Andersen Consulting’s growth from 22,000 consultants in 1989 to 53,000 in 1997 is, says managing partner George Shaheen, “the most exciting statistic we have”.
“It’s all about creating jobs,” he says. “All young people want is an opportunity and if you provide it wonderful things happen.”
However, these “wonderful things” – which for Andersen have also meant four years of 20 per cent plus growth – have also landed the firm, and the industry it belongs to – with one of its biggest headaches: people.
“The supply side problem is terrific and getting worse,” says Shaheen.
Or, as Keith Burgess, former head of the UK firm and now in charge of the global Business Process Management practice puts it: “There’s a global shortage of smart people”.
Andersen’s breakaway position at the top of the consultancy industry has made it a target for ambitious individuals worldwide.
“We’re one of the hottest companies on the campus,” says Shaheen. “The phone’s ringing off the hook with experienced hires wanting to join us. We spend half a billion dollars annually on training: that’s money that could have gone into the pockets of our partners.”
However, Andersen is struggling to hire people as fast as it loses them: Shaheen admits to turnover rising towards 20 per cent. Hiring by clients has now become a major drain on the firm, and a couple of years in consultancy before a return to business school is still a popular career move. In addition to this there will always be a percentage of new hires who don’t like the work or fail to shine, and the consultancy lifestyle is as corrosive of personal life as ever.
This could be the Achilles heel of the Andersen project of “building the consultancy firm of the future”, or indeed of the future of the whole industry. To maintain growth, Andersen will have to recruit another 15,000 consultants worldwide in 1998. This will involve screening over 250,000 applications and actually interviewing 100,000-150,000 people.
As Shaheen says, the defining feature of the consulting firm of the future will be its ability to “leverage its knowledge capital as a prime weapon”.
Given that “knowledge assets” still wear a predominantly human face, success in attracting, and more importantly holding on to top talent may become even more critical to retaining competitive edge in the consultancy market of the future.
Shaheen has rejected acquisition as a route to this goal: “I’ve never felt that the acquisition of professional services made any sense,” he says. “They want a premium for their business, they want to work for the same rate, keep their name and manage their own destiny. We talk to world-class talent as individuals.”
In pursuit of this world-class talent, Andersen has radically overhauled its whole approach to recruiting, developing, rewarding and retaining staff.
“We had to change the types of people we hire, the way we develop them and how we create those teams,” says Carole Meyer, global head of human resources. Meyer has been with the firm for 20 years, joining straight from college, and considers her experience to be typical for a new recruit of that period: “I was sent to the training centre at St Charles to learn how to code in Cobol – as a major in art history it was totally alien to me. My first assignments took advantage of my new skills in coding.”
As Meyer advanced she returned to St Charles again and again, learning first project management skills and then for supervisory training. Industry specialisation began after she moved to Manhattan to work on financial services clients, and she was made a partner after 10 years, which she attributes to “hard work and good mentoring. I did what I was told and did it well. Most of the partners went through the same model.”
Now things have changed: instead of “growing its own”, Andersen now recruits 30 to 35 per cent of its people directly from the marketplace, and next year this proportion will grow to 35-40 per cent.
“We need people with deep skills, for example in SAP,” says Meyer. “Hiring from the market is the most effective way to build our skills base rather than develop those skills internally.”
The firm now recruits in different manner to the CV-and-interview style of the old days:
“Five or six years ago we took a different approach to how we screen a candidate,” says Meyer. “We made a study of the most successful partners and how they work. We boiled down their success into a series of core behaviours. Now, instead of asking questions like, what are your extramural activities? what do you see yourself doing in five years’ time? – which tend to get canned answers – we’ll ask something like ‘could you tell me about a situation where you had to resolve conflict with two people you didn’t know very well?’.”
This reflects the sort of situation that might come up in a client context: however, the candidate’s response might come from a part-time job, or even a home situation.
“This is a better indicator than grade averages,” says Meyer. “It’s a more intensive interview process, but we now have a higher degree of our organisation with those core behaviours.”
The firm has also changed the way it markets to potential recruits:
“I saw a little poster and went to the careers office,” says Meyer.
Today we market on a much broader scale.” This has included a Wall Street Journal advertising campaign and a test campaign in Germany, the Netherlands and Switzerland based on Andersen’s Formula One sponsorship of the Williams team. In the States, the firm has introduced the “student leadership conference” taking promising recruits off campus for a programme of contests and outdoor activities.
“They’re exposed to us, we’re exposed to them,” says Meyer. “Plus they make great envoys back to their own campus.”
As part of the ongoing globalisation of the business, Andersen is in the process of installing a global recruiting process, which allows the firm to deal with candidates who appear in one market, but may wish to work in a different one. Training and development is also becoming more specialised and tailored.
