It was a conversation with his daughter recently that got Jan Grude thinking about his industry’s recruiting prospects and how to attract a new generation of skilled employees.

“[She] asked me a heart-sinking question. She said, ‘Who chooses to be a benefits consultant?’ And I was really hard pressed to identify who does and why,” says Grude, chief executive officer and president of ACS/Buck Canada Ltd., an outsourcing and pensions and benefits consulting firm based in Toronto.

Talent&#8212or the lack thereof&#8212is top of mind for Grude and senior representatives from some of Canada’s largest pension and benefits consulting firms. While the industry sells itself on having smart people, there are fewer and fewer of them coming out of the woodwork to join the industry ranks.

“What we’re starting to see&#8212and this is around the world&#8212is we’re losing more young people. Not to our competitors, but outside of the business,” says David Burke, national retirement practice director of Watson Wyatt Worldwide in Montreal. “So people coming out of university aren’t often walking into [the consulting industry]. It becomes a real challenge because that talent pool is our strength.”

And it isn’t any one segment of the pension and benefits consulting industry that’s feeling the impact, notes Kevin Aselstine, a managing principal with Towers Perrin in Toronto. It’s the whole profession. “Fewer people are coming into the consulting industry in Canada.

Unfortunately, the shortage of talent comes at a time when plan sponsors’ needs are becoming more numerous and complex, and third-party expertise is critical. Not only are plan sponsors facing labour shortages of their own, but they’re wrestling with pension underfunding, rising health costs, regulatory compliance and plan member education, according to a survey of 100 plan sponsors across Canada conducted in June and July by the Rogers Healthcare and Financial Services Research Group. The survey found these to be among the top business challenges for which plan sponsors require pension, benefits and human resource consulting services.

And, for the most part, plan sponsors are satisfied with how their consultants are performing. Fifty-six per cent of plan sponsor respondents are “very satisfied” with their pension consulting service provider and 40% are “somewhat satisfied,” compared to 48% and 48% respectively in 2005. Similarly, 54% are “very satisfied” and 42% are “somewhat satisfied” with their benefits consultants, compared to 51% and 36% respectively in 2005. Satisfaction with human resources consulting services was significantly lower, with 32% indicating they are “very satisfied” with the services they receive while 60% are “somewhat satisfied.”

Despite the favourable satisfaction levels, Paul Owens, plan manager and chief executive officer at the Colleges of Applied Arts and Technology Pension Plan in Toronto, has begun to notice the dearth of skilled consultants.

“Retiring talent is a major issue, particularly in the investment [consulting] arena,” says Owens. Although he’s happy that “some of the firms are building up resources, to their credit.”

While the talent shortage is one of the consulting industry’s greatest challenges, it’s ironically also one of its biggest drivers of new business. As employers across the country face a dearth of skilled labour, they are increasingly turning to consulting firms to help them find and keep the people they need and to get the most out of those they already have.

According to the survey of plan sponsors, 15% of respondents are currently using a consultant for “talent strategies.” Fourteen per cent of respondents say their organization is using a consultant for “training and development” while roughly one quarter are using a consultant for “strategic compensation planning.”

“We see a heightened interest in everything that falls under the umbrella of workforce effectiveness, from assisting clients with sourcing people with the right skills, attraction and retention, and engagement of the workforce. That’s created quite a few new opportunities for us,” says Aselstine. He says more and more employers are asking: ‘What type of workforce do I need? How will my workforce grow? How will I ensure the people I need are there?’

Grude points out that few organizations have typically put a great deal of rigor into identifying talent issues. But now his firm is starting to see a heightened interest in employee diagnostics aimed at determining what motivates employees in terms of total rewards, not just compensation and benefits. “What attracts, what retains, what engages employees?”

It turns out the answers to those questions are much different than what they were in the past. Younger workers are no longer satisfied with just a good pension and benefits package. “They want to travel, they want a different lifestyle,” says Sarah Beech, managing principal with Hewitt Associates in Toronto.

“It’s also their working habits,” adds Pierre Chamberland, executive vice president of Morneau Sobeco in Montreal. “When we started, working 50 hours a week was not an issue. Now work/life balance is much more an issue than before.”

