I wonder what happens at my place next year - I suspect bonuses will be down 50 to 100%. Will that cause change amongst any of us effort wise?
My S says he’ll be upset if they give on target bonuses to the junior staff at the expense of the senior associates and VPs who are bailing out the company at the moment. He’s billing more hours than any of the analysts, despite having an extra ~10 hours a week of non-billable activities to do as well.
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We’re set up that we all have a target; depending on the job. But then, based on your rating, you can get a multiple. So last year, for example, I got 115% of the target. Others 100% or 105% or I suppose someone rated underperform 90%, etc.
But if two people make $100K and the target is 10% and one earns $12,000 and the other $10,000 - who’s the smart one?? Likely the one who made $10K…working less.
Every year in my last life I consoled someone who’s review was “average” vs. those above average. I used to say - what time are you in? - 8:30. And out - 5P. Others are working 60-80 hours - so you get .5% less raise. Who’s the smart one here?
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Yes, at least his bonuses are slightly wider range, eg if your target bonus is 15% of salary you might get anywhere from 10% to over 20%. But still, if you don’t need the money because your base salary is high enough, some people won’t care.
The alternative for motivation in consulting is more of an up or out model, where it’s not just about your bonus and annual raise, but also whether you’ll be allowed to stay.
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I laugh at consulting - at both my companies, I’ve seen presentations clearly used for multiple companies - and our last project, we told them the goal and asked them to create an “objective” survey to have the thoughts validated. Several of those I call on gave me a copy - it was so subjective, that the company got the answer it wanted…and the path taken failed and has been undone.
I have a friend who is a VP in entertainment who tells me that her management hires them and they tell her things like, to cut costs, you need less headcount. She’s like - hmmm - thanks.
Not a huge fan - no idea why companies hire these MBB firms…but that’s another issue…but i wonder if it might eventually catch up with them. Personally, I don’t see the benefit.
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To validate their strategic decisions to their leadership and Board.
That’s what they did - the management made a horrific decision and a leading firm validated for them - that it was what the customers wanted.
They were so aghast at the survey - that’s why they sent to me.
Sad quite frankly but at least, years later, the work was completely undone.
In his case it’s economic consulting and they have vast databases of proprietary market information that clients wouldn’t otherwise have access to. Some of what he does is fascinating, he was telling me about buying cellphone location data to see where everyone goes in a city so they could figure out where they come from and which areas were most valuable.
I’m also not a fan of generalist consultancies. I’ve spent far too much of my career bailing out MBB teams after being hired as the subject matter expert when they didn’t know what they were talking about.
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It’s not just about smart, it’s about incentives. Is that extra $2k enough of an incentive to work harder? I think the smarter companies incentivize properly via bonuses and the best way to do that is to have significant differences between good and poor performers.
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I’d like to find one but it just may be my industry.
Consultants …. I remember back in my early economist days the retail bank I worked for got Big Name Consultant in to cut costs. These guys tried to do textbook work study on us. Um, we’re economists. Generally we’re either reading (researching) or fiddling around in spreadsheets or eViews or writing about what we fiddled around with. They didn’t know what to do with us (I had one guy sitting watching me read research reports for an hour… um) and the head of department chucked them out after a day. They did get rid of our tea lady, and replaced the tea ladies with self serve machines that had crappy tea and the occasional cockroach. I assume they do something good somewhere for the industry to have reached the size it has, but one size fits all doesn’t work.
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So have I.
Signed,
Non MBB Consultant
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It is somewhat interesting to relate the differences between consulting in the U.K. and US. In the U.K. it wasn’t uncommon to hire consultants because the client wanted their best answer. In the US it’s almost unheard of to hire consultants to do anything other than endorse the preconceived expectations of management, even in due diligence. Here you have to be part of the team. Whereas in the U.K. might never even find out what the client decides to do with your recommendations.
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My workplace has access to this data. It is pretty mind blowing the level of information it will give you. We got it primarily for Econ development/planning use. I declined having access to it. I’d spend all day playing with it. I can still ask my interdepartmental coworker to do the analysis for me if I needed something.
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Yes that’s what he does (“Econ development/planning use”)
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To get back to job prospects and away from bashing BCG…
In any hiring boom people tend to forget that unless you are a “once in a lifetime talent” (Yo Yo Ma, Nobel prize winning physicist, Mikhail Baryshnikov), most people are NOT irreplaceable. Even if you are summa cum everything in life. Even if you’ve been blowing the cover off the ball in every competition you’ve been in since second grade.
And then the boom ends, and reality hits. And in my non-economist view, this is one of the reasons why the tight job market is so disturbing to students who remember their friends getting fantastic, multiple offers a few years ago and saying things like “I’d like to travel to Thailand after graduation, so can I have a start date in October instead of July?” But this current downturn is NOT unique, even if it feels that way. There were several recessionary/high unemployment years in the 1970’s. There was a major hiccup that impacted tech, aerospace, and a few other industries in the 1980’s and 1990’s. There was a HUGE pullback after 9/11 (understandable) but it had actually started first quarter of 2001 when a LOT of companies quietly cut their hiring targets-- and then 9/11 provided ground cover for further cuts. And of course- 2008/2009.
I get called an elitist regularly on CC, but I will play my broken record (in modified form) one more time, just in case there’s a parent on here who really wants to help their kid figure out a solid launch strategy (and not just whine about how unfair it all is that Starbucks is no longer allowing “work from home” for new corporate employees).
