Initially best known as a global accounting firm, Deloitte has been expanding more and more into management consulting. It's to the point where, in the United States, consulting is now the largest piece of the broader Deloitte business pie.
Jim Moffatt, the chairman and chief executive of Deloitte Consulting, sat down with On Leadership to reflect on his 27-year career at Deloitte, which traits he has found make for an effective CEO, and whether he thinks there are too many consultants out there today. The conversation has been edited for length and clarity.
Q. What do you see as the biggest trend in consulting?
A. There’s globalization. Also, changes in technology are driving disruption at a pace we haven’t seen before, and I think that creates interesting opportunities for the companies that are prepared to take advantage of it and some significant threats for those that aren’t.
Q. Deloitte has a good window into the economy. What are you seeing right now?
A. Continued uncertainty. The U.S. economy is starting to be robust, but there’s so much fragility around the globe—and we’re so interdependent—that there’s definitely some concern it will come back and dampen growth in the United States.
Every quarter there’s some new event, whether it’s geopolitical, economic, health-related. If you’re waiting for everything to be perfect, you’re going to be waiting a long time. Companies have to have the confidence to invest through uncertainty and develop the skills to deal with uncertainty.
Q. You've been doing a lot of research on long-term unemployment. Has Deloitte increased its own hiring of people who have been long-term unemployed?
A. We did. First of all, we hire 18,000 people a year, and we checked to make sure we had no unintended biases in terms of screening mechanisms. We also focus on veterans.
Our biggest effort has been around developing playbooks for employers, employees and also communities based on lessons learned not just us, but from 300 companies that participated in providing tips for how to solve this problem.
If you have a big portion of the population on the sidelines, not contributing to the economy, that’s a problem. And if you look at the people who get hired from the long-term unemployed population, they become very engaged, very loyal, very productive employees. So there’s a good business case for it.
Q. What are the main things you look for in the people you hire at Deloitte? And are the skills you’re looking for today different than what you were looking for five years ago, ten years ago?
A. The underlying attributes we’re looking for are very similar, but I think what motivates people and what they’re looking for in their careers is changing. Millennials, in particular, want to be engaged in a very, very different way. They want to see the commitment to invest in them. They want to be exposed to the most leading-edge techniques and analytics. But they don’t have necessarily the long-term aspirations that many others did when they joined.
Q. What’s the biggest management challenge you face as the CEO of Deloitte Consulting?
A. The hardest thing is communication when you have 30,000 people spread around the world. When I took this role on, we reset the strategy. About a year and a half into it, we realized people got the pieces but didn’t understand how it all hung together. I really had to make a concerted effort to crystalize it on one page, and to spend time making sure that people understand.
The thing that I worry about the most is losing connection with our people as we get bigger, particularly as the way people like to communicate and stay connected changes. I don’t want to lose sight of that, and lose talent along the way.
Q. What’s your general philosophy on the best way to pick up leadership and management skills?
A. There’s nothing better than real-life experience. An apprenticeship model is very much how I learned. I got dragged into situations with other partners when I was a young practitioner, probably beyond where I should have been. But I started out just listening and observing, then gradually getting roles. Being in really tough situations, really challenging situations, that’s where you get tremendous growth potential.
Q. Do you think the traits that make for a great consultant are somewhat different than the traits that make for a great CEO?
A. There are a lot of similarities. Someone recently asked me what prepared me for this role as CEO, and I said, “I was consulting to senior executives for 20-plus years, and dealing with a lot of the same issues that we have here.” There’s nothing like helping companies determine their strategy, and then driving those strategies throughout the organization, that prepares you better for this job.
Q. From your work as a consultant, which traits have you’ve seen be really effective and really not effective for CEOs?
A. Command and control just doesn’t work anymore, except maybe if you’re in a very troubled situation. That’s very ‘80s and ‘90s. I think people want to see where the organization is headed, where they fit in and why that’s important to the company.
The best leaders I see have a clear destination in mind. They start with the North Star—that is, they get focused on the “what” before they get ground up in the “how.” Too often in companies, people start worrying about the “how” before they’ve agreed on where they’re headed.
There’s a natural gravitational pull I see in organizations that will pull you back to a more conservative answer. If you don’t push beyond where the organization believes it can go, a lot of times you sub-optimize.
Q. You mention not being a fan of the command-and-control approach. Is there any other leadership technique you think is bogus or wrong?
A. There are lots. Sometimes leaders fall in the trap of falling in love with the role. I think you should define the role, not let the role define you. And by that I mean, you have to be comfortable with who you are and what you’re trying to accomplish. Too often people get focused on the short term and the bottom line, particularly today with public companies.