Previously, all recruits went through training in the same four competencies: process, change management, IT and strategy. Now the firm offers a programme of 350 courses for more customised training: 50 per cent will be competency specific, 15 to 20 per cent industry specific with only 30 to 35 per cent forming the common core for all trainees.
The firm has also softened its “up or out” approach, whereby people who couldn’t or didn’t want to progress up the partnership hierarchy would have to leave. An example is the development of solutions centres, such as the rapid system development and delivery centre in Manila:
“The people who work in these centres go there every day,” says Meyer.
“It’s a different model from the travelling consultant going from city to city These people have more control over their lives. We did this to provide deep skills for our clients, but it’s proved to be a career alternative that many find attractive.”
Another alternative is offered by Business Process Management, Andersen’s burgeoning outsourcing practice.
“You might go to the same client every day for five years,” says Meyer.
Again it’s win-win: we got into this business to offer value to clients, and it offers a nice career alternative for our people.”
An industry-wide failing that Andersen is tackling is the appalling ratio between the sexes, particularly at senior level. This is not necessarily a case of “glass ceilings”, but a reflection of the destructive effects of the consultancy lifestyle, and particularly the hard choices faced by female consultants who want a family as well as a career.
In the Americas, Andersen has implemented a mentoring programme for women.
“Before it was luck and ‘happenstance’, but we’re too big now to chalk it up to luck,” says Meyer. “We’ve instituted a mentoring specific programme targeted at senior women. All are teamed up with senior mentors, to whom they can talk on a confidential basis about everything: it’s improved our retention of senior women.”
For junior staff, Andersen is developing the concept of “communities”:
“As we got bigger, we lost connectivity with junior people; we need to recreate those communities,” says Meyer. The new “communities” will be organised around competencies, with a senior partner responsible for bringing people together for social and work events. The scheme has been piloted in France, Germany, the Netherlands, Belgium, Austria and Switzerland.
Early results are encouraging: turnover in those areas has dropped to 7-8 per cent, compared to a global average of 17-18 per cent.
Another change is the way consultants are scheduled: previously consultants would be attached to a partner whom they would follow from assignment to assignment. Now global scheduling allows for a more accurate matching of skills to assignments.
With this global approach comes a more disciplined approach to business development.
“We always leveraged very smart people by having a strong methodology,” says Jack Wilson, managing partner for global markets. “It gained us a reputation for being androids but it was very effective. We’ve never been very method oriented in business development. It was kind of an art form.”
Now assignments are managed by agreements between groups of partners about which clients should be taken on, and how to maximise the value to both the client and the firm. This leads to some heavy phone traffic at four o’clock Eastern Standard Time: the one hour when people all over the world are awake at the same time.”
This changes the way partners work: “The 1953 partner model worked until 1991: client-partner-local office,” says Wilson. “All our P&Ls that drove behaviours were aimed at growing the local office. In 1991 we took one region of the US and did away with the local offices. Two years later we did the entire US and regionalised Europe. Now we no longer look at office net income or regional income, we look at client margin.”
Although Andersen is still organised by industry grouping, the 16 industry groups have been cut loose from any geographical linkages. This has had a knock-on effect on partner compensation, and the allocation of the “units” which determine the division of profits.
“In every place we’ve moved from being more local centric to being more client centric,” says Wilson. “The partners who have worked hardest with clients, who have teamed, have gained the most units.”
According to Wilson, partners adhering to the old ways are a “dying breed”.
It’s clear that the new global structures are causing some short-term upheavals. However this seems a price the firm is willing to pay to secure the long-term future.
Shaheen believes the role of the future consultancy firm will be to create the infrastructure for the 21st century, building the networks, the business processes, that commerce can be conducted from.
“The consulting firm of the future will be an integral part of 21st century commerce,” he says. “We are building competencies that will allow us to grow, not just serving clients, but as part of serving entire industries. Someone’s going to step forward and define tomorrow: we intend that to be Andersen Consulting.”
Shaheen claims that Andersen Consulting redefined consultancy when it entered the market as a separate entity in 1989, relegating the strategy houses to market niches and opening the way for “juggernauts” like EDS and IBM to come in and play. Now he’s preparing to do it again, although his vision might not sound much like today’s “consultancy”.
“The word consultancy does allow us to play in some predetermined space – the last thing you want to do is to carve out some space that only you understand and only you can play in,” he says.
“I believe we’re on the edge of redefining the consultancy world,” he adds: “I don’t think that should be a surprise: we’re dedicated to make change when by any measure it would have been easier to stand pat. We must continue to have enough pride in Andersen Consulting to continue to change it. By definition we’re going to have to change the rules again or everyone else will catch up.”