Every practice makes pay decisions differently. What do you know about the rationale behind how…
By John Borrowman, CPC
Borrowman Baker, LLC, BV Staffing + Consulting
If you’ve hired talent in the last two to three years, you’ve felt the impact of rapid pay rises. Those chickens may be coming home to roost in some parts of the BV labor market.
Layoffs at larger practices have put experienced professionals on the market in numbers we haven’t seen since the years of recession in 2008 – 2009. No one likes layoffs, least of all those who must execute them. But payroll is the most significant expense in consulting services, so you can’t cut costs without touching payroll.
Individual factors are at play in each case, making it difficult to draw broad conclusions. As to be expected, though, departures tend to be in the 0-to-2-year experience range. Some instances reach into manager ranks.
In contrast to the cost-cutting that triggers layoffs, there are BV employers around the country who need to hire. There are two reasons, though, why layoffs are not the dividend they might appear to be.
Location mismatch. BV professionals now in the job market are in—and reluctant to leave—large markets. No surprise. That’s where their jobs were. It’s just not where the employers are that would like to hire. Remote work arrangements could mitigate this issue if it were not for the second reason …
Compensation mismatch. The practices with the most layoffs were also the ones paying the highest salaries, which were most likely pushed higher in response to talent loss to BV-adjacent roles in PE, Hedge Funds, and Investment Banking.
Hiccups in the labor market often settle out via compromise. Some laid-off may back away from their compensation expectations and stay in BV. Others may leave the profession, contributing to a longer-term shortage of experienced talent.