Q. Do you think there are too many consultants in the world?
A. I suppose yes.
I spend a lot of time with clients talking to them about where they should use us and where they shouldn’t. And I’ve spent a lot of time talking with our people about how we should only do work when we can really make a difference with the company. If we can’t, then it doesn’t end up well for the company or for us. Not every consultant is good for every issue.
First of all, our clients are really smart. They’ve gone to all the same schools we have. They’ve been working in the industry for a very long time. It’s just that they’re faced with an issue or a challenge they’ve never seen before. That’s where consultants come in. In those times and those situations we can be invaluable, but not in every situation. I think it can also become a crutch.
I believe what you’ll start to see is that the compensation for consultants will be more and more based on the value we deliver. Right now, about 20 percent of our portfolio is value-based work. And we have been pretty dramatically shifting to do even more. It changes the dynamic. We become business partners, and it forces a clarity of expectations on both sides about what needs to get done.
Q. Do you mean that the pay structure for consultants should be different—for example, that they shouldn’t bill hours?
A. I think you would see more varied compensation models. We have projects right now where we’re getting paid completely based on growing a new business, or completely on the turnaround performance of a company. It has nothing to do with the hours we put in. We still have some projects that are the typical fee-for-service, dollars-per-hour model. But we’re trying to move more and more to putting value as the benchmark, and that means being willing to take on different compensation arrangements.
Q. Do you wrestle with how to keep employees from getting burnt out? Flying around the country all the time as a consultant can be pretty exhausting.
A. We’ve been looking at this now for about 18 months. What really became clear is that people want to have both flexibility and predictability. Some people want to do work whenever they want, however they want, as long as they get it done. Other people don’t mind being on a long-term project, but they want to be able to plan ahead about their time with family or with friends. So we have each of our teams now look at what they can do to structure their projects to give people both flexibility and predictability. Our goal this year is to have 75 percent of our projects at that level, and next year it’ll be 100 percent.
Q. Do a lot of women who go on maternity leave at Deloitte not come back because of the demanding schedule?
A. Yes, I think that’s challenging for everybody. We’ve done some things around that to make it easier for women to come back. We changed the way we evaluate them at year’s end. We let people take as much time off as they want. But I think there’s more to look at—such as how to allow people to go in and out more easily, or to work part-time more easily. We’re in the talent business, so we can’t afford to lose access to that talent pool.
Q. What’s a memory from your life that has influenced your thoughts on leadership?
A. I did hard-core construction between my freshman and sophomore year in college. I was digging footings. It was really hard work in the middle of summer in San Diego. We had to measure the footing, but we didn’t have any tools. So I grabbed a brick off the palette, and I made the mistake of grabbing a finished brick. I don’t know what the cost was—it was probably 15 cents more than a normal brick. But the mason came over and just read me the riot act.
“College boy, you’ll never amount to anything! What are you doing? You’re not thinking!”
He was right. It was a good lesson in that I really should have stepped back, thought about it and gotten the right tool. Taken time to think, right? In fact, one of my mentors on my first consulting project made a similar point. We were all cranking on our analysis, and he just walks in and goes, “Shut the computer. Just step back and think. It’s not just in the numbers. You actually have to get a chance to process.”
Q. Do you have an executive coach?
A. I’ve had one in the past. Right now, I’ve got 30,000 executive coaches, in the form our people. I also have three kids—21, 19 and 15—and I learn from them every day.
Q. Another question we always ask people in this interview series is: What do you believe?
A. I believe you always have to do the right thing. It’s easy to take shortcuts. It’s easy to not deal with the hard stuff, in all aspects of your life. I think you have to have a compass. At the end of the day you have to say, “Is my next action the right action?”
Q. What’s the best piece of advice you’ve been given, or that you would give others?
A. One of the first pieces of advice I got early in my career was from one of my partners. He said: “Every couple of years, pick your head up and make sure you’re still passionate about what you’re doing.”
What that really gave me was the license to step back and ask whether I was still positioned in the right way, or whether there was something else I would rather go do. I never got fixated on a role. I was always just looking for something that was interesting, challenging and where I could have impact.
I never aspired to be the CEO. It was never my 20-year strategic plan. My partners and directors were gracious enough to elect me to it, but I think that is one of the biggest and best lessons. I tell our young people the same thing, “Pick your head up, look around, make sure you’re still enjoying what you’re doing.” Because if you’re not passionate about what you’re doing, it’s unlikely that you’re going to be happy and it’s unlikely that you’re be going to be very good at it. There are so many different things you can do in this world.
Also in this series: