HR Consultancy takes big hit in recession as firms seek visible returns
David Woods, 11 January 2010
3
3 comment's on this article.The HR consulting industry is one of the biggest casualties of the recession, having shrunk by as much as 20% over the past year, new research reveals.
According to a report from sourceforconsulting.com, there has been a substantial shift in the type of HR services being bought, moving away from traditional services, such as organisational design and change management, to those that offer a measurable return on investment.
Sue Grist, co-founder and director of business consultancy Egremont, said: "There's been a shift to using consultants to help save money. When we sell work now, the impact we'll have on business processes and costs is front of mind."
The survey divides HR consulting services into three groups:
· Recession-specific services: for example, outplacement and advice on outsourcing the HR function, which have grown during the recession but have limited shelf-life beyond it.
·‘Past their peak' services: such as organisational design and capability assessment, which form the bedrock of much HR consulting but demand for which is likely to shrink.
· Potential for growth services: which focus on performance management and personal productivity, as organisations look to get more from their employees and their consultants.
But according to Fiona Czerniawska, joint managing director of sourceforconsulting.com and author of the report, economic recovery is unlikely to reverse these trends. She said: "Our research points to a ‘generational' shift in HR consulting, away from traditional areas to focusing more on performance management.
"The future of HR consulting will see traditional firms collaborating, even merging, with smaller, more innovative specialists, in order to survive. The merger of Towers Perrin and Watson Wyatt announced in June, and the recent acquisition by PwC of performance management consulting firm Paragon, is evidence of this evolving trend."
To post comments please log in here
All Comments
elspeth watt - 11 January 2010
This mostly applies to large HR consultancy firms. Companies like Calibre HR & Training \(www.calibrehr.com), which work predominantly with SMEs, have always had to demonstrate they are adding value. Many of the larger firms worked with large organisations that to an extent had not seen the relationship between inputs from the consultants and outputs, or if they had, it took a while for that message to get through - large government departments being a good case in point.
Jackie Allen - 12 January 2010
I agree - that's why lots of SMEs are doing better in the recession..they are more flexible so are able to change quickly to market demands and always want a high return on investments - it's critical to their survival.
Kristian Svindland - 12 January 2010
Short-sighted...I bet a lot of companies will wish they had the HR consultancy on bankroll when they get sued for wrongful terminations. We \(www.hroplus.com) see companies that make a cost-cutting measure like this then regret it.
Your Comment