COVID19 Redundancies Risk

Big4 Coronavirus COVID covid19 MBB redundancies
Recent activity on May 26, 2020
6 Answers
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Anonymous A asked on May 03, 2020

Hi all,

These are uncertain times and we are about to endure the worst economic downturn we have ever seen. I have some questions I thought I would ask to the community.

- How likely it is that top consultancies such as MBB, Strategy&, Roland Berger, EY-Parthenon, OC&C etc will decide to lay off consulting employes? These are different companies so feel free to differentiate amongst them

- If they decide to do it, when would they? After how many months of this downturn? If they don't what other steps can they take to stay afloat despite much lower revenues?

- Is there any seniority level more likely to be laid off? E.g. new joiners vs. senior analysts etc.

- How likely is for offers of September starters etc to be rescinded?

Thanks very much and best of luck to all candidates in these difficult times.

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Clara
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replied on May 04, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Here are my toughts:

  1. Comsulting companies are indeed already laying off, but business as usual. Consulting companies have performance reviews and apply the up-or-out rule.
  2. See answer 1
  3. As always, the lower parts of the pyramid get usually more impacted. The higher you go, the more secure the job is. However, top layers are also going to be affected, with less promotionns and for sure less partners naming this year.
  4. Depends:
    1. For those who got to do their interships this summer, it's all about the performance
    2. For those whose interships got cancelled, I see very rare that their offers get rescinded.

Hopr it helps you!

Best

Clara

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Anonymous updated the answer on May 05, 2020

Dear A,

This is one of the central question nowadays. Actually, it depends on from the company. Some firms like AlixPartners and Roland Berger have a secure mechanism in their DNA, while they are focusing on a lot of restructuring job and digitization. So, this consulting firms will be stable during the crisis and probably even hire some candidates, because their restructuring and cost cut management job will increase in the future. It will outbalance the decreases in other areas like engineering and automotive. In general, of course, many firms will face some risks in a long run, however, I don't think it will come to massive layoffs, but it also depends on geography and local economies. Some geographies will perform better for these firms, others - probably not. So, as for your further questions, the bigger the firm is - the more stable it will stay through the crisis. So lay off would rather be possible with a small firms, and probably companies will follow the principle First-In, First-Out and up out. If they were to lay off people, probably, will get rid out of junior hierarchies, as well as out of those consultants who are not performing very well over the last years.

However now the war for talents is that big and the crisis also bringing the opportunity to consulting firms, so I don't expect the lay-offs which we have seen back in 2008.

Hope, it helps.

Try to focus on the chances, because many companies are still hiring and after COVID-19 will be over, the crisis will come in, and companies will be still looking for new consultants in order to advise their clients during the crisis times, so be prepared and use your chance.

If you need any help feel free to reach out.


Best,

André

(edited)

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Anonymous A on May 05, 2020

Thank you. Do you have any recollections about how many, how, and what type of people were laid off by consulting companies in 2008?

Anonymous on May 09, 2020

No, unfortunately, I don't have any statistics on that, but I'm happy to share my insights from that time with you and what I did to survive the last severe financial crisis and how did I manage to successfully start in consulting after it was over

Ian
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updated an answer on May 26, 2020
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi,

It depends.

Some of the tier two firms are cutting costs through:

  • Setting pay to 80%, with an opt-out policy (KPMG)
  • Letting go of some staff with <6 months tenure (EY)
  • Forcing unpaid leave for staff not on billable projects (Deloitte)
  • Stopping bonuses

So far, it seems the tier 1 firms are cutting some bonuses and being stricter with the "Up or out" system. It seems unlikely they would rescind new hire offers, but you should always have a plan B.

Al this being said different geographies are different, as are different roles...even in tough times companies do hire and projects are won.

By the way, if you're iinterested in trying out cases that deal with the impact of the coronavirus, check out these two cases:

https://www.preplounge.com/en/management-consulting-cases/brain-teaser/beginner/coronavirus-times-194

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/chinese-chess-191

(edited)

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Anonymous A on May 05, 2020

Thank you! Do you have sources from any of those firms' policies?

Ian on May 26, 2020

Hi there. Yes, a lot of this is inside contacts. However, a number of these stories have now been publicized.

Anonymous replied on May 04, 2020

Hi there,

Don't think anyone would have a definite answer for you, given the uncertainties that no one can predict. The situation depends on which country you are in, and it is always evolving.

- Top firms have not laid off people in the same way an industry company does, but "up or out" could be more strictly followed, the bar for getting an offer would be higher, some might be more willing to let people take leave of absence

- What I know is multiple firms, in order to stay afloat, started measurement from the Partners. Not in the form of laying off, but in some firms Partners' quarterly bonus has been delayed, and in another the Partners are all taking a 30% salary pay cut for a few months. TBH, the result would be small if they start from the bottom - new joiners or analysts salary is way way smaller than Partner, so they won't squeeze out as much if they start from the bottom.

- On offers, it depends on the company and the country situation. I don't think anyone here can give you an answer. Top firms like MBB might not rescind, but whether start date still stays or not could depend on the COVID situation.

Hope it helps,

Emily

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Anonymous replied on May 05, 2020

Hi,

It really depends on the region but irregular lay off in SE Asia will be the last option as consulting demand still exist even in this challenging times. In addition, the firms expects and want to be ready for a rebound so losing people will not be ideal. To avoid laying off people I saw firms do a mix of these measures: deferred partners compensation, delay bonus and promotion, reduce working hour, etc. Having said that a regular lay off (i.e. up or out) will still happens

If lay off happens it will really be a performance based decision, again they don't want to lose the good people so at all level the bottom performer will be lay off first

I haven't heard any offer rescinded in SE Asia but it is possible depends on the firms liquidity and how much risk they are willing to take.

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Vlad
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replied on May 04, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

1) They are already laying off, but not in a sense you are thinking of it. Consulting companies have performance reviews every quarter and during the downturn, the bar is much higher. E.g. whatever was tracking performance before covid will be now considered as low

2) Answered in the previous

3) The bottom layer is usually more impacted. There is a lack of managers in general, so analysts and associates

4) Again, it's all about the performance

Best

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Clara gave the best answer

Clara

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