1- Rigor counts. When your kid has the choice of taking “Buyer behavior” for a marketing major, vs. the MUCH more difficult statistics sequence (i.e. learning how to manipulate data, not just a high level understanding of “this is what a regression is”), take the harder course. It will make you more employable, regardless of what the economy is doing.
2- Learning core skills vs. learning the kind of content that becomes obsolete very quickly gives you optionality down the road- in any economy. So classes that use primary sources vs. tertiary sources (the difference between reading what Lenin actually said, vs. reading Wikipedia) are going to help you, no matter what you end up doing professionally. Reading, analyzing, summarizing, comparing, interpreting. These skills are more important than memorizing a textbook about International Business. What happened when the Euro was introduced? Thousands of textbooks about foreign exchange got sent to the shredder, that’s what happened.
3- Flexibility is critical. Unless you need to be near your oncologist (god forbid) a 22 year old does NOT have the “juice” to be picky about location. Back in the day recruiters would bend over backwards to give new hires their first, second, or sometimes third choice of location. But everyone can’t live in Paris, and someone needs to be based in Dayton. When YOU are the new grad interviewing and you make it clear that Dayton, Tulsa, Cedar Rapids, Duluth- hey, you love exploring new places- that gets you in the door.
4- Learning fungible skills is more important than specializing at age 22. What does that mean? If the “dream job” is becoming a curator at the Smithsonian, than you are better off working as the junior member of a conservation team for a Historical Society in Indianapolis, than you are working at CVS and moonlighting as a bartender in DC. Yes, I know, “I’ll make better contacts by being local”. But that’s a myth. You make contacts by learning about conservation in Indianapolis, and when your boss asks "who wants to go to the annual meeting of the AAM (a big deal in museum circles where you will meet EVERYONE) you raise your hand and go to the AAM. There are more resumes passed around at these events than there are at the checkout line at CVS.
There’s more-- but I’d hate to cement my reputation as the crotchety old person who has been hiring into more recessions than you can count.
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Hope not…or your bonuses could be down the following year if they are performance based.
Where’s the fun in that?
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Blossom’s list is spot on! I’m going to add:
Conscientiousness and Reliability- Developing those skills early and having that reputation while you are still in school in classes and doing internships/coops.
My D has two colleagues (both 10 years older) who do the minimum effort. One complains about not being able to leave early on a day to day basis, doesn’t answer his work phone when he’s supposed to be on call, and does the bare minimum (and thinks he’s smarter than everyone else to boot so works very poorly with the guys on the floor). The other drops the ball on every project he’s assigned, doesn’t do what his BOSS asks of him, and bails on participating in all the workshops, conferences and certifications that his boss wants him to attend. It doesn’t take a crystal ball to know who is going to be passed up for promotion and who will get fired if they need to make a headcount reduction. And neither would have made it out of the company co-op program with a return offer if they had started there.
And maybe I’m being naive here but no one in our circle, young or old, is motivated by bonus payouts. They want to do a good job because they intrinsically care about doing a good job. To me that’s like the little kid who is working for the perfect report card because they are going to get a toy, not from the internal satisfaction of learning and becoming more competent.
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Well in my industry - bonuses are based on profit - and then some individual components beyond to differentiate employees.
Post covid, profits boomed - yes, supplier costs went up but OEMs built in more profits too. It wasn’t just the dealers charging over sticker but OEM discounts to dealers all but disappeared.
Today it’s opposite. OEMs are flooding dealers with incentives, which then get passed on to you. So that’s a huge profit swing from the last four years or so - incentive dollars alone.
Then you have electric - which the government has removed support and frankly, the public, by and large, hasn’t accepted. Dealers don’t want - so OEMs have had to offer huge discounts and still sit on many dealers refuse to take (so that means more discounting) And then the $7500 tax credit goes away end Sept - which means OEMs will have to dig deeper in discount for what remains. So now is actually a great time to buy I believe - if you want an EV (non-Tesla).
So in my industry and I believe throughout - bonuses are profit based.
For several years, we got double the pre-covid bonus. Now, I don’t think we’ll even see the pre covid bonus, if we get any bonus. But if we get no bonus, then they will have a retention problem - but with the job market today, maybe they are ok with that. Each company will see that differently.
So in my industry, from all I know, bonuses are profit based - but in my situation, i can maybe have a 10-12K swing based on my individual performance. Probably half of that if we simply hit target vs. the double payment of target in the post covid years.
My son’s company is the same - different industry - his target is 10% of pay - based on the company’s performance. I’m not sure if his has an individual. Last year they did well so he got 14%+ of his salary. He had a good review but not sure it impacted the bonus; just his annual increase I believe.
At my last company, they called your annual raise merit based - but honestly, it was given based on where you were in the payband. If one person was $80K and stunk, they might get 4%. The next person int he same job was good but making $100K, might get 3%…because companies ultimately want all to make the same for the same job…so that’s another consideration at some places.
Back to auto OEMs today -look at Ford - building this massive, multi billion dollar plant in TN - and it’s stopped until 2027 and then who knows. The world changed in automotive - and quickly.
A lot of OEMs have invested in electric but slowed down. Tesla and to an extent Hyundai seem the winners so far.
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