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Around a quarter of the 400+ clients we questioned recently were HR directors; most were significant buyers of consulting services. The striking thing about talking to so many of them is how rarely they voluntarily talk about the big HR consulting firms, even though many use their services. This paradox appears to stem from the fact that they think of these firms primarily in terms of administration rather than “consulting”. “We don’t use any of the big HR firms except on payroll and remuneration issues,” was one, typical comment.
Ironically, these firms aren’t regarded as specialists: “They spread themselves too thinly,” said one HR director. There is, we suspect, a chronic lack of innovation here: too much of the big firm’s time is spent on back-office efficiency issues, and too little grappling with the challenges of – say – cross-border talent management. Outside their core markets, these firms lack the brand to be credible with a board of directors, so HR directors looking to get difficult decisions validated are more likely to turn to a strategy or Big Four firm. Neither specialists nor big brands, the HR consultancies have to work harder to sell their services: “They’re very aggressive, too fast to tell us that we don’t know anything and that’s why we need their help,” said another HR director we spoke to. But perhaps the greatest irony here is that cultural fit and employee engagement are seen to be low-down on the agenda of these firms; they’re perceived to be unwilling or unable to change the way their work.
So does that translate into a huge opportunity for smaller consultancies which specialise in the HR space?
The answer is both yes and no. Certainly, there’s a demand and real desire to get to know specialist firms, especially those which can demonstrate fresh, deep thinking in specific areas. But there are two significant barriers – which is why the big HR consultancies continue to be big. The first is international know-how: HR directors aren’t convinced that smaller, more specialist firms can field consultants with hands-on experience of working in different cultures, so by default they’ll go to the larger ones for cross-border work. Second, it’s hard to know who the best niche firms are and what they specialise in, so HR directors have to rely on personal networks and referrals when they go beyond the big brands.
Most niche HR consultancies don’t and can’t afford to spend much on marketing activities, but they need to find a way to get their message across more effectively if they’re to exploit this opportunity. If ever it was worth them investing in doing so, now is the time.