Unconventional answers about management consulting : 2009

Paradosso

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Re: Unconventional answers about management consulting [#permalink]

20 Dec 2008, 03:40

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How are staffing decisions made? Is it entirely based on availability, or do they care about what your preferences are? For example, if I like the Energy field, will they take that into consideration when placing me to different clients?

Great question, as staffing is never debated before you get in and is maybe the single most deciding factor about your happiness once you are in. What plays out in staffing decisions:

Your preferences: top 3 all have a bidding system that lets you place points on:
- industry (industrial goods, consumer goods, financial services, energy & utilities, ...)
- capability (e.g. process redesign, due diligence, organizational redesign, etc.)
- location
- engagement length and team size

Your bids are a factor if anything else is equal. In any case, my advice is to place all of your points on one thing (e.g.: same city the office is located in, or an industry). Placing points on engagement length and team size is frowned upon. The importance your preference carries is directly tied to your past performance: if you're good, managers will ask for you, and if they do you have leverage to steer your staffing and be graceful at the same time (just pick the practice the manager you love is with). If you're average/bottom, you can expect to fly from practice to practice: the fine line reads 'leave'. If you're unknown (newly hired), what plays is your past experience if there's a project that matches, otherwise state your preference and pray: not for the industry or the location, but for being assigned to a good manager.

Also consider:

1) Early alignment to a practice pays good dividends: I am a generalist at heart like you, msday, so don't misunderstand me. Practices are defined by industries, and you can experiment the most different situations in the same practice (I have been in the same practice all my time at Bain, and I have seen sales strategy, due diligence, organizational redesign and now a hostile takeover). Plus: getting to know the industry will give you tons of credibility and fast bootstrapping: you will work less and you will be way more confident and less stressed. Plus: if you stay in the same practice, it means that the people there want you: you will be in the top quartile of your peer group come evaluation time (if you toured 17 practices, no one will remember you).

Plus: you can begin to develop a professional network. The most successful analyst and associates are the one who spend 40% of the time doing the analyses they are supposed to do, and the remaining 60% hanging with senior managers and partners, getting the buzz, getting known by clients, reading relevant material or even irrelevant, but useful to a good conversation (and being happy doing that), doing work their managers/partners give them outside the project.

2) There will always be the time when you switch practice due to momentarily lack of engagements or a simple desire of a partner to test "if you are really so good as I heard during the evaluation". So don't worry about variety.

Paradosso

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Re: Unconventional answers about management consulting [#permalink]

Updated on: 20 Dec 2008, 07:06

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msday wrote:

2. What % of workweeks include at least 8 hours of work on a weekend (Sat + Sun)?

It depends on your manager and your practice. Managers vary widly in this respect. The head of my practice apologized to me because I worked until 2am the previous day (a Thursday) in a very very high-profile engagement. He invites me to go home if he finds me at the office at 7pm on a Friday.

Stories I hear from my colleagues are those of 1-3am on a regular basis (2-3 nights a week) plus weekends more than half the times.

Overall, I can say this: you will definitely be working some weekends. It may be 10% of weekends or 75% of them. If you are in the private equity practice, it will be more like 75%, if you are in energy or industrial more like 10%.

What you can act upon is to be contrarian when stating your staffing preferences: don't go where everybody else wants to, it does not pay. Go to a small team where you will be known to partners and directors. You won't work many weekends and when you do, they will be grateful: they will tell you on Monday and you will be immediately repaid, they will tell everyone come evaulation time and you will turn a profit.

Personally, I work maybe 50% of the hours of the hardest working private equity guy, maintain a girlfriend and friends, and share his same year-end valuation.

Be accomodating, but don't be a slut.

Originally posted by Paradosso on 20 Dec 2008, 03:51.
Last edited by Paradosso on 20 Dec 2008, 07:06, edited 1 time in total.

Paradosso

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Re: Unconventional answers about management consulting [#permalink]

20 Dec 2008, 04:03

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How are exit opportunities out of firms such as Monitor and Booz? How about Accenture and Deloitte? Are there even solid exit opportunities out of these firms, or do some of these firms recruit with the intention of having career-track consultants?

My general advice: don't use MC as a stepping stone. If you don't like it, you won't last 3 years or if you do, you won't be the top performing one that gets all of the exit options.

There are lots of people who are in MC and don't like it: if you are like them, you will be one of many. If you like it, you will make them pay for their uncertainty and reap all hte benefits.

