More employers are committing to monogamous relationships with their HR consulting firm
Only a few years ago, it was standard practice for Canadian employers to spread the love around when it came to working with HR consultants. They would have different providers for pension and health benefits consulting, as well as for employee communication, administration, compensation and other services. More recently, organizations have demonstrated an increased willingness to partner with a single consultancy for multiple services.
This trend, in part, is prompted—not surprisingly—by the consulting firms themselves, motivated by a desire not only to increase revenues but also to deepen client relationships. For some, cross-selling—promoting additional services to existing clients—has become a targeted objective.
But what persuades clients to commit to one consulting firm? What are the advantages—and disadvantages? Several Canadian employers shared their views on why they no longer play the field and what the new relationship with their HR consultant encompasses. At the same time, consulting firms highlight what they are doing to broaden client mandates. For some smaller consultancies, this means further defining their niche in order to maintain and grow market share.
Building a Closer Connection
Phyllis Retty, Canadian/Latin America area leader, total compensation resource centre, with 3M Canada, remembers when the company spread business around to all the HR consulting firms. One impetus for the shift to using primarily one provider was technology. “Our employees want one stop—a portal—to access and learn about their benefits, enrol online, contact the EAP provider, read research,” she says. “Our expertise is in solving customers’ problems in industries like healthcare, mining, oil and gas, construction, electronics and others. Knowing our HR consulting firm’s expertise is in HR and benefits, their insights into the HR industry are powerful. If we didn’t leverage those insights, it’d be a missed opportunity.”
Retty says, however, that there were other reasons to consolidate services with one firm. “They know our business, and we have a great relationship. I can pick up the phone and call someone who knows me, understands my challenges and recommends solutions.” She also finds that cost synergies are available and that dealing with a single provider can be more efficient and streamlined.
The downside, says Retty, is that “it’s tough to leave if there are service issues or other problems that can’t be resolved, especially if you’ve paid a lot upfront.” However, there have been no hitches to date with 3M’s current consultant, as the firm keeps close tabs on how things are going and “talks things over regularly.”
Monique Porlier, vice-president, operations, and chief financial officer at the national office of the Canadian Cancer Society, sees real advantages in dealing with a single HR consultancy. “Because we use the same firm for pension, benefits and investment consulting, we get synchronized advice,” she says. “They know our organization better, understand the interdependencies and bring us better solutions by being involved in so many areas.” Porlier stresses that one of the reasons that things have worked so well with their consulting firm is that the consultants talk to one another. While she has three primary consultants that she deals with, she knows that “saying something to one is like telling all three. We are all part of the same team.”
Zahid Salman, executive vice-president with Morneau Shepell, highlights some additional benefits for clients in dealing with a single firm. “Program delivery is more integrated, and clients benefit from better insights and data analytics when one firm delivers multiple services.” Moreover, multi-service clients have clout. “Our large clients have input into our innovation road map and the next wave of HR solutions.” Finally, the clients’ employees also benefit from an integrated solution. “Today’s technology enables integration of multiple HR programs on a single platform, which supports a seamless employee experience and enhanced engagement.”
Natural Evolution
How deliberate is the approach to cross-selling at HR consulting firms? Mid-size and smaller consultancies, while always interested in expanding relationships with their clients, see cross-selling as more of an organic process at their firms. “We don’t have specific targets or compensation bonuses for cross-selling,” says Greg Malone, a principal with Eckler Ltd. “Our consultants regularly have discussions about clients that might need certain services and look for natural synergies. For instance, if we provide defined benefit pension consulting to an organization, we talk to that client about our investment consulting services.”
Josée Patry, partner, group benefits, with Normandin Beaudry, refers to her firm’s approach to cross-selling as “a service strategy rather than a selling strategy.” Sarah Beech, president of Pal Benefits, agrees and believes that the structure at smaller private consulting firms is naturally conducive to cross-selling. “We have a holistic P&L [profit and loss statement], not one that is divided by line of business,” Beech says. She thinks this helps the firm to keep client needs front and centre and makes all consultants natural cross-sellers. “There are fewer barriers to wearing multiple hats in a more fluid, privately held company,” she says.
That attitude also prevails at Knightsbridge, where the “One Knightsbridge” philosophy is embedded in the company’s approach to clients, according to Ralph Shedletsky, chief customer officer. “Internal collaboration is key,” he says. “We act as a single, seamless unit, regardless of the practice area we represent. Our focus is on how the client can gain the greatest impact from our services.” Malone echoes the sentiment, adding that when you put the client’s needs first, business growth follows.
