Latest InSights

By Philip Thomas - Advisory

Benchmarking for partners in the consulting industry is crucial as it ensures that their compensation aligns with their unique leadership roles, individual contributions, and the overall strategic success of the firm, acknowledging the distinct and multifaceted nature of partner responsibilities; however, the inherent complexity often makes partner surveys less common compared to their more standardized consultant counterparts.

Unique requirements for benchmarking partners

Robust and meaningful partner compensation benchmarking surveys require significant amounts of work and inevitably entail a large number of complex variables, encompassing various forms of current and deferred income, while taking account of individual performance metrics, market dynamics, tenure, and specific contributions to the partnership.

Broadly speaking, accuracy in view of all these considerations rests on three key pillars:

• Job Matching
• Total Income
• Firm Selection

While each of these can be considered a separate discipline or area of expertise, similarities lie in a shared requirement for solid logical foundations, deep knowledge of and experience with the market, and defined and appropriate methodologies.

Should any one of the three pillars fail, the resultant compensation report would not be robust or meaningful.

Let’s take a look at the three key pillars in more detail:

Job Matching

Generally speaking, the more value that a partner adds to their firm the more income that they can expect in return.

It is therefore essential to understand the value added to a firm in order to job match appropriately.

Vencon Research’s approach utilises a generic framework to match client levels to other directly comparable levels in the market. Comparability is determined based on detailed consideration of a variety of relevant information (as applicable) including but not limited to:

• Job titles
• Job descriptions
• Defined roles and responsibilities
• Function, industry, service line and practice responsibility
• Geographical responsibility
• Sales revenue generation
• Deliver revenue responsibility
• Managed revenue responsibility
• Span of control
• Utilisation rates
• Strategic involvement

Total Income

Firms often take very different strategic approaches with respect to the types and sizes of remuneration components that they offer their partners. Firm structure dictates to an extent what is or is not possible, however, even between firms of comparable structure we often see bespoke and unique approaches.

It is therefore crucial to gain deep understanding of the ins and outs of each firm’s remuneration package in order to be able to determine the correct income data. Along with the raw income data, Vencon gathers extensive information about firm structure, remuneration packages and the individual components.

In simple terms, Vencon Research’s approach ensures:

• Inclusion of all income that should be included.
• Exclusion of any income that shouldn’t be included.
• That any included income is included in a like-for-like manner.

Firm Selection

Benchmarking surveys compare one data set (client data) to a market data set based on a selected list of relevant competitors. If the market data was based on an unspecified list, it would not be possible for the client to make sound judgements or decide upon the right corrective action.

Given the highly sensitive nature of partner data, Vencon Research’s Partner Compensation reports are anonymous, i.e. the market firms are not named. However, key criteria about each firm is provided so that clients are able to make suitably informed decisions and select appropriate competitors.

In brief, while ensuring each participating firm’s anonymity, Vencon Research indicates the following for each selectable market firm:

·         Firm Type (original firm focus, e.g. Operations-based or Pure Strategy)

·         Firm size in terms of firm revenue

·         Firm size in terms of number of Consultants

·         Revenue per Consultant

·         International presence (countries located in)

·         Scope of different industries served

·         Scope of services/functions offered

Vencon Research’s detailed and committed approach to data gathering, data analysis, data clarification and data management ensures that the three key pillars stay standing which in turn results in robust and meaningful Partner Compensation Benchmarking Surveys.

For further information on our Partner, or other benchmarking surveys, visit our website, or get in touch to arrange a consultation.

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 Yao Tang - Business Development

In the wake of the widely discussed "great resignation" phenomenon in the United States, a similar trend, albeit less dramatic, has been observed among our clients in Australia. In the course of discussions with HR professionals we’ve heard one theme repeat itself:

Despite not experiencing an extraordinary surge in resignations, there's a palpable sense of burnout, characterized by extreme fatigue and mental exhaustion, among workers, which has resulted in decreased productivity, increased absenteeism, and resistance towards returning to the office post-COVID-19.

