Management Consulting

Arthur D. Little was the first management consulting firm, founded in 1886. Its initial focus was more technical in nature, before the firm transitioned to general management consulting. F.W. Taylor, who is credited with developing the field of scientific management, established the first consulting firm to focus on management in 1893. Theories of scientific management would form the basis of the original MBA curriculum at Harvard Business School (HBS), established in 1908.

The most elite of the consulting firms, McKinsey, was established in 1926. It was several years later, however, that McKinsey started to resemble the consulting firm of today. McKinsey’s relationship with HBS is well chronicled, and the case method that HBS uses almost exclusively is well suited for preparing the next generation of top consultants.

As the consulting industry started to become an important player in the business economy after World War II, consulting firms began to seek top graduates from leading undergraduate schools and MBA programs, in part to help legitimize their industry. McKinsey was the first management consulting firm to hire college graduates rather than experienced managers, beginning in 1953.

Boston Consulting Group (BCG) was established in 1963, creating competition for McKinsey over some of the country’s top talent. BCG claims to fame became its development of frameworks like the Growth/Share matrix and its creation of industry-focused practice areas. Bain & Company was established 10 years later in 1973, forming the third of what have come to be known as the MBB firms (McKinsey, Bain BCG). Bain, founded by former BCG consultants, carved out its own niche based on offering advice and recommendations designed to increase the long-term financial value of its clients and their stock prices. Bain also pioneered a policy of working with only one client in an industry to avoid conflicts of interest.

The emergence on the scene of BCG and Bain forced McKinsey to more clearly articulate its core competencies as part of competing for top talent and clients. Playing to its strengths while calling attention to its reputation as the first of the MBB firms, the Firm, as it referred to itself, established the “McKinsey Way” of understanding business problems. BCG, meanwhile, used some of its signature frameworks to help differentiate it from the other two leading firms, and Bain won a reputation of its own as being more nimble and flexible in terms of how it addressed business cases.

While the MBB firms successfully established themselves at the top of the market for clients and talent—consistently attracting the very top MBA candidates—several big accounting firms came onto the scene in the 1980s and 1990s, offering management advice to their auditing clients. The number of these accounting firms has since shrunken and gone through some reorganization, in part resulting from conflict-of-interest issues that led to the unraveling of companies like Enron and World Com in the early 2000s. Now known as the “Big 4,” they include Pricewaterhouse Coopers (PwC), Ernst & Young (EY), Deloitte and KPMG.

The consulting industry, meanwhile, has continued to grow—with the need for a steady flow of incoming MBA graduates keeping pace. To adapt to the realities of the technology revolution of the late 1990s, most leading consulting firms have developing practices that focus on information technology. The industry has thrived on solving complex business problems that face global corporations.

Management consulting is a global industry, with major hubs focused on the major business centers around the world, including New York, Boston, San Francisco, London, Toronto, Amsterdam, Mumbai, Paris, Frankfurt, Moscow and Beijing.

Within a consulting firm, an MBA graduate starts his or her career as an “associate” or “consultant,” with the precise job title varying from firm to firm. These MBA hires may work in a particular practice area, which can be either a product or industry group. Industry groups focus on a specific industry—such as financial services, media and entertainment, healthcare or consumer products—while product groups focus on areas such as strategy management, information technology management or supply chain management.

McKinsey, Boston Consulting Group (BCG) and Bain—commonly referred to as the MBB firms—form the industry’s upper echelon and are the most sought-after recruiters by MBA grads. Other prominent firms include the “Big 4” accounting firms, PwC, EY, Deloitte and KPMG, which developed large consulting practices to serve their accounting clients. There are also a number of boutique consulting firms that are popular destinations for MBAs, including LEK (focused on media), The Brattle Group (focused on economic and regulatory issues), the Bridgespan Group (an affiliate of Bain focused on nonprofit and social impact), Analysis Group (focused on economics and strategy), Putnam Associates (focused on the pharmaceutical and biotech industries), and The Cambridge Group (focused on economics).

The top firms each feature multiple practices, with the highest-profile practice generally being the one that focuses on strategy. Since all other business functions need to support a firm’s strategy, strategy consulting is generally targeted to the CEO and other top leadership of a client firm. Consulting in functional areas—like information technology, supply chain and accounting—support strategy. Finally, there are roles at consulting firms that support consultants in their work, although this “back office” work is not generally sought by MBA graduates from top business schools.

The large consulting firms will also have offices in all the major business centers around the world. Some of these offices will focus on specific industries; for example, working for a consulting firm in Houston, Texas, will likely mean that you will work on cases related to the oil and gas industry.

