are translated into compensation models, is that specific skills or qualifications are a) not always reflected in a higher salary b) only rarely separately remunerated on a skill-by-skill basis.

Exceptions may be found when it comes to specific “hot skills”, often in the IT-realm, which may reflect in a higher salary or extra salary payment (though often only when this IT skill is actively deployed).  Even in these cases, there is not a direct connection between remuneration and specific skills, as:

a)       Unique & in-demand (i.e. scarce) skills at time of hire/promotion can over time become more ubiquitous in the market amongst more incumbents (and therefore would not require unique compensation).

b)      Additional compensation afforded a consultant for a unique/in-demand skill is difficult to retract once said skill becomes more ubiquitous.

c)       The exact number of skills acquired by an incumbent does not automatically align with the execution of some/all of those skills while the consultant is part of a consulting project, i.e. resulting in overpaying for unused skills.

What we can confirm from observation, is that specific skills are often a deciding factor in staffing the consulting position itself (as opposed to added remuneration). Skills are important in as much as they are linked to a particular role, but additional skills can also imbue an advantage to achieve greater success in the hiring process, and thus incur a more likely/faster career progression to the next career level(s).

Here at Vencon Research we approach our remuneration benchmarking analysis on a “type of consulting/advisory work” (i.e. line of business) basis, with the inherent understanding that incumbents are expected to have a wide variety of skills in order to be hired and perform their duties effectively. We follow a meticulous process of aligning a firm with the most suitable competitors, precisely matching job roles (while taking into account required skills), conducting business-oriented mapping, and incorporating appropriate compensation elements. This meticulous approach ensures that each of our clients receives the utmost granularity and individuality, optimizing their compensation strategy.

In this sense skills are essential determinants in defining job roles for accurate matching against competitors in the benchmarking process. However, with the exception of some "hot skills" they are not usually assessed as a value component of compensation themselves.

For more information on this topic or on how you may successfully respond to the issues raised in this article, please contact Vencon Research – as always, we are happy to assist you.

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Vencon Research’s 2022 Pulse Survey provides an insight into the effects of currency devaluation and inflationary pressures in Turkey. The survey results highlight the challenges faced by firms in Turkey in retaining their employees, and the measures they are taking to address the financial hardship faced by their employees.

1.  CHALLENGES IN RETAINING EMPLOYEES

The study revealed that firms in Turkey are facing challenges in retaining employees, with a significant increase in voluntary attrition. As a result, 67% of firms surveyed have increased their hiring efforts. Despite this, half of the firms reported that their employees are experiencing financial hardship.

2.  RESPONSES FROM CONSULTING FIRMS

To address the issue, all firms reported adjusting their compensation structure in the last 12 months, with 67% of them attributing this to both inflation and currency devaluation.

The adjustments were made for all types of employment contracts, with two-thirds of firms adjusting based on job role, function, and/or career level.

Measures taken to combat inflation and currency devaluation included increasing base salary, offering one-off or multiple payments, and increasing bonus/variable pay. Interestingly, only 17% of firms used "pegging" of compensation to a foreign currency.

3.  DRIVERS OF COMPENSATION DECISIONS

The most critical factors driving compensation were the cost of labour and inflation, with other contributing factors including cost of living expenses, fluctuations in exchange rates, and attrition rates.

About 50%of the firms were unable to make predictions about the anticipated situation in the next 12 months in Turkey. However, most firms are planning to make changes to their compensation model in the coming year.

Half of the firms plan to raise the base salary by over 20%, one-fourth plans to boost the bonus by 20%, and another quarter plans to raise the bonus by 11% to 20%.

4.  INDUSTRY REMAINS PROACTIVE

In conclusion, the survey shows that businesses in Turkey are taking proactive measures to retain employees and address their financial hardship in light of inflation and currency devaluation. It also highlights the need for firms to review their compensation structure more frequently than the typical once-per-year review, and plan changes to address the challenges of inflation and currency devaluation.

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Should you have any further questions or would like to receive more detailed information on this topic, please reach out to us at info@venconresearch.com

Key HR indicators for the consulting industry

This collection of market statistics briefs highlights key consulting market statistics across five countries in the Eastern Europe region: Hungary, Slovakia, Poland, Czech Republic, and Romania. It offers insights into various key factors, such as the highest paying lines of businesses, market growth, starting salaries, career progression, and market pay level.

Notable highlights across Eastern Europe

• The year-on-year market headcount increase across these five countries ranged from 1% to 4%, with “Strategy-Oriented Management Consulting” and “IT Risk & Cyber Security Consulting” lines of businesses witnessing the largest growth.
• The average time required to progress from analyst level to partner level ranged from 25 to 30 years, with Poland and Hungary having the fastest track.
• “Strategy-Oriented Management Consulting” was one of the highest-paid lines of business and "Big Data and Analytics" also ranked among the top three highest paid in three of five countries.

The sheets also present median salaries for all Vencon Research career levels as percentages of basic salaries paid in the United States. Out of the five countries presented here, consultants in Czech Republic were paid the highest, ranging from 30% to 61%, while those in Hungary were paid the least, ranging from 23% to 42%.

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