That said, ceteris paribus there is a great difference in exit options between the big 3 and anyone else:

-Some companies recruit only from the big 3. They actually want someone from the big 3 and will court you. You will have the strong side of the trade.

- If you are not from the big 3 you have 50% of getting the question:"Why did you not join [big 3 name]?". Make it 100% if your interviewer is a former big 3. For how good your answer is, you will be at a disadvantage to the other big-3 candidate.

In general, the less prestigious your firm, the more you have to rely on your personal story and your network. Especially your network, since employers do not read essays of yours like B-schools do. So if you come from Booz/Monitor, you can expect to go working for one of your clients. You from McK, you will get head-hunter calls no matter what.

Accenture/Deloitte: it's not management consulting. They will tell you they have management consulting teams: the market does not believe them. And if you look to their work as strategy consultants, their background shows from page 1. Accenture is an IT consultant/outsourcer, Deloitte certifies your balance sheet and that's it.

Don't take a position in a company whose general culture/perception/main job is another one, that's a general rule. If you want MC and only land an Accenture or Deloitte job, go somewhere else, you most probably would not have been happy in Bain anyway.

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Re: Unconventional answers about management consulting [#permalink]

20 Dec 2008, 06:44

very useful posts, paradosso. +1 for each.

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Re: Unconventional answers about management consulting [#permalink]

20 Dec 2008, 15:21

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Truly informative thread +1!

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Re: Unconventional answers about management consulting [#permalink]

20 Dec 2008, 16:57

Thanks Paradosso!

Another staffing question for you. It seems that your previous work exp can play a role in determining assignments. Does the same apply to where you went to bschool? Will assignments ever be made because someone went to school X?
(sorry if this is silly, just didn't know and wanted to ask)

thanks

Paradosso

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Re: Unconventional answers about management consulting [#permalink]

20 Dec 2008, 17:17

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ac8706 (lend me some of all the green you've got there), it's actually a good question!

No. Which school you went to does not play any role whatsoever (it might have during recruiting/negotiating, but it stops there). Your concentration (took 3 advanced class in excel modeling, learnt Monte Carlo simulations, ...) might play a role in case there's an absolute tie between two or more engagements you might be staffed on. But this only applies to your first engagement out of school. All humans, staffing partners included, can only handle a limited number of variables, and almaMater is not one of those.

Afterwards, it's like Hollywood: you are pretty much defined by your last engagement

(until you begin to show a trend, that is). You could be an Henry Ford Award recipient from Stanford, but if you blew it last time you are at a disadvantage to the guy who worked its way from the IT support office (and there are a few in my office). Basically, everyone has a silver resume so a) it's not distinctive b) everybody knows you can be a lemon no matter what, or, as one partner once put to me:"There are sh*tload of magna cum laude guys from [top Italian university that both he and I attended] who would easily get played by their grocery man".

Management consultants like grocery men. On the other hand, I did not like my 23-year-old, 3-intenships, summa-cum-laude-Msc-expecting, mid-distance-runner, 770-gmat-scorer intern who could not calculate a CAGR or bother to refine the details of his slides. Nor did my manager, who de-staffed him from the engagement after two days. He basically left all his chances of securing a full-time offer in a couple of days and he won't know until internship is over. If you can't spot the sucker, you are the sucker, as they say. But I digress.

Also, your previous experience hardly plays when there has been an MBA between it and consulting. As you know consultancies are very open to switchers and every newly-minted MBA is created equal, olympic athletes, software engineers and corporate lawyers alike. You only start with a record if you've been sponsored by the same company you've returned to.

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Re: Unconventional answers about management consulting [#permalink]

20 Dec 2008, 17:39

thanks so much paradosso!

That makes a lot of sense - it's good to know that once you have a position in a consulting firm, your performance there plays more of a role than the background.

thanks again!

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Re: Unconventional answers about management consulting [#permalink]

21 Dec 2008, 11:45

Thanks Paradosso this is a great thread. Kudos added.

I have a couple very basic (and probably pretty dumb :-D

) questions for you. Can you give examples of typical assignments at an M/B/B firm? Are you doing things like helping firms understand why they're losing market share or seeing profits decline? Are you helping them decide whether to enter new markets or launch new product lines? I'm just trying to get an idea of what the typical engagements are at one of these firms. Also, what is the typical size of your team on one of these engagements. Thanks!