Strategic Approach
Many large consulting firms, however, have a more focused attitude to cross-selling and have changed processes and programs to facilitate it. Julie Holden, client growth and strategy leader with Buck Consultants, says the firm’s shift to a client-centric culture has led to a focus on education. “We’ve introduced more internal training programs—particularly on launches of new products and services—and developed teams to listen to and talk with clients about their needs, always focused on a realistic, practical solution,” Holden explains. “Doing so has equipped our consultants to have high-level discussions about various problem-solving approaches, and they know the right time to bring in the experts for more detailed discussions.”
Ted Singeris, president of Mercer Canada, says that while cross-selling is not a new initiative at the consulting firm, it has been identified as one of Mercer’s operating imperatives for client growth. Mercer appoints “key relationship managers” to deal closely with the client. “Clients don’t know or care how we divide ourselves into lines of business,” Singeris says. “The key relationship manager’s responsibility is to identify the client’s needs and deliver solutions, regardless of line of business. The end result is not cross-selling but happy clients.”
Morneau Shepell also appoints client relationship leaders whose main focus, says Salman, is to develop a deep understanding of their clients’ needs and priorities. “This ensures that service delivery is aligned with their priorities and solutions are introduced as appropriate to best address their needs.” Salman stresses that the relationship leader must become a trusted advisor for the client in order to expand the relationship. “This is not a sales role,” he explains.
In order to be successful, the relationship leader must also have what Salman refers to as “internal authority” in order to provide integrated, high-quality service to the client and to focus the entire team on solving the client’s challenges. Another necessity is for relationship leaders to keep things fresh. “They must regularly identify trends and bring solutions,” says Salman. “The client relationship will stagnate if they do not introduce innovation and emerging best practices.”
Maintaining Position
The emphasis on cross-selling at large HR consulting firms has had an effect on the extent to which smaller organizations retain and develop their client base, too. Some firms have found that increased attention to cross-selling from large consulting companies has provided them with opportunities to develop expertise in specific areas.
Brendan George, a partner with George & Bell Consulting, finds that the large consulting firms are still focused on large clients, though they are becoming more interested in smaller organizations. Generally speaking, smaller local firms still have the edge, according to George. “Personal relationships are important, given that the client is more likely to see the local consultant as part of its internal staff,” he says. Moreover, when a smaller consulting firm is engaged, “the client is more likely to be served by a senior consultant rather than a junior one.”
Even when a large national firm makes a smaller client an offer it can’t refuse, there may still be a role for the small consultancy to play. When the Saskatchewan Roughrider Football Club opted to change its pension administrator recently, HR manager Kim Mealing appreciated some additional assistance.
A consultant from a smaller firm provided the industry-specific resources and expertise needed to define what the club was looking for in an administrator, issue a request for proposal and evaluate the contenders. “The consultant guided the process and acted as our advisor,” says Mealing. “He also instructed potential providers regarding our specific needs to ensure they could accommodate them. With his help, we chose a national firm with a local feel—just what we were looking for.”
Likewise, if smaller consulting firms can’t provide specific services that their clients seek, they often refer clients to other firms that they know will be a good fit for their contacts. “We spend a lot of time listening to our clients,” says Beech. “That makes it easy to introduce them to the right people to, for instance, provide administrative services, whether they’re part of our company or another one.” And sometimes the recommendation is even to take certain services back in-house. “If the client has the internal expertise and resources, we’ll help them to take back responsibility for some HR functions, with some training when required,” says Patry. “We prefer to offer services where there is real added value.”
Other smaller consulting firms have carved a niche for themselves by offering services that may be less appealing to large consultancies. “We offer customized mid-management coaching, for example, a service that might not interest big firms,” says Tim Arnill, president and CEO of Verity. “We also provide services specifically for boards and directors in the non-profit sector.” Arnill adds that his firm also focuses on services that organizations are not likely to bring back in-house. For example, a company may decide that it can do its own recruiting, but it’s hard to do effective executive coaching internally.
Not Ready to Settle Down
If a client decides that there are fringe benefits to working with a number of consulting firms, that’s clearly its prerogative. However, Singeris says that it’s incumbent on consultants to first make the client aware of the full range of services the firm offers and then “to demonstrate the value in having one partner providing multiple services.”
If the client still decides to use multiple consultants, Malone’s position is that there is no point in pushing consolidation. “There has to be a desire and need on the part of the client. If the organization has a philosophy of diversification, we accept that,” he says. Beech also appreciates that the choice is an individual one. “If the client wants to work with other providers, we respect that—and respect the other consulting firms involved,” she explains. “It’s just part of putting the client first.”
Marcia McDougall is a freelance writer and president of InteGreat Marketing PR Events. mmcdougall@integreatmarketing.com
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