Now is the best time to hire in over a decade, and is an opportunity to bring in once-in-a-decade talent – a seismic shift from just two years ago.
We analysed over one and a half million data points to see what’s happened to the job market over the past few years, a period characterised by rapid flux: Initially, quantitative easing and COVID drove The Great Resignation and the biggest war for talent we’ve seen since being in business. This market, highly favourable to candidates, was abruptly halted by high inflation and consequent sharp quantitative tightening. The higher cost of capital resulted in some pretty severe re-valuations and a tough trading environment. As a result, reductions in wage costs were required through job cuts and hiring freezes.
What does this mean for employers now? For those in a position to, it’s a great time to hire rarely available and exceptional talent.
Jump to:
– Movemeon hiring index
– Have McKinsey, Bain and BCG been hit harder?
– What business types are most popular at the moment?
– Where to find future leaders?
Introducing the Movemeon hiring index and what it says about the market
We use our proprietary data to give an overview of how favourable the hiring market is for employers. Our analysis also explores how this varies for different consulting firm alumni, and people moving into different industries: PE, VC-backed scale-ups and Corporates.
Below is how the index has changed over the last five years. For context, it’s worth understanding who the Movemeon community are:
- It’s global: our 75k members are based across the world, with our main hubs in the UK, France, DACH, the Middle East, APAC and the US
- Everyone has worked in a leading consulting or accounting firm: 45% are ex-McKinsey, BCG and Bain; 30% are leading strategy firms; the remainder are the Big4
- They are future leaders and Board members: consultancies make up six of the top eight “CEO factories” (companies whose alumni become CEOs of the largest businesses. And this isn’t constrained to just large businesses, with a disproportionate number of unicorns founded by consulting alumni
In terms of interpreting the numbers:
- 0-25: a very hard market to hire in. Focus on retention, as replacing people is going to be hard.
- 25-50: a hard market to hire in. Be proactive and start talent pipelining for key positions.
- 50-75: a good market to hire in. Start looking to take advantage of the market, and strengthen key positions.
- 75-100: an exceptional market to hire in. Look to bring in exceptional talent, that you’ll only get a few chances to snap up.
The Great Resignation feels like a long time ago
After COVID, Movemeon’s hiring index spent a year below 25. This was an incredibly hard time for companies to hire. Increased focus was on retention (compensation rises) and other effective ways to onboard talent (freelance).
During COVID, uncertainty meant hiring pretty much drew to a standstill. In parallel, there were some initial layoffs from industries that were hit hard by COVID. We saw the index reach some of its highest levels from March 2020 to August 2020 – a great market to hire for those in a position to do so.
However, this soon changed. Quantitative easing and large social support packages trickled through, and at a time when everyone was spending less. The resultant economic boom saw companies’ hiring intensify. The Great Resignation poured further gas on the fire – with retention dropping sharply at companies. Our index dropped to some of its lowest sustained numbers between March 2021 and March 2022.
Throughout this period, companies were falling over themselves to attract the best candidates as the war for talent intensified. Salaries spiralled as the focus on retention intensified. The freelance market boomed as a quick solution to urgent capacity and capability constraints.
“You see who’s got swimming costumes on when the tide goes out”
W Buffet
With hindsight, we now know this was (hopefully) a once-in-a-lifetime shock to the system.
Just three years on and the picture looks very different. High inflation and consequent quantitative tightening has meant we’ve gone from one extreme to another. Overhiring has resulted in more radical action in recent months around redundancies, wage reduction, job cuts and hiring freezes.
The tide well and truly went out and, as Warren Buffet would say, it has been a great indication of who had swimming costumes on! With very few companies hiring, and more people looking, the index went from a sustained period under 25 to 100 in just 10 months. It has sustained those levels ever since (although we’re seeing some green shoots in Q1 2024).
Have McKinsey, BCG and Bain been hit harder? Or do they just have more options?
When we look at what this has looked like for the alumni of different consultancies, a very interesting picture emerges.
As you can see from the first chart, McKinsey, BCG and Bain went from some of the lowest numbers on the index to the highest number, in a matter of a single year.
When we compare the difference between Q2 2022 and Q2 2023, we see that MBB and the Big4 saw the largest turnarounds in the market. Interestingly the smaller strategy houses and the boutiques seem to have seen less of a shift.
The potential drivers behind this are complex.
It’s hard to determine whether the larger change in McKinsey, BCG, and Bain alumni is driven by just how in demand they were before, or just how many are looking now. Based on our initial analysis, it appears the demand factor plays the larger part.
For the current consultants, it has been reported that more people are being managed out of McKinsey, Bain and BCG than other firms.
For alumni, it’s more complicated. The hardest-hit sectors in 2020-21 (e.g., VC-backed scale-ups; PE post-deal) had a disproportionate flow of MBB consultants doing this type of work.
The other driver could simply be that they have more options. In a highly competitive market, their brands might mean there are still doors open to them. Leading them to be less willing to “sit through” their current work position and proactively look to move.
What we can say is that this is the best time we’ve ever seen to hire alumni from these firms.
Corporates more popular than scale-ups; PE losing its talent edge
We also analysed how this picture varies according to the type of business.
Even in the hiring frenzy of the Great Resignation – Private Equity was a competitive place to find a job. Numbers of people employed in PE has not kept track with growth in terms of assets under management and there has always been strong interest in moving into the sector.
Interestingly, over the last 6 months, we’ve seen the desire from candidates to move into the Corporate and Advisory sectors grow to the same level as into PE.
Now is the best time to hire in a decade
Returning to Warren Buffet’s old adage – those wearing swimming costumes can now take advantage. Companies in a position to take a through-cycle approach, and potentially sacrifice some margin in the short term have a once-in-a-decade opportunity to transform their organisation’s talent.
Consultancies are future leader factories. This has been well documented for years, and recently re-analysed by OnDeck. They looked at the CEOs of the largest operating companies in the US and saw where their alumni came from. We’ve copied the list of the top 8 below, 6 of which are consultancies.
Is now the best time for your business to hire its next CEO?
If you’d like to find out more about how Movemeon can support your hiring, please get in touch.