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Re: Unconventional answers about management consulting [#permalink]

21 Dec 2008, 12:27

More questions...

1. Do European offices hire almost exclusively from European b-schools?
2. If working in an office in a European country other than the UK, is it necessary to know the local language (French, Italian, etc.)?
3. Are European offices significantly "older" or "younger" than U.S. offices, i.e. do they prefer older candidates for each level (analyst, associate, engagement manager), sort of like European b-schools prefer more experienced folks?

This forum is probably exactly what I need from GMATClub now that I have an admit and am looking forward to the next step,, so thank you for sharing your expertise(ience).

Paradosso

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Re: Unconventional answers about management consulting [#permalink]

22 Dec 2008, 03:22

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Thanks for the kudos girls/guys. Again, very good questions I will try to address.

Can you give examples of typical assignments at an M/B/B firm? Are you doing things like helping firms understand why they're losing market share or seeing profits decline? Are you helping them decide whether to enter new markets or launch new product lines?

Convential wisdom goes that management consultants are the companies' physicians. While it is a great metaphor to explain your mum what you do for a living, it is slightly different than that. No one goes to Bain or McK without offering an idea of what they want from you. In you examples you picture a company that, like a patient, tells the symptoms to the doctor ("lose market share") and lets him perform his magic with no limits whatsoever. This would imply two assumptions that are not acceptable in business endeavor even if often true:

a) I am the CEO of the company and I don't know wtf is going on, so I'm asking you, who have never heard of the company in your life before today.

b) I am letting you decide to do whatever you want with the $3000/person/day I am giving you. All company data is yours to go through.

So, while those scenarios you mentioned are good examples of what to expect in a case interview, the initial mission the client would give the team will always be more precise and delimited. Oftentimes the team will reverse-engineer the problem (medicine-like) and perform analyses and develop hypotheses outside the boudaries set by the top management, but the conclusions, if defendable and compelling, will nevertheless be framed in a way as to remain into the beaten path, with a possible proposal for an extension (btw, it is not true that consultancies do not sell. Consultancies do sell and the selling part is maybe the most important). Such an approach do not pose political problems (another oftern underlooked yet crucial dimension of this line of work) by making the top management believe they got it right fro the start and just did not have the brainpower to execute, yet deliver actual value to the company.

So, examples of typical assignments:

"I want to enter new market X. Help me do that"

"I want to acquire company Y. What do you think? Due diligence it for me (from a business point of view that is)".

"What dealers do I shut down and where do I put new ones? Go through this 10,000-row database for me"

"I can adapt my plant to produce 5 different types of commodity Z. Which one should I produce and where do I sell it?"

Two things all assignments have in common:

1) They all start by defining and understanding the relevant markets.
2) The management always has its own idea before the project start. Not to hurt its sensibility while giving real answers and making them buy the next project is an art (the only one that makes you a partner).

Paradosso

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Re: Unconventional answers about management consulting [#permalink]

22 Dec 2008, 03:30

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I sohuld add that there is a lot of operational excellence / performance improvement work in all management consultancies. This goes like:

"Redesign my accounting system"

"Help me improve my procurement" (one of the most frequent engagements)

"I want to shave 10% off my fixed costs. Help me do that"

In general, the more you have don business in the past with a client, the more the relationship evolves into a doctor-patient one. The last engagement I mentioned was only possible with a company we did business 5+ years straight before.

Also, do not buy into the strategy vs. operational performance improvement dichotomy. You learn as much and add as much value working on these assigments above as the one of the previous post. It's all management consulting.

The real difference is between:"Redesign my cost centers" and "Here's the cost centers, put them into SAP" (though a management consultancy can be asked to do both).

The best criterion I have identified is: if you can do it on a piece of paper, it's management consulting.

When you work as a consultant, always remember that the legends of 20+ years ago (Henderson, etc.) did not have computers. Don't fall into pretending that computational power and memory substitute consulting.

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Re: Unconventional answers about management consulting [#permalink]

22 Dec 2008, 03:46

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what is the typical size of your team on one of these engagements?

I will add another dimension: average seniority of the team. That said, it varies wildly, from a team of onw manager and one analyst to 15+ people in the same room. However, it is quite simple to estimate what the team will be based on the client-consultancy signed contract. Just remember: what varies is the scope and the timing. The scope changes in order to accomodate the budget of the client. Budget drives staffing in turn. I have seen project changing from 6-member to 2-member teams after negotiating. That is because the basic unit of measure is the average daily billing rate of the team ($xxxx/person/day).

General guidelines:

1) The more the project is high-level strategy vs. operational improvement, the more senior the team;

2) The more the project is high-level strategy vs. operational improvement, the littler the team;

2) The more the project is high-level strategy vs. operational improvement, the shorter the engagement;

Consider that a management consultancy has no relevant costs/productive inputs but personnel. So utilization rate is the key. That said, it is clear that multi-month, large operational improvement teams are where the company makes its money (I won't tell you the margin %, but think along the lines of Google/Microsoft, except the product does not scale). However, to sell those you have to develop a bullet-proof strategic rationale first. You have to have the management's absolute faith. Strategy engagements are often sold in fact as loss leaders (ok, let's say "under the par of expected marginality"

) in order to make tons of gold afterwards.

Let's say that if you find yourself, as an analyst or associate, working in very vertical teams with no peers, it's a very good sign. If you repeatedly find yourself buried in 6-months project with 2-3 peers, not so much (but everyone will be staffed on both for the sake of a good evaluation of his potential).

As I've said before, most of the people are in this line of work for the money and the exit options, not for the love of it. Partners know and tend to staff them as cash cows on long projects. Meanwhile, the others work in vertical teams trying to generate/consolidate new clients. As in the first strategic phase (often called A&D, "analysis and design") you are working with the CEO and her reports, which dows not happen in subsequent operational projects, it is then the vertical team people who are more likely to develop the network to make partner. So it all figures for he who wants to see it.

Working in vertical teams is tough as you are the analyst who will serve multiple managers/partners (often with conflicting schedules/opinions), but it's where you want to be. You are working with less stupid people, so:

1) you will learn more
2) you will work fewer hours (he who makes you do an all-nighter is never a director and almost always a moron).

Paradosso

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Re: Unconventional answers about management consulting [#permalink]

22 Dec 2008, 04:00

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1. Do European offices hire almost exclusively from European b-schools?
2. If working in an office in a European country other than the UK, is it necessary to know the local language (French, Italian, etc.)?
3. Are European offices significantly "older" or "younger" than U.S. offices, i.e. do they prefer older candidates for each level (analyst, associate, engagement manager), sort of like European b-. It'sprefer more experienced folks?

1. Not at all! While most people come from European schools, INSEAD in the first place, for abvious reasons (they are Europeans in the first place), European office are dying to recruit from US schools. Remember that schools are a signal to the employer that their graduate is a low-risk hire. Everyone knows that the best schools and the fiercest competition to get in are to be found in the US, so they want to get those people. They really want to --you can ask good money.

Yet most of the US schools graduates are Europeans because

2. Yes, you have to be fluent in the local language (i.e., you have to be able to speak with the client). Not native (being a foreigner could indeed be an advantage), but fluent of that fluency that can be learnt. Think 105 in the TOEFL. Ok, you have never took teh TOEFL, never mind

. The more an office works abroad the more they can think to staff you around in English-speaking engagements, which are also very high-profile, so you better be good (my money says you fit that bill). So I say that for an American who is willing to learn languages, is very possible to work in Europe at Bain, quite possible to work at McK, difficult to work at BCG. Things change if you are willing to go to Kiev or Moscow, no one expects you to speak Russian there and you will make a lot of money.

3. There is no real age preference at recruiting. At the same level, you will find Europeans are older (especially in Italy/Germany) because:

a. there are more years of study to gain an undergraduate degree
b. there is always some kind of thesis/dissertation that takes up other time
c. few people begin straight into consulting

I, for one, am 27 and have been working for two years only. That said, you will find 32-year-old partners here too: he who sells wins, that's worldwide.

Hope that helps guys!

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Re: Unconventional answers about management consulting [#permalink]

22 Dec 2008, 06:55

Great thread! YEAH!!!!!!!!

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Re: Unconventional answers about management consulting [#permalink]

22 Dec 2008, 12:22

Thanks!!

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Re: Unconventional answers about management consulting [#permalink]

23 Dec 2008, 17:44

Thanks paradosso. A few more questions:
1) Once hired, how easy is it to transfer from one office to another? As in, if you're hired into the London office, how easy it is to move to say NYC?
2) What's the typical promotion path once you're hired? Are the first opportunities for promotion a few years after being hired? And then what?

thanks

gmatclubot

Re: Unconventional answers about management consulting [#permalink]

23 Dec 2008, 17:44