(4 votes, average: 4.75 out of 5)
Loading ...
Charles Burleigh, a fellow Sales Performance Compensation consultant, data integration expert and blogger, wrote an interesting post about consulting rates.
In his post, Burleigh asks an interesting question: should a senior consultant drop his rate in order to remain engaged on a project? He notes that recent Callidus TrueComp positions being advertised only fetch around $40-$50; less than half the “acceptable” rate. He attributes this drop to less experienced consultants willing to take on these roles at lower rates, and to clients that may have unrealistic expectations.
I think there are several forces at play creating this situation:
Should senior consultants accept lower paying contracts? There may not be other options. Keeping your skill set up to date and getting more relevant experience during the market downturn (even at lower rates) could make a difference in getting a more lucrative contract once the market recovers.
This being said, companies should be very careful to choose consultants or consulting companies with the the right experience, and not settle with a junior consultant only to save a few bucks. After all, you often get what you pay for. But keeping this in mind, for the reasons I have outlined above, now might be a good time to kick off an SPM project and obtain ‘better-than-usual’ rates.
In the meantime, an industry-wide consulting rate drop might be just what is required to generate more demand, to help the sales performance management industry to prosper, and in turn cause the consulting rates to climb back.
Good article, Im interested to see what companies do in Q3 and Q4 which are traditionally the busiest quarters for this industry. I understand the lack of new projects in this recession, but will be keen on seeing if companies are avoiding year end plan changes as well. Fingers crossed.
Undoubtedly in the past couple quarters there has been a form of reserve price gouging going on with some companies attempting to reap the benefits of a down economy and some consultants being in unfortunate personal economic situations that is allowing this practice to continue. Contrary to the article I see this as both a short term aberration and an unsustainable business practice (from both sides). Ultimately clients have a fiduciary responsibility to get the best rate possible but they also bear a responsibility to hire qualified consultants and minimize risk. The economy will rebound and rates will return to normalcy in due time, but long term there is certainly room in the market for price segmentation as long as people understand the risk to reward value proposition. Within this niche I believe the article hit the nail on the head with the cliché ‘you get what you pay for’ and in my opinion the short term benefit of hiring low cost consultative support vary rarely outweighs the risk of sub-par work , the cost to redo, lost opportunity, and internal “tarnish”.
In support of the article the last few quarters macro-economic forces have caused a cascade of events to enable the classic fundamental of Supply vs. Demand. The working capacity of the consulting community (regardless of skill) has significantly outweighed the project demand and in turn applied downward pressure on consulting rates. On the supply side we saw acquiescence to the pressure in the form of firms bidding reduced average rates and the occasional silly rate in attempt to at least subsidize expenses or to try and win business on a lowest cost model. In addition to actual soft demand another factor unrelated to the current market is we over the years see recruiters post up job postings with little understanding of the market and at rates that are entirely unrepresentative with the experience, knowledge and value that an experienced consultant can bring to a client.
On the positive side in my talks with vendors, clients and other system integrators I hear a lot of sales activity going on, indicating demand combined with pent-up demand from the prior quarters. The economy will need to continue to right itself but Short to Long term I remain very bullish in the ability for full service Sales Performance Management consulting firms to add tremendous value to their clients around human capital, compensation plans, business process and enabling technology and to do so at a fair market rate.