Consultancy firm Kearney grants stake to junior staff in company amid skills shortage
“We give them an equity grant that will increase in value as the equity value of the business increases, which vests when they become partners,” he said. The Australian Financial Review on his first trip to Australia since COVID-19 hit.
“There’s a financial upside and an ‘if, then’ element, which is very good for retention and motivation, and it also embeds the spirit of ownership in the past.”
Everyone at the corporate management level or equivalent has the opportunity to buy. Staff at this level manage other colleagues but do not yet manage clients and typically have two to three years of experience.
‘I can do it’
Mr Liu said it was a “junior but very crucial” level in the overall corporate hierarchy and – most importantly – was also when staff turnover was highest.
“You know enough about how it works and how the team, results and clients should be delivered…you have a lot of interest from clients and other types of professions, so you’re tempted by this,” he said. .
“So you’re very valuable to yourself, you have a lot of self-confidence and ‘I can do it’.
“So that [scheme] is a good opportunity for us to incentivize and excite people on this level, give them something long term… and make the right long term decisions to be a partner one day.
Mr Liu said that while some employees would still leave for other roles – “it has always been a profession where people grow and go” – the program would help motivate others to enter into a partnership and develop “good people”. behaviors” to invest in the business on the way.
Although the program naturally reduces the profits of the partners, if not in absolute terms, at least in terms of the amount they are paid each year from the company’s profit pool, Mr. Liu believed that this would lead to a increase in long-term income.
“The main constraint [to growth] it’s the resources…and the biggest drain on business value is losing the people you want to keep.
“The business case is that you excite the next generation, they will be better and more engaged partners, so there will be even more of them and that will make the cake bigger.”
Mr Liu also predicted that the strong growth in the strategy consulting space, whether through boutiques or elite consultancies such as McKinsey, would continue after the pandemic.
“It’s pretty clear that strategy consulting has been and will continue to be a growth industry for some time,” said the US-based consultancy chief.
“Looking at our own business, during and after COVID, there is definitely a double digit rate [growth] everywhere and in some places, even in mature geographies, practices and geographies, 30 to 40 percent.”