Aselstine points out that the consulting industry is facing the same issues as its clients when it comes to dealing with the different priorities of the younger generation. “So many clients you talk to say the same things: ‘What’s wrong with those young people?’ When in fact our research says there’s nothing wrong. They are just different than you. We need to find what engages them.”

So what’s the answer to the consulting industry’s growing talent shortage? Ashim Khemani, chairman and chief executive officer with Aon Consulting in Toronto, says one of the keys will be to attract talent from non-traditional disciplines or fields. The challenge, he adds, will be fitting these new recruits into the organization. “How you integrate them with the existing talent is actually a source of immense creativity,” he says.

“The consulting industry will also need to make more concerted efforts to retain experienced consultants beyond retirement age,” adds Aselstine. “There are a lot of mature, experienced consultants who say, ‘I spent 30 years in the industry and I don’t want to keep up this pace for another 10.’ But there are many who aren’t really ready to disengage either.” Convincing those people to stay will require being flexible with working arrangements. “That’s particularly difficult in consulting when we are so client focused and we think in terms of 24/7 because the needs of our clients kind of force us there,” he says.

At the same time, part of the challenge will be to ensure people working in the industry have fulfilling work. “The number one driver of attraction and retention when you look at people who are retirement- eligible is interesting work,” says Aselstine. “I think we as an industry have to find a way to get better at retaining those skills.”

by Anna Sharratt

As plan sponsors move beyond Canada’s borders, they’re looking for consulting solutions that can allow them to streamline their businesses.

“We need an organization like ours to organize itself in a more global way—so that serving clients in Mexico, in China and in Canada is almost transparent,” says Jacques Théorêt, president and chief operating officer at Mercer Human Resource Consulting. But providing global capabilities is costly. For that reason, Mercer is looking beyond its borders—much like its client base—to outsource various capabilities. Sarah Beech, managing principal at Hewitt Associates in Toronto, agrees that being a major player includes melding a strong national presence with a significant global one. “If you look at some common themes around where organizations are going to need to be positioned to win in the market, they follow around global capabilities.” And she feels sponsors are looking for more globally focused consultants. “They need to partner with people who have the ability from a much more global, bigger picture business perspective than just looking at their local markets.” Some consulting firms feel that if you’re serving clients with a smaller employee base, then global capabilities aren’t attractive to them. Bill Morneau, president and chief executive officer of Morneau Sobeco in Toronto, says only a fraction of his clients are going global. The globalization possibility really only exists for larger firms— predominantly American-led multinationals. “Even in that case, we only see a subset of those that really want to [go] global,” he says.

by Anna Sharratt

When Mercer Human Resource Consulting announced the departures of both their global president and CEO, Dan McCaw and their president of U.S. operations, Dean Connor earlier this year, it was another prominent footnote in a year of transition for the consulting industry. Ron Lloyd, president of Hewitt Associates, announced he was leaving in March, as the firm was working to implement its joint partnership with Exult. In the meantime, Morneau Sobeco was busy acquiring Heath Benefits Consulting.

“It is a reorganization, says Jacques Théorêt, president and chief operating officer at Mercer Human Resource Consulting in Montreal. “We have restructured our matrix where more of the decisions are made on a global basis.” In Mercer’s case, that led to the high-profile departures of McCaw and Connor. “We went through [the restructuring] and it led to a change of leadership in some areas. Obviously in a period of change, some people are comfortable with the changes, others look for opportunities elsewhere.” Reshuffling areas of coverage has also been a priority for some players. The Morneau Sobeco/Heath merger has meant the consulting firm has been able to gain a foothold in the West while ramping up its consultant numbers in major cities like Ottawa and Toronto. Says Bill Morneau, president and chief executive officer of Morneau Sobeco in Toronto: “We want to grow everywhere.” The firm has also taken an holistic approach to its compensation solutions package, offering defined benefit and defined contribution pension plan administration along with benefits plan administration via decision support software online. Morneau says he’s seen a keen interest on the part of sponsors in these types of products as many plan sponsors move towards a greater variety of compensation programs.

Don Bisch is Editor of BENEFITS CANADA. With files from Anna Sharratt.