HR Consulting

Human resource (HR) consultants respond to a client’s human capital needs, advising on and implementing a wide range of strategies designed to maximize the workforce’s output and potential. Consultancies with a specialist HR focus are hired by clients to assess, develop and attract talent; transform how the workplace operates; engage employees; improve performance; and draw up compensation and benefit plans.

The smallest consulting segment, HR is undergoing a fairly dramatic transformation as data-driven people analytics overtake traditional focuses on systems and personal relationships. HR consulting is also not tied down to working with human resources departments. Human capital issues arise in a wide range of contexts — from M&A deals to new talent management strategies for a new business function.

What does an HR consultant do?

Depending on their knowledge and experience, HR consultants are likely to work in one of three distinct functional capacities. Developing and implementing specific HR models or systems is the type of work most commonly associated with consultants in this segment. In this role they will advise and support HR managers in improving their department’s performance.

Clients also hire HR consultants to help them navigate a more generalized maze of human capital issues. Whether the organization is undergoing a root and branch transformation due to a merger or acquisition, or investing in an entirely new company culture characterized by a diversity & inclusion drive, HR consultants will be on board to lend a hand.

The third broad function of HR consultants is to help clients oversee a major shift in human capital strategy. For example, an in-house advisory unit may hire external HR consultants to help them deliver a talent acquisition model that meets the demands of an ambitious new management strategy.

HR consulting services

There are eight disciplines within the HR consulting market: Human Capital Strategy, Compensation & Benefits, Organisational Change, HR Function, Talent Management, HR Analytics, Learning & Development and HR Technology. In each domain, clients expect distinct skillsets, competencies and experience from their consultants.

Human capital strategy - Developing people-based strategies that might include diversity, talent management and recruitment drives. Example: Establishing a new corporate culture.

Compensation & benefits - Advising on compensation and benefits packages, from signing-on bonuses to pension plans. Includes non-monetary workplace benefits. Example: Improving performance through incentive scheme.

Organisational change - Generating change in the structure of a client’s organization that may involve a new leadership paradigm, relationship between different stakeholders, or ways of working. Example: Helping clients integrate new management structure after merger.

HR function - Improving performance of HR department. This could be through implementing new technologies, targets, or a shakeup of department personnel. Example: Implementing delegation to improve HR efficiency.

Talent management - Important role advising on the development, recruitment and retaining of top talent. Intimately connected with new technological trends. Example: Using Big Data to identify talent that would otherwise fly under the radar.

HR analytics -  Application of analytics to HR function, leveraging new technology and analytical capabilities to develop human capital strategies and insight. Example: Applying statistical models to assess client’s HR performance.

Learning & Development - Advising on improving the performance of individual employees and larger departments. Involves education and leadership development programs. Example: Mentoring promising young talent.

HR technology - Specialist focus on the systems and IT solutions used by HR. Example: Introducing Oracle services to client’s HR department.

HR consulting market

Worth approximately $30 billion, HR consulting is the smallest industry segment. It accounts for around 10% of the global consulting market and is less than half the size of the operations sector. Client spending on HR consultants dropped considerably during the financial crisis but has largely recovered since, with year-on-year growth levels approaching 5%.

Paradigm shifts in the workforce and wider population as a consequence of automation, AI, and other disruptive technologies is expected to fuel the growth of HR consulting into the foreseeable future. The human capital landscape is set to be redrawn as entire industries are automated; the separate assets of people and technology merge; and immigration, aging, and diversity issues take up more space in the minds of thought leaders and CEOs.

HR consulting firms

Though certainly subject to disruption, the HR consulting stage has traditionally been occupied by three distinct actors. Aon Hewitt and Willis Towers Watson are among the specialist HR consultancies with a global reach and reputation. A large number of leading generalist consultancies boast a distinct HR practice, with Deloitte and Oliver Wyman being prominent examples. Also on the stage are smaller actors that focus uniquely on a particular HR discipline, such as talent management.