Dealing with consulting firm layoffs

It is often said that life in the consulting industry is feast or famine. Actually, I think they say it about every industry, but I know from experience that it is true in consulting. After twenty years in consulting with various firms, I’ve learned that business naturally ebbs and flows. It can be caused by the national economy, shifting client needs, changes in the firm’s sales approach, or a host of other reasons.

When it does happen, it affects everyone in the firm in one way or another, depending on whether you were laid off or survived.

The victims

I’ve been the victim of consulting firm layoffs twice in my career. I’ve also been one of the last men standing when the company flamed out and closed its doors. It’s a scary feeling no matter where you are in your career. There are car payments, mortgage/rent payments, and mouths to feed.

Once you get through the denial and bargaining phases, and graduate to acceptance, you want to get your résumé updated and out to your network. The first time I went through consulting firm layoffs, I was surprised that other people in my network did not have the same sense of urgency that I had in finding a new position. As I matured, I realized that they had full-time jobs, lives, and other priorities. They couldn’t drop everything to line up interviews for me.

I also learned that if I maintained a network throughout my career, not just when I needed a job, people were more familiar with my personal brand and were more willing to help.

I felt a stigma that I think every downsized person feels when he or she is let go from a company for the first time. There is a tendency to feel a diminished sense of self-worth; a feeling of being singled out, especially when your peers remain employed.

See my related post: When Leaving Your Job Is the Right Option

In consulting, there are usually three primary questions firms ask themselves as criteria for selecting the people that are let go:

Is the consultant currently adding value?

Translation: Is this person billable? If you are on a billable project, few consulting firms are going to remove you.  You’re adding to their bottom line.  They need more like you, not fewer.

Does the consultant have potential to continue adding value?

You may not currently be on a billable client project, but you have knowledge of an industry or technology, or have some in-demand skill that will help them acquire clients in the near future.

Is the consultant too difficult to place at a client?

If a consultant has skills that are no longer in great demand, it may be hard for the firm to find clients that will accept that person. Additionally, even the most selective and vigilant firms hire the wrong people. By “wrong people” I mean they don’t fit with the firm’s culture or may just not be cut out to be consultants. Consulting is more than just having a skill. A consultant needs to be able to deal with clients, help them solve their business problems, and communicate with them diplomatically.

It is because of these three categories that firms have cut-backs in waves. If a firm senses a downturn in business, the consultants in group #3 are usually the first to be eliminated because they tend to be the greatest drain on the bottom line. If times get worse, the firm starts looking at category two. That group is usually filled with valuable people, the firm just hasn’t created enough business to place them.

None of these are necessarily a “death knell” for a firm. Layoffs simply happen depending on the ebb or flow of business. Firms have to cut back on staff to survive the inevitable downturns. If the firm is unable to generate enough business moving forward however, layoffs will continue until a skeleton staff is there to lock the doors for the final day of business.

Survivors of Consulting Firm Layoffs

It can be a bittersweet moment for those that survive a layoff. Deep down, your selfish side is happy that you lived to work another day. But these were your friends and colleagues that were asked to leave. You don’t know if they will be bitter and view you as the enemy – you now represent the firm that booted them. What do you say to these newly unemployed peers when you have to face them?

You also wonder if it’s just a temporary reprieve. Am I part of the next wave? Do I need to start worrying? Am I foolish to stay with a sinking ship?

All of these are legitimate questions. Each company’s situation and each person’s situation is unique. All of the answers could be yes, all of the answers could be no, or some combination. Each person needs to decide for himself.

When I went down with the ship, the company I worked for was in chapter 11 bankruptcy protection for a year. They were trying to restructure their debt and turn the ship around. I was trying to purchase my first house and didn’t want to have a recent job change while I applied for a mortgage. I decided that if things didn’t start turning around by the time I closed on a house, I would begin seeking another position.

Thirty minutes after signing papers on my new house, I learned that the company filed for chapter 7 bankruptcy. They went out of business. The good news was that it didn’t stop me from getting the mortgage. The bad news was I didn’t know how the hell I would make the payments.

In that case, things worked out. Within a month, I was hired by a top-tier consulting firm which greatly enhanced my career and the opportunities I was exposed to. In fact, all three times I’ve lost my job, I moved on to something more interesting, with more opportunity.

If you find yourself as the survivor of a round of layoffs here are some dos and don’ts in dealing with it effectively:

Do

• Reach out to your peers that have been let go. They may be embarrassed about reaching out to you or possibly even depressed. Offer to help them with whatever you are able to do. You can provide introductions with contacts in your network or offer to be a reference for them. You may help by simply providing a listening ear.
• Continue to keep in touch with them. Periodically call, text or email them to let them know you’re thinking of them. Make yourself available for coffee, lunch, or just to talk.
• Consider staying with your firm. Some people are so risk averse that they leave a company at the first sight of bad times. Even in good economies, business downturns happen. You just survived, so it’s a good sign the company sees value in you. If you stay on and help the company get back on their feet, it may help you in the long run. They may reward you for your loyalty, or it might just be a good experience for your resume.
• Keep your resume updated and maintain your network. This is something you should always do, in good times or bad.

Don’t

• Slam your employer. You may be disgruntled and want your former colleagues to know how miserable it is as a survivor. This won’t make them feel any better and will just make you feel worse. Try to keep it positive.
• Offer help if you can’t do it. If you don’t believe that your unemployed peer was a good employee, don’t offer to be a reference. If they ask, you may need to be brutally honest. Tell them you can’t do that and tell them why. You may lose them as a friend, but your professional reputation is on the line if you have to lie to give them a good reference. Supporting them and lowering your ethical standards are two different things.
• Give too much credibility to the optimistic outlook by management. They may tell you that the sales pipeline is strong; we’re just around the corner of prosperity and this is just a blip on the radar. They may also tell you that no more layoffs are planned. They have to say that. Look for facts and indicators of progress. Monitor for actual sales to occur. Watch for additional hiring. If key executives begin leaving, they are privy to information that indicates how the company is actually going. So that could be a sign too.
• Just leave for the sake of leaving. Of course it depends on your personal financial situation, but if you have the tolerance for risk, don’t just bail on the company when the first headhunter calls. If you do decide to leave, try to find something better. If you are not selective about where you go, you could be in the same situation, or worse within a year.
• Make your job search too obvious. If there is another round of layoffs and your management is aware that you are actively looking, you could move up on the list as a layoff candidate. You have a much better chance of finding another job if you are already employed.
• Burn bridges. So you hate your current employer. You get another job offer and quit with a vengeance. Whether you tell your boss what you really think of him or decide to urinate on his desk, you have nothing to gain from it. You may not plan to use his name as a reference, but if someone at your next company – or the one after that – knows him, that person may ask his opinion anyway. Exit gracefully. Thank them for the opportunities and move on. If they get nasty, take the high road. Be a professional. You’ll be glad you did in the long run.

Layoffs are a fact of life in the modern business world. Nearly every company experiences them at one time or another. Whether you are a victim or a survivor, how you deal with this period of adversity will define your personal brand for years to come.

If you would like to learn more about working in consulting, get Lew’s book Consulting 101: 101 Tips for Success in Consulting at Amazon.com