To delve deeper into this concerning trend, researchers from The University of Melbourne conducted a comprehensive study in 2022. Surveying 1,400 employed Australians, the study aimed to assess their well-being and work experiences two years after the onset of the pandemic. Regrettably, the findings paint a less-than-ideal picture, emphasizing the widespread symptoms of burnout among workers.

The Burnout Landscape in Australia and Beyond

Burnout is not exclusive to Australia; it's a global concern with serious implications for individuals' health, well-being, and productivity. The consulting industry, a historically demanding sector worldwide, is not immune to this challenge. Several factors contribute to burnout in this industry:

• High Workload: Consultants often grapple with demanding client projects, tight deadlines, and extended working hours, creating an intense pressure to deliver results.
• Travel Requirements: Frequent travel, a common aspect of some consulting roles, leads to physical and emotional exhaustion, posing challenges for those spending extended periods away from home and family.
• Client Expectations: The industry places high expectations on consultants to meet client demands and deliver valuable insights. Balancing these expectations with personal well-being is an ongoing challenge.
• Variability in Workload: Consulting work is inherently cyclical, with periods of intense activity followed by relative calm. This variability can result in irregular working hours and heightened stress.
• Project-Based Nature: Constant adaptation to new teams and clients, a characteristic of project-based work, can be mentally taxing for consultants.
• Remote Work Challenges: The shift towards more remote work and virtual engagements due to the COVID-19 pandemic introduces new challenges related to work-life balance and feelings of isolation.

Addressing Burnout: Solutions for Individuals and Organizations

In the Australian context the issue has been recognised by government, which has implemented various mental health initiatives and programs to address burnout and improve access to mental health care. However, consulting firms, being on the frontline of this issue, shouldn’t wait for government solutions.

Tackling burnout requires a collective effort from both individuals and organizations. Individuals are encouraged to prioritize self-care, set boundaries, manage stress, and seek support when needed. Organizations, on the other hand, play a pivotal role in promoting a healthy work environment. This includes encouraging breaks, offering flexible work arrangements, and providing mental health resources and support.

Concrete steps include:

• Workload Management: Firms can assess and manage consultants' workloads to prevent overburdening. This might involve adjusting project assignments and schedules.
• Mentorship and Support: Provide mentorship and support systems for junior consultants, helping them navigate the challenges of the industry and manage stress.
• Flexible Work Arrangements: Offer flexible work arrangements, including remote work options, to help consultants achieve a better work-life balance.
• Training and Resources: Provide training on stress management, resilience, and mental health awareness. Offer access to mental health resources and counselling services.
• Regular Feedback: Encourage regular feedback between consultants and their managers to address concerns and identify early signs of burnout.
• Promote a Healthy Culture: Foster a culture that values work-life balance, self-care, and well-being. Lead by example from the top down.
• Diverse Project Assignments: Rotate consultants through different types of projects to keep work engaging and prevent monotony.
• Mental health awareness: This should be a priority for employers and society at large, with ongoing efforts to reduce stigma and encourage open conversations about burnout. Employee Assistance Programs (EAPs) can offer confidential counselling and support services to those experiencing stress and burnout.

It's worth noting that addressing burnout is not only the responsibility of consulting firms but also requires individual consultants to take proactive steps to manage their well-being and communicate their needs effectively.

Burnout in the consulting industry can be a complex issue, but with awareness and proactive measures, it is possible to mitigate its impact and promote a healthier work environment. Nevertheless, as we saw with our Australian contacts in the HR departments of consulting firms, it was their awareness, identification and concern to address the issue that lead to launching effective mitigation programmes and improvements for all concerned.

‍

Tailored Collaboration for Success

Vencon Research is your collaborative partner in navigating the complexities of HR management in the consulting industry. Our bespoke recommendations are crafted with your unique needs in mind, ensuring local relevance and global consistency. Contact Vencon Research today to discover HR solutions for your company's success in the global consulting arena.

