The Message Behind the Demise of Aon Hewitt Canada’s Rewards Practice

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Feb 12, 2014

Aon Hewitt has laid-off its reward consultants in Canada while retaining other parts of its HR consulting practice.

While this sort of thing is common in business, it comes as something of a shock to the Canadian HR community where Hewitt was long seen not just as one of the biggest consultancies but also one of the nicest.

There are, no doubt, many particulars around the decision, however perhaps the main takeaway is that consulting can be a tough business even when you are well established.

While the HR community ponders the fate of Hewitt’s rewards practice, the Canadian legal community puzzles over the demise of Heenan Blaikie, a leading player in Canadian legal services for 40 years, now in the process of winding down operations. Another high-profile case is Michael Porter’s strategy consultancy the Monitor Group, which went bankrupt just over a year ago.

No one is safe in a changing competitive landscape.

Tech and the changing world of consulting

The technology angle on the Aon Hewitt story may be that these days companies would rather spend their HR budget on reward software rather than reward consultants. It is not that software replaces consultants, just that the software is new and what consultants are offering has not changed much in the past decade.

The consulting business is not what it once was. Years ago, HR managers had time but lacked expertise. Now, they are likely to have the expertise but no time.

That makes for a different kind of consulting intervention. Consulting firms also find developing talent more difficult, in the old days they could bill out juniors at profitable rates while developing them into capable consultants. Now companies resist paying consulting rates for inexperienced talent.

In the case of Hewitt, being acquired by Aon in 2010 probably did not help. The world of a big corporate may not sit well with the odd world of consultancy.

When advertising giant Saatchi & Saatchi acquired Hay Management Consultants in 1984 they were horrified to find that the consultancy was, on paper, always just a few months from bankruptcy.

HR consultancies typically go from project to project, busy today, and hopefully busy tomorrow, but with no revenue firmly book more than a few months ahead. Eventually Hay broke free, taking with them the brilliant McBer team which changed the face of HR with the idea of competencies.

What’s interesting

  • A deep pocketed, well-established brand with a good reputation is still no guarantee of success in today’s world of HR consultancy.
  • The excitement in HR is now driven by new technology from vendors rather than new ideas from consultants.

Where the real value is

  • Recognizing how the world of consulting is constantly changing and models that worked in the past may not work in the present.
  • Pondering how the pressures on consultancies are a direct reflection of changes inside companies. It is worth reflecting on how the needs and capabilities of your HR function have changed in the past decade. How has that affected your use of consultants?