Assessing Fit

In assessing whether a particular consulting firm is a good fit for a candidate, it is important for candidates to understand the types of consulting engagements that the company works on and to gain a feel for the company’s culture. It is also important to under­stand how the firm organizes its industry and product practice areas and what type of training program it offers. The size and structure of industry groups varies from firm to firm, so a candidate interested in a particular practice area should research the oppor­tunities available within each target firm.

A consultant can work with different types of organizations, including corporations, for-profit and nonprofit enterprises and govern­ment agencies. Within the field of consulting, entire firms, or groups within a larger firm, may focus on areas such as op­erations, strategy or IT. Within these broad areas, consultants may focus on a particular industry, such as financial services healthcare, media and entertainment or telecommunications. A management or strategy consultant might therefore focus on pharmaceutical firms, offering her expertise primarily in that area. The wide variety of functions and industries that work with consulting firms means that a consultant’s work may involve anything from marketing to system implementa­tion.

Though this breadth of assignments makes a consultant’s work quite diverse, it is helpful for a future consultant to know what type of function and industry he or she would like to focus on after earning an MBA, as different firms specialize in particular functions and may require new hires to have several years of experience in a particular industry. Finally, candi­dates interested in pursuing post-MBA careers in consulting should know how large or small a firm they would like to work for, as larger firms may offer the opportunity to work with a great many industries while a smaller firm may focus on only a few in depth.

Role

MBA graduates from leading business schools are generally hired into the same role, regardless of prior industry experience. This role is called an associate, or consultant or manager, depending on the firm. We will refer to it as associate for the purpose of this resource, we will refer to consultants coming out of undergraduate programs as analysts. The associate position demands the same long hours as the analyst position, but it allows for greater contact with clients.

Associates focus on researching the data required for a specific client engagement, doing additional primary research, developing the analysis around a problem, using excel in many cases. Associates communicate recommendations and intelligence, via powerpoint, and maintain relationships with junior-level clients. Because an associate will work on multiple engagements overtime, she is expected to develop a strong understanding of issues within that domain.

After two years as an associate (the first position post-MBA) the path forward is to a project leader. A project leader’s role is to lead individual client engagements, managing the project team, while also supporting some business development. Project leaders will also perform some of the analysis. The next step forward in consulting from being a project leader is to be a partner of the firm, also known as principle. This role focuses to a large extent on business development, seeking out new client engagements, as well as organizational leadership. Partners may also lead large projects.

Though many MBA students enter the management consulting industry upon graduation from business school, relatively few continue past the associate role to make a career out of consulting.  This is in part due to the “up-and-out” model that these consulting firms deploy for their recruiting, and the demanding nature of the work.

Up and Out Policy: Both management consulting firms and investment banks require their hires to move up in the organization, after a pre-determined period of time (two years is standard) or get managed out. Thus there is no opportunity to remain at the entry level beyond the pre-determined period of time.  If you are perceived as good enough to one day make partner, you will be asked to progress to the next level. If you are not perceived as good enough, they will ask you to leave.  This creates a competitive environment among peers which is not as prevalent in firms which do not adopt such a policy.  This also ensures a new incoming cohort each year and keeps the entry positions for those at the beginning of their post-MBA careers.

The rationale for such a policy is to ensure that there is a path moving forward for star performers to make partner, average performers do not clog the promotion channels for those beneath them who will be the next generation of outstanding performers.

For those who are not going to progress within the consulting firm, there will typically be resources available to help secure opportunities outside of consulting. Typically consulting firms are more apt to do this than investment banks.

The exit options for those leaving consulting are very attractive.  Many associates might move to a business development role, or other functional area of a corporate client. Some will join a tech firm or start their own firms.

The Work

Associates in consulting work somewhat long hours; a 55-60 hour work week is not unusual. The work also includes significant travel, and it is not uncommon for an associate to be working at a client site for four days a week, returning to her office on a Friday. Consultants spend time at the client’s location to conduct research and delve deeper into the par­ticular problems of the business. This requires extensive travel and long work hours during the week, but keeps the weekends more free. Consultants are rewarded with relatively high compensation versus their peers in other industries, although they do not have the opportunity to receive the same level of bonuses as high-performing investment bankers in a similar role.

Consultants essentially produce knowledge, content, arguments and answers to address corporate problems. They also become experts in presenting their advice, through powerpoint, which is their medium for sharing ideas. Consultants work on teams, much like their peers in investment banking, and will work long hours, during the week, with those team members. They are working in a high-paced environment. One criticism of the work of consultants is that it is focused on recommendations, rather than implementation, although some firms are shifting some of their resources to focus more on execution and implementation. Consultants will have the opportunity to be exposed to myriad industries and cases, over a short period of time.

Both consulting firms and investment banks deal with issues at client firms at the highest level, helping the CEO address key business issues; there is plenty of opportunity to interface with C-level people.