References

Leah, R., Brendan, C., &David, B. (2023, March 19). The 'great resignation' didn't happen in Australia, but the 'great burnout' did. Find an Expert.unimelb.edu.au. https://findanexpert.unimelb.edu.au/news/63392-the-'great-resignation'-didn't-happen-in-australia--but-the-'great-burnout'-did

Sarah, S. (2023, April 14). The Great Burnout: Exhausted Aussie workers forced into ‘quiet quitting’ and resignations. News.com.au. https://www.news.com.au/finance/work/at-work/the-great-burnout-exhausted-aussie-workers-forced-into-quiet-quitting-and-resignations/news-story/21a83bd5cd14458306469423f10d4585

Steve, H, Tim, C., &Mackenzi, G. (2023, May 4). Seven strategies to avoid employee burnout Prioritizing employee well-being in the workplace. Deloitte. Com https://www2.deloitte.com/us/en/blog/human-capital-blog/2023/how-to-avoid-employee-burnout.html

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.

‍

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 Andy Klose - Associate Partner

This article explores the complexities and challenges associated with benchmarking and aligning C-Suite compensation with market practices, addressing issues of data variability, company size influence, and discrepancies between public and private entities. It proposes a multi-step solution leveraging standardized data, market comparisons, and pay ratio definitions to create fair, balanced, and market-aligned C-Suite compensation structures.

Navigating the Complexity of C-Suite Compensation

The landscape of C-Suite compensation transcends a simplistic evaluation of roles and responsibilities. It’s a labyrinthine domain shaped by diverse metrics. Major factors, among others, are:

• legal structure
• revenue
• profitability
• operational scale

While no universal blueprint exists, patterns among similar-sized firms offer invaluable insights into shaping tailored compensation practices aligned with strategic goals and organizational cultures.

Challenges in Compensation Evaluation

Compiling compensation data for C-Suite roles or executive leadership positions, specifically within the consulting industry, poses challenges due to the scarcity of publicly available information. The complexity of this task is magnified by the varying compensation across different roles and companies.

Company size emerges as a critical factor, however, the correlations between different size criteria, such as:

• revenue
• employee count
• EBITDA
• Total Cash Compensation

exhibit significant variability. For instance, a corporation employing approximately 40,000 employees and generating a revenue of approximately $10 billion pays a total of $12 million to its CEO. Meanwhile, another corporation with around 120,000 employees and around $4 billion in revenue compensates its CEO with $4 million.

Addressing Variances and Inadequacies

1. Benchmarking exercises using a broad comparison range often yield flawed results due to the diverse sizes and operations of compared entities. The exercise should be as specific and targeted to relevant competitors as possible.
2. Variance among C-Suite positions and discrepancies between public and private entities further complicate fair evaluations. Make sure you are benchmarking either public or private, and only include entities from the other group with full awareness of the possible influence on results.
3. Limiting datasets to similar-sized companies and standardizing compensation data based on the most correlated size criterion emerge as crucial solutions. Even where similar firms are under comparison, failure to adequately match the C-Suite levels being benchmarked, or account for differences in compensation structure will result in misleading conclusions.

Solutions for Fair C-Suite Compensation Packages

A multi-step approach is advocated, involving:

1. defining pay ratios between C-Suite roles
2. standardizing data for market comparison
3. factoring in complexities associated with different company types

This approach aims to develop fair pay ranges, considering market ratios between roles and aligning compensation with organizational and industry-specific benchmarks.

In summary, developing compensation packages for C-Suite executives involves overcoming multifaceted challenges influenced by company size, data variability, and discrepancies between public and private entities. By utilizing a multi-step approach involving standardized data, market comparisons, and role-based pay ratios, organizations can craft fair, balanced, and market-aligned compensation structures that reflect the intricacies of their operations and strategic goals.

We are at your disposal for further questions and suggestions regarding how to optimally design your company’s C-Suite compensation package (and/or model).

Andy Klose is an Associate Partner at Vencon Research International and heads the company’s consulting unit.

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 Cara Solorzano

Our latest article addresses professionals and decision-makers in the consulting industry involved in shaping the global expansion strategy of their firms. It delves into Location Responsibility models—Local, Regional, or Global and offers insights into strategic planning, effective management, and balancing global consistency with local nuances.

