Staff substitution: alive and kicking

Consulting firms call it staff substitution; clients call it contingent labour. Some people say contracting; others, interim management.

The number of terms is an indication of how contentious the issue is and how blurred its definition. What it boils down to is the use of management consultants in roles which should rightly be filled by full-time employees. While it can make sense for an organisation to delay recruiting for the role (the future may be uncertain, the right person hard to find and/or headcount may be limited), hiring an expensive consultant, whose entire training and business model is predicated on finite, usually short-term projects, doesn’t.

Yet it happens. And that’s to the detriment of the consulting industry (which gains a reputation for squeezing people out of their jobs and charging too much) and of clients (who foot what can end up being a considerable bill).

There was a lot of talk about how the recession would end this. Many clients put slashing their consulting bills at or near the top of their cost-cutting agenda. It was clear at the time that they were targeting this area, restricting expensive consultants to projects and reducing significantly the number of contractors they used. Even when good times return – the thinking went – the misuse of consultants in this way was over; the lesson had been learnt.

Sadly that doesn’t seem to be the case. We’d already heard anecdotally from many of the consulting firms we speak to that some of their recent growth had been driven by clients who were short of people, having made swingeing cuts in their own staff numbers during the recession, but now we can put some figures round it – although they need qualifying and interpreting.

Our recent survey of quarterly buying trends suggests that between 15% and 38% of consulting falls into the staff substitution / contingent labour category. It also indicates that the bigger an organisation is, the higher the level is likely to be. Now, our figures come from purchasing teams: consulting firms would no doubt put the figure much lower, but that discrepancy doesn’t so much negate the point as reinforce it. Whether consultants like it or not, whether end-users would agree with this or not, this is how one important set of people see it – and that’s a worry.