Dealing with disruption in the recruitment and consulting industries

"Business models are less durable than they used to be. The basic rules of the game for creating and capturing economic value were once fixed in place for years, even decades, as companies tried to execute the same business models better than their competitors did. But now, business models are subject to rapid displacement, disruption, and, in extreme cases, outright destruction."

Marc de Jong and Menno van Dijk, McKinsey

The scenario outlined above is occurring across industries, throwing into flux the systems and processes of the past. Against this backdrop, business leaders are finding that they do not necessarily have all the appropriate skills needed to overcome the challenges they face. In seeking to adapt their organisations to the current climate, they inevitably require external capability.

However, the traditional solutions available to them are also being thrown into disarray. In fact, disruption is having a direct impact on the recruitment and consulting industries. In the past, these industries have adhered to autonomous business models that have appeared to be steadfast.

But things are beginning to change.

In this blog post, we will explore how the recruitment and consulting industries are dealing with disruption - and what this means for organisations seeking to find the right executive capability in a time of uncertainty and constant change.

Dealing with disruption

Both the recruitment and consulting industries have business models and market structures that have stayed the same for decades. But now they are in flux. As the wider business environment changes, recruiters and consultants need to acclimatise to provide services that reflect this new corporate worldview.

Writing for the Harvard Business Review (HBR), Clayton Christensen asks: "If you are currently on the leadership team of a consultancy and you’re inclined to be sanguine about disruption, ask yourself: Is your firm changing (at least) as rapidly as your most demanding clients?"

Disruption creates a reactive, domino-effect that can't be ignored. So, in general terms, how have recruitment and consulting changed?

The world is more connected and so organisations rely less on recruitment firms – but when they do use them, they expect recruiters to deliver more value than they might have in the past. Today, businesses want candidates to live up to their expectations – both in terms of their skillset and their ability to integrate smoothly into the organisation. Therefore, to succeed, recruitment firms now need to be more proactive, building up strong and mutually beneficial relationships with both candidates and businesses. Their networks need to be better than ever and they need to leverage data and technology. And they can't find just any candidate; they need to find the candidate. 

In consulting, firms are starting to offer more tailored and bespoke services. Organisations face unique problems at different times and their capability requirements change in relation to this. Businesses want in-depth expertise and support at every stage of their corporate project and so may look to different providers to achieve this. 

Returning to Clayton Christensen’s comments in HBR: "We are seeing the beginnings of a shift in consulting’s competitive dynamic from the primacy of integrated solution shops, which are designed to conduct all aspects of the client engagement, to modular providers, which specialize in supplying one specific link in the value chain. The shift is generally triggered when customers realize that they are paying too much for features they don't value and that they want greater speed, responsiveness, and control."

Increasingly, midmarket and boutique firms are taking to the stage. And we are also seeing the emergence of a new, hybrid model, where organisations offer both recruitment and consulting services, and seek to tailor their offering to their clients’ specific needs – from scoping and planning a corporate project, right through to post-delivery. 

The impact on how organisations find capability over time

Traditionally, recruitment and consulting companies have helped at either end of a corporate project, from full-scale business transformation, to a change in a particular department. Consultants come in to help strategise and plan (and possibly kick-start a project); recruiters find the people to implement the change and/or oversee operations post-implementation.

But now organisations are emerging that can offer more flexible help to cover each stage, from modular solutions, to services that take a business right through from the start to the end of their project. The traditional approach is still alive and well, but it may not necessarily be the best route for every business.

The table below outlines this new landscape. As we can see, an organisation taking a traditional approach would use a combination of recruitment and consultancy services for set elements of their project. However, a business using a modular or hybrid solution would draw on the relevant expertise at the relevant time, whenever that might be - it’s about finding the right people at the right time. 

Option	Strategic review	Planning and scoping	Delivery
Traditional multi-vendor	Consultancy	Executive team	Recruitment
Traditional consultancy	Consultancy partner	Blended team	Blended team
Modular or hybrid solution	Top calibre experts from a corporate or consulting background, varied over time - on an interim or permanent basis.

Businesses across the spectrum are facing disruption, as macro forces combine to place intense pressure on their operational structures. In this new landscape, business leaders are having to re-evaluate their organisation's executive capabilities. In many instances, the makeup of their current board is not conducive to implementing the fundamental changes required.

Therefore, businesses need to gain access to the right people, at the right time, over time, in order to meet the new challenges, they face. While business leaders have traditionally turned to recruiters and consultants for their needs, in an age of disruption, these business models are also evolving.