The Global Landscape of the Consulting Industry

In an era marked by rapid technological advancements, evolving business landscapes, and an increasing demand for specialized expertise, the consulting industry has witnessed a remarkable global expansion. The traditional role of consultants as problem solvers has transcended geographical boundaries, and consulting firms now find themselves navigating the complexities of a world interconnected by digital networks and international markets.

The Location Responsibility Dilemma: Local, Regional, or Global?

As consulting firms strive to navigate this dynamic landscape, the crucial question emerges: What Location Responsibility model best serves your firm's vision - Local, Regional, or Global?

Regionalizing Offices for Global Competitiveness

Many consulting firms that have a significant global presence organize their country markets by regions, such as APAC (Asia Pacific), or LATAM (Latin America). Regionalizing offices empowers consulting firms to navigate the intricacies of diverse markets, respond rapidly to client needs, and leverage local talent, ultimately strengthening their overall competitiveness in the global consulting arena.

Strategic Planning for Successful Regional Expansion

While regionalizing offices has its advantages, consulting firms must carefully weigh these against the potential downsides, such as increased operational complexity, challenges in maintaining consistency, and any potential impacts on company culture and financial performance. Through Vencon Research’s years of data collection, we have observed that strategic planning and effective management are crucial factors in mitigating the aforementioned risks. Ensuring successful regional expansion can be resolved by assigning one country market to be responsible for the entire global standardization and operations of company acculturation.

Centralized Global Oversight: Enhancing Consistency and Collaboration

Global oversight of consulting firms, where a centralized management structure governs operations across various regions, presents several advantages.

Establishing Consistent Standards

One significant advantage is the ability to maintain consistent standards based on the philosophy of the company. With a centralized approach to oversight, consulting firms can establish and enforce standardized methodologies, best practices, and service quality benchmarks that apply uniformly across all offices worldwide.

Fostering Collaboration and Synergy

This consistency enhances the firm's reputation, instils client confidence, and fosters a sense of reliability in the delivery of consulting services. Centralized management enables efficient sharing of information, resources, and expertise across different regions. This interconnectivity allows for a more collaborative and synergetic approach to problem-solving, leveraging the diverse skills and perspectives available within the global consulting firm.

Drawbacks of Global Oversight

While a model predicated on global oversight provides uniformity in strategies and operations, this method of management also has some disadvantages.

Overlooking Local Nuances and Cultural Differences

One potentially significant drawback is the risk of overlooking the nuances inherent within local cultural differences. A centralized management structure may struggle to fully understand and address the unique challenges and business environments in specific regions. This lack of localized insight can result in strategies that are less effective or may not resonate well with clients in certain markets.

Communication Challenges and Team Detachment

Cultural and communication barriers may also arise in a globally overseen consulting firm. Effective communication becomes more challenging as the organization spans different languages, time zones, and cultural contexts. Furthermore, global oversight may lead to a sense of detachment among local teams. Employees in regional offices may feel less connected to the overarching vision and decision-making processes of the firm, potentially affecting morale, engagement, and retention.

Striking the Right Balance: Considerations for Success

While global firm oversight offers benefits in terms of consistency and efficiency, consulting firms must carefully consider and address the potential downsides, including the risk of overlooking local nuances, reduced agility, and communication challenges.

Balancing Global Oversight with Regional Specifics

Balancing global oversight with mechanisms to understand and address regional specifics is essential for success in a diverse and dynamic consulting industry. It ensures that your firm can adapt to local nuances while maintaining global consistency, fostering resilience in the face of evolving market dynamics. This equilibrium is the cornerstone of sustainable growth and competitiveness in the global consulting arena.

Tailored Collaboration for Success

Vencon Research is your collaborative partner in navigating the complexities of global expansion. Our bespoke recommendations are crafted with your unique needs in mind, ensuring local relevance and global consistency. Contact Vencon Research today to discover the ideal Location Responsibility model for your company's success in the global consulting arena.

‍