Is Bigger Better?
One significant driver of the trend toward expansion is the push to go global. Consulting firms—particularly larger firms with parent companies outside of Canada—are feeling the pressure to offer clients an international perspective and integrated worldwide service delivery. “There’s a lot of globalization going on right now,” says Anthony Cardone, senior vice-president, group savings and retirement, with Standard Life. “The consulting firms…they’re leveraging their core competencies across the world and using best-demonstrated practices within respective markets.”
Depending on the clients you’re targeting, being a larger player with global expertise may be a competitive advantage. “Having global strengths is getting to be a bigger and bigger issue,” says David Burke, retirement practice director, Canada, with Watson Wyatt Worldwide. “It used to be that the local consultant sharing his or her personal experiences would be enough to satisfy the needs of most organizations. That’s just not true anymore. You’re not going to be able to provide the kind of topnotch advice that you need to provide to meet the needs of most sophisticated organizations unless you have access to a strong global network.” Some say this is particularly true for large Canadian multinational companies, which tend to gravitate toward consulting firms of similar size and strengths. “Size obviously is a factor, especially when you’re talking about global presence and you’re dealing with multinational organizations,” says Cardone. “Certainly, the bigger carriers have a greater probability of growth by leveraging those relationships they have around the world.”
Clients with a more diverse workforce may also prioritize global capabilities. The University of Toronto, for example, hires faculty from all over the world with different cultural backgrounds and workplace experiences, says Angela Hildyard, vice-president, HR and equity. She believes that a global consultant is better positioned to help the university manage that diversity, offering a better sense of the wide range of available alternatives that could potentially be reworked to meet their specific needs. “We’ve certainly relied on our consultants a lot to help us look at different options,” she says. “We look for consultants who have an outstanding knowledge of the whole range of issues, that have a great reputation and that work globally.”
Larger firms often have greater resources at their disposal, such as global research teams and sophisticated technology, which smaller firms may not have. With access to scalable technology, many consultants see plan administration outsourcing as another target market for the consulting industry in the future. “There’s still plenty of growth when it comes to administrative outsourcing,” says Fred Vettese, chief actuary with Morneau Sobeco. “Administrative solutions through technology is really that backbone on which we can provide all the other consulting services that clients need in order to support their plans.” Jo-Anne Billinger, senior vice-president with Buck Consultants, believes that due to the cost and resources necessary to establish technology platforms for plan administration, technology will become a key differentiator. “The price of admission and ongoing support to have good technology solutions has and will continue to eliminate players,” says Billinger, adding that “you need not only global knowledge; you need global delivery resources.” These capabilities are particularly important for companies looking to pair HR consulting services with outsourced administration of their group benefits and retirement plans. They’re also a priority for large firms that want to centralize reward programs on a global or multinational basis, adds Kevin Aselstine, managing principal with Towers Perrin.
But do you have to be a global player to compete? Not necessarily.
The markets are different for smaller and larger firms, consultants say—they typically aren’t targeting the same types of clients. “There still is room for smaller or more local firms,” says Aselstine. “There’s a part of the market that may even have a preference for that.” Just as larger companies may gravitate toward global players, smaller companies may lean on local consultants for help with their pension and benefits issues. “It is very rare that I get knocked out of competition by a large provider and, conversely, they’re just not interested in my business either,” adds Frank. “So it works out well.”
From a competitive standpoint, consultants say size isn’t the only consideration, nor is it usually the deciding factor. “Experience, knowledge and talent are really the key factors from a decision-making perspective, versus just sheer number,” says Sarah Beech, managing principal, consulting, with Hewitt Associates. It’s much more important for consulting firms to recognize their strengths and where they fit into the market overall. Surviving in a competitive industry is really a matter of finding your niche.
