Pre-COVID, roughly a quarter of such decisions were made at the CXO level; the rest, by heads of department and other people directly beneath CXOs. Today, 53% of decisions to bring in outside help are made by CXOs, reflecting both the extent to which many large projects span multiple departments and the important role consultants and other advisers have played during the turmoil of the last few years.

Around a fifth of clients say that having an ambitious, dynamic leadership team is one of the most important drivers of the volume of external help used by their organisation. Organisations with more ambitious post-pandemic goals are far more likely to use consulting support than those whose level of ambition has remained unchanged.

All of which is fine—helpful, even, to professional services firms looking for growth—up to the point where things start going wrong at the top. When we started running regular surveys of clients’ responses to the economic environment, not having an effective leadership team was bottom of senior executives’ worry list: In Q1 this year, just 3% of the clients we surveyed said that a poor response from the top of their organisation was a factor in reducing their confidence. External issues, such as supply chain disruption and changing consumer behaviour, loomed far larger.

In our latest data, two factors are keeping confidence down. The first is that, as consumers economise and inflation bites, costs are rising, impacting profits; the second, that leadership teams have been too slow to respond to the situation—a problem now cited by 22% of clients, a jump of 19 points in just three months.

What’s causing this sudden shift? Not, it seems, a further deterioration in the economic situation: Asked about a range of issues affecting their business, from inflation to growing political tension, the proportion of clients saying their organisation has been negatively impacted has fallen from a peak of 60% in Q4 2022 to 40% in our latest research.

Confidence, though, remains stuck at just over 80% of clients who say it’s been reduced by the economic situation—an example perhaps of “availability bias”, that we often reason on the basis of the first examples that come into our minds and will give different responses to questions that are framed more broadly or narrowly. However, clients’ growing sense that this will be a long crisis—the percentage saying it will last more than three years has gone up from 56% in Q1 to 67% now—could also be a real factor depressing their confidence.

Another possibility is that the polycrisis is turning out to be more of a challenge because it involves responding to many different problems at once, whereas with the pandemic and even the initial period after Russia’s invasion of Ukraine, it was fairly clear what organisations should focus on (looking after their employees, battening down the hatches with COVID, securing supply chains and adapting to sanctions with the Russian invasion).

We can see that in our most recent data: Even in Q1 this year, there was a broad consensus in business about where organisations should focus what limited investment budgets they had: improving productivity, digital transformation, and more effective risk management. Ask the same question this quarter, and you get a much more even spread of priorities: digital transformation and productivity remain top, but the gap between those and other priorities is much narrower; sustainability, which had dropped well down the list, is coming back.

Why does this matter? If senior leadership teams, the people who preside over more than half the decisions made to use external help aren’t sure what to do, then they are less likely to hire outside help—and this is indeed what we’re seeing signs of. The proportion of clients saying they’ll spend more on consulting, while still positive—about 56% say they’ll spend more (but it’s not clear how much more) in the next 12 months—is lower than in the last two years.

Anecdotally, this is backed up in conversations we have with consulting firms: recent growth has been good, but client decisions about hiring firms are taking longer, and there are signs of projects being delayed, re-scoped, and occasionally cancelled.

How should consulting and other professional services firms respond? Clients continue to need expertise and want to see concrete results delivered quickly. Getting those basic messages out clearly to the market may help clients feel more confident about bringing in external support.