Guiding Light
August 01, 2008 | Alyssa Hodder

…cont’d

All Consulting Firms, Great and Small

In spite of increased competition and cost-control concerns, consultants say the market for their services is alive and well. “The good thing about being a consultant is that there is a huge need,” says Irene Lis, president of Aligned People Strategies Inc. (an independent HR consulting firm). “What’s also great is that because there’s a huge need, there’s room for all sorts of players.” Clients will always need help with their HR issues, and these issues present opportunities for different types of providers.

Not only is there a place for smaller firms, being a David among Goliaths has some advantages. For instance, larger firms may be challenged by administrative complexity and internal red tape—hassles that smaller firms can more easily avoid. “As a smaller player, you can be more nimble, you can be more flexible…you can turn things around a lot more quickly, [and] you can make decisions a lot more quickly,” says Lis. She adds that consultants in smaller firms often have the additional advantage of having worked “in the trenches”—for example, having experience with the corporate as well as the operational side of a client’s business. Working in various industry sectors and gaining different perspectives gives them a more wellrounded understanding of clients’ issues, says Lis. “It’s good to be able to change your hat and say, ‘I’ve been there; I know what you’re talking about. I believe that’s where many of the smaller consulting firms have an edge—because most of the consultants will have had the hands-on experience that makes them credible to clients.”

The ability to work more closely with plan sponsors and plan members is another potential advantage. Some employers believe that a smaller firm offers a more personal and customized experience. Lori Bradley, manager, HR and payroll, with Extreme Fitness, says she prefers to work with a smaller consulting firm. “I think you get better service—more attention to detail and customer needs,” she remarks. “We have a plan that’s a little bit different, [and] our needs are a little bit different than someone else’s. I need to have somebody who can devise a plan that works for us, instead of trying to fit us into a box that may not meet all our needs.” Likewise, Frank feels the personal approach has worked well with his clients. “The advantage of us being small is that we are very customer-focused; we are very specialized in working right at the employee level,” he says. “People appreciate a very high-touch, hands-on approach.”

Top of Mind

We asked more than 100 consulting firms to identify the top five pension, benefits and HR issues that their clients face as well as some of their own challenges. Here’s what they had to say.

Pensions

More than half of respondents identified employee education and communication as one of their clients’ top five challenges.

Other issues include cost containment/affordability of benefits, CAP Guidelines compliance and regulatory/ legislative compliance.

Benefits

77% of respondents said cost containment/affordability of benefits is one of their clients’ top five challenges.

44% identified plan design and flexibility and 35% cited employee education and communication as key concerns.

HR in General

50% of respondents said attraction and retention of employees is one of their clients’ top five challenges.

Total compensation/total rewards, employee education and communication and regulatory/legislative compliance also ranked among their clients’ main HR issues.

Consultants cited cost containment/ affordability of benefits, employee education and communication, talent management, staff attraction and retention, generational or workforce diversity issues and regulatory/legislative governance among their main challenges.

 

And, at a time when employers are sensitive to costs, there’s always the issue of fees. Lis notes that smaller organizations, given the scale of their benefits programs, may not be able to afford the fees charged by large global consulting firms with greater overhead costs—particularly if the organization seeking help is new to the marketplace or implementing employee benefits for the first time.

It seems that players large and small are comfortable with their positioning in the marketplace. “Overall, I think we’re very happy to be in the place that we’re in,” says Frank. “We’re not looking to make significant changes. We’d certainly like to grow our business, like everybody else. But we’re not going to fundamentally change what we do to try to increase our bottom line.”

Consultant Challenges

Maintaining this positioning, though, isn’t easy. For consulting firms, talent management—attracting, developing and retaining the right staff—remains a key concern. Since a firm’s intellectual capital is its bread and butter, “talent in this field is a scarce and prized possession,” says Beech. And that talent must be nurtured and leveraged appropriately. For example, says Ashim Khemani, chief executive officer of Aon Consulting, firms shouldn’t expect their technical experts to perform well as salespeople or as client relationship managers. “You don’t expect a marathon runner to succeed in a 100-metre race,” he adds.

The “soft skills” of consulting are also becoming more important. The pension and benefits consultant of the future, consultants say, will have both in-depth knowledge of his or her particular area of specialization and strong business acumen. “We have to make sure that all these people stay up to date on the deep subject matter expertise that they need to actually practise in the areas that they practise, but also [have] broader business skills and focus,” says Aselstine. Since clients are beginning to think about pension and benefits plans within the context of larger HR and business issues, consultants will need to take the same approach. “In order to really seek to understand and help a client with their business needs, we need people who have some broader skill sets—who are able to listen and bring in broader solutions than just the traditional line of business solutions,” Beech agrees.

But in developing these broader solutions, consultants face some legislative and regulatory barriers. Consultants say the current pension environment in Canada is not conducive to customization or innovation. “There are areas that have become overly bureaucratic and overly rules-driven,” says Pitcher. In addition to specific issues, such as compliance with the new accounting standards, retirement consultants and actuaries constantly struggle with the lack of harmonization in pension legislation across the various provinces. “If you really want to make an impact on quantum innovation in DB plans, the legislative climate has to change,” Khemani adds. “It is complex, and it is restrictive, in some respects.”

Finding new solutions also means staying on top of the constant flow of news and information. Most consultants keep a close eye on developments in the U.S. as an indicator of trends that may ultimately extend to Canada. “From the perspective of our industry, that’s really a constant challenge for us—to be very aware and keep our eye on what’s going on not only south of the border, but also globally,” says Lynn MacAdam, national vice-president, national account sales, group retirement services, with Sun Life Financial. With a greater volume of information circulating more quickly online, consultants say it’s hard to keep up. But not doing so could put the firm at a disadvantage. “If you don’t have an interesting point of view or something that’s new or emerging best practice to talk to clients [about], I think your market share can slip quite quickly,” says Aselstine.

More importantly, consultants must be proactive in addressing these new developments and trends with their clients. “The environment in which business operates today is so complex that managers have to be proactive in identifying problems before they produce visible symptoms,” says Dan Napier, a benefits consultant with Focus Insurance (an independent benefits consulting firm). “Our role is to identify potential problems, discuss and present alternative opportunities, bring them into focus and then assist in executing the options selected by our client.” In a business based on intellectual capital, it’s crucial that consultants remain—and are perceived as—experts in their fields. “At the end of the day, we don’t sell widgets; we sell brainpower,” says Burke. “We sell brainpower combined with the ability to leverage that brainpower across the world.”

Join us on Twitter