What Firms Seek

A consultant needs a skill set that includes the ability to think creatively and solve problems, analyze the big picture as well as the details and juggle multiple as­signments. Because consultants work in teams that average between two to six people, teamwork becomes of the utmost importance. Consultants also engage clients directly, so interpersonal skills and professionalism are very important in this industry. Additionally, a consultant needs to demonstrate initiative, synthesize data and adapt to different environ­ments. Consultants need strong analytical skills. Companies turn to consultants to provide objective analysis of business problems, relying upon them to research and assess the given issues and offer a viable strategy for ad­dressing them.

Consulting firms seek candidates with a broad range of experiences and are often more open to candidates without pre-MBA consulting experience than investment banks are of candidates without pre-MBA banking experience. This is due, in part, to the fact that many of the skills that consulting firms seek can be developed through of a variety of pre-business school backgrounds.

Consulting firms are also generally more supportive of analysts and associates who seek other opportunities after working at the firm for a few years. The rationale for this is two-fold. First, the consultant may want to return, and the firm wants to keep that option open. Second, the exiting consultant may join a company that becomes a client of the firm.

For those who are switching careers into consulting, landing an internship opportunity in the summer between the first and second year of business school is one of the best ways to enter the industry.

The Recruiting Process

Leading consulting firms have sophisticated recruiting programs for MBAs that generally focus on students at the very top business schools, since they already will have overcome a rigorous admissions process to get in. In addition, top consulting firms favor MBA students who have strong grades in business school—provided the school doesn’t have a grade non-disclosure policy—and high GMAT scores. It is important for those seeking a career in management consulting to examine the career management reports of schools that they are interested in to see what percentage of the class goes into this field.

On-campus recruiting generally occurs in the fall for second-year students and during winter months for first-year students. This is similar to investment banking, but different from tech recruiting, which has much more of a just-in-time focus.

The leading consulting recruiting activities at the very top business schools include company presentations and networking events on campus, which are designed to entice students to apply for a job within the firm. Consulting firms will also scour the resume books of top schools to identifying high-potential candidates and invite them to special recruiting dinners in an effort to woo them.

For those candidates seriously interested in landing a consulting job, it is very important to research firms and cultivate ties with consultants at these target firms. This will often involve hours devoted to networking events, office visits and phone calls.

Student-led consulting clubs also support their members in the recruiting process in a variety of ways. These include offering additional resume-writing workshops, compiling resume books, providing interview preparation and mock interviews and hosting additional networking events with alumni from the consulting firms. In fact, the resources provided by consulting clubs can be as important in the recruiting process as those provided by career management centers at most top schools.

Most interview offers are based on a closed interview process, in which the company selects which students it wants to interview. Students are selected to interview based on their contacts with the company—a result of their networking activities—and a submitted application and a resume. Each consulting firm will have a team that works with each of the schools where it recruits. That team will include a member of human resources, as well as a team captain who will be an alumnus of the MBA program. These teams are responsible for managing the recruiting program at each of the schools.

Interviews generally occur in two rounds, and a candidate may undertake two interviews per round. The interviews will explore fit with the company, as well as credentials, based on prior work experiences and classes taken.

Interviews for consulting firms also include a case. The case interview process illustrates how a candidate can contribute to an assignment at the consulting firm. The case will be introduced by the interviewer—it will not be known to the interviewee ahead of time. The interviewer might propose a business problem, after which the interviewee can ask additional questions before formulating a response to the case. It is important to prepare for this type of interview ahead of time; many prospective summer associate will prepare by undertaking dozens and dozens of case interviews with their peers.

The interviews are typically conducted by more senior consultants, rather than human resource professionals. Later interviews in the process may even be conducted by partners, who sometimes choose to put prospective associates under pressure to see how they respond to a more heated situation. Because consultants deal with C-level clients, the screening process needs to be rigorous, assessing not only candidates’ knowledge, but also their professionalism and sophistication.

Some candidates are not able to get an internship at their preferred consulting firm. While a more difficult prospect, it is still possible to recruit for the preferred consultancy in the second year. Obviously this path is less secure than the path of those who intern at their preferred consulting firm. It is much harder, and unrealistic, to recruit for a full-time role without any prior consulting experience.

This number will be based on marketplace conditions and the performance of the individual associates. Of course, a number of summer associates decide that management consulting is not for them, so they either quit or stop seeking to land a full-time offer.

Some candidates with consulting experience prior to the MBA who plan to return to consulting may choose to gain a different experience for their internship. For example, someone who has done consulting in the tech sector and plans to return might seek a summer internship at a tech firm. For this group, it remains important to network with the consulting firms during the internship recruiting season in order to remain on their recruiting radar.