Speaking of investment solutions, in OCIO, we benefited from some transactions in Westpac and Vanguard, Mark mentioned that earlier, but also good net new inflows and capital markets provided us some revenue lift in Q1. From a career perspective, growth was muted to 1% for the quarter, but we’re following a period of strong growth over the past several years, including a challenging 12% comparable last year. The growth was strong in international, is very broad across all practices and regions. We did see, as was mentioned, some softness in US career, specifically in rewards in the transformation space, as I would say, clients are starting to navigate some of the macro conditions, right? So, let me highlight the career practices coming off that very long period of high growth.
As I mentioned, double-digits in — for the past eight quarters, driven in large part, I would say, by inflation and employee attrition. If we all remember the great resignation back coming out of the pandemic, which drove a lot of labor shortages and really created a lot of demand for projects with clients as they were trying to think about the rewards and how to pay people to keep them retained, the skills that they might need if they had to pivot, because they didn’t have the right resources, and also starting to think about transformation as they were having less resources to work with, and there was innovation in technology, as we’ve all talked about AI, in the past and helping clients through those. So certainly, I think from that perspective, we feel good that there’s good breadth of our solutions and demand in the market as we go ahead and fill those needs.
John quickly asked me to talk a little bit about how I think about the business and the priorities too. So, obviously, my first call. On April 1, I got to step in and begin this opportunity of a lifetime leading Mercer and our 21,000 colleagues from around the world, as we are focused on creating brighter futures for our clients and for their people. I am extremely humbled and honored to be the CEO of this fantastic firm. And personally, I really want to thank Martine Ferland for a very smooth transition and for the growth momentum and culture that she helped create here. Priority-wise, I want to accelerate that momentum. From the impact that we’re having to clients to the fantastic careers we build for colleagues here, the collaboration amongst our colleagues across Marsh McLennan, we can leverage new technologies, and we perform really purpose-driven work, and can have a positive impact on our communities as well.
I think we’re very well-positioned, as we’ve been repositioning ourselves over the last several years, reshaping our portfolio. Mark mentioned the divestitures. We’ve been divesting admin practices. We’ve been building capabilities and reach and global benefits in OCIO. We’ve been accelerating acquisitions and we’re really just creating more value for clients at scale. And that’s what we’ve been focused in on. So, I’m very optimistic about our future.
John Doyle: Thank you, Pat. We’re excited to have you at this table. Greg, do you have a follow-up?
Greg Peters: I do. Thanks for the detail on that answer. I want to pivot to M&A. And specifically, Mark, I think you mentioned the interest expense outlook for the company and we note the higher interest rate cost of the debt that’s being issued versus that which is being paid off. So, I’m curious if there’s been any follow-through on those higher costs in the terms of valuation of transactions that you’re looking at. And, I’m also curious if there’s any valuation difference between larger properties versus smaller properties that you’re looking at in the M&A market. Thank you.
John Doyle: Yeah. Thanks, Greg. What I would say is we remain quite active in the market. There’s a good — we have a good strong pipeline, as I’ve talked about in the past, we have an excellent reputation in that marketplace as being a good owner as well. So, we’re excited about the deals we did in the first quarter. And again, we’re going to continue to remain active in the market. I think valuations have remained stubbornly high, I would say, on the other side of things. And while we might expect that for top-quality assets, I would also point out that some lesser-quality assets have traded at some very, very high multiples of late. And so, we’re going to be picky. We’re looking for well-led businesses with real strong growth fundamentals that make us better and are a good cultural fit for our organization.
We’ve been very successful at it. And again, as Mark pointed out, we expect to continue to deploy capital in the market going forward. Thank you, Greg. Andrew, next question, please.
Operator: And our next question comes from the line of Michael Zaremski with BMO Capital Markets.
Michael Zaremski: Hey, great. Good morning. Probably for Mark on the margins and the expense bucket. If I look over the last year-plus, the margin improvements come much more so from the general and other bucket, rather than comp and ben. It looks like that it flipped a little bit that relationship this quarter, if I’m correct. Anything changing there, given the expense management programs, or just in terms of how we should think about where the margin improvement is coming from on a go-forward basis?
John Doyle: Thanks, Mike. Mark, you want to…
Mark McGivney: Yeah, I think it’s a great point that you’re making and I think it reflects the strategy of the company. We’ve said we continually invest in positioning ourselves for the future. And over the last several years, we’ve talked about the heavy investments we’ve made organically in talent. And so, I think we’ve done a terrific job of really being thoughtful about all of our other operating expenses, functional costs, how we’re leveraging things across the firm, T&E. Really some of the gains we made in the pandemic, we’ve harvested them. So, as you point out, a lot of our margin expansion over the last five years has come from being really disciplined on things far away from the client and investing heavily in client-facing talent. And so, I think that is a factor in our growth. And I think also as we look forward, there’s going to be leverage in those investments, which is why we’re optimistic about margins going forward.
