Companies pay millions for the service of just a few men and women with almost no experience in the real field. Everybody says management consulting (or, “consulting” for short) is over-priced and over-rated. But consulting keeps getting bigger and bigger each year, attracting the brightest and the most ambitious talents from top schools. How does that all work? Will I ever be a part of that great engine?
Management consulting is an industry providing expensive and professional advice to organizations to improve their overall performance, through better “management”, which includes strategy, governance, operation, organization, finance, and marketing. The three most prestigious management consulting firms are McKinsey, BCG, and Bain (the Big Three).
“Management consulting” is the consulting type focusing on … management!
In simple language, think about any other type of “consulting”. If “financial consulting” focuses on advising clients about finance, “legal advisory” ensures lawful activities across the broad, and “IT consulting” helps clients solve IT problems, then “management consulting” is all about management.
“Management” is a broad area, connecting almost all other functions and departments of any particular company. As a management consultant, you typically work on top-level business problems, those that concern CEOs, Chairmans, Boards of Directors (BOD), Boards of Management (BOM), etc. Simply because they are in-charge of “management”.
1.1 Categories of management consulting
But still, “Management Consulting” is a very broad term.
Technically, anybody helping anyone on “management” is a management consultant.
Management consulting firms can be divided into 4 main categories (or tier): The Big Three (McKinsey, Boston Consulting Group, Bain), The Tier 2 (Accenture, Kearney, Oliver Wyman, L.E.K.), The Big Four (Deloitte, PwC, KPMG, EY), and Boutique firms. This categorization is based on the typical project sizes.
So you can imagine McKinsey would do the biggest projects while Deloitte typically take on smaller contracts, often in a more granular and niche area. This is despite the fact that Deloitte itself is a bigger company than McKinsey. So the categorization focuses mainly on the size of the projects, NOT the size of the firms themselves.
The word “management consulting” or “consulting” standing alone mostly refers to that top-of-the-range group (MBB). Preparation for this group is also the main focus of our website.
1.2 Management consulting vs Strategy consulting?
“Strategy consulting” is a part of “management consulting”, focusing on the strategy practice. Other than strategy, a management consulting firm also does operation and implementation. It is rare to see a pure “strategy consulting” firm, doing only “strategy” nowadays.
Also, don’t assume that management consulting is merely about (1) strategy and (2) implementation. This breakdown is overly simplified. Both strategy and implementation are part of the “management” big picture with so many other moving pieces.
I will talk about this in greater detail below when we deep dive into a typical consulting project.
Speaking of size, Big 4 accounting firms (E&Y, Deloitte, KPMG, PwC) are also the biggest consultancies. However, size alone cannot tell the whole story because those firms also do a lot of other services.
The most elite and prestigious management consulting firms in the world are the Big Three: McKinsey, Boston Consulting Group, and Bain (MBB). These three companies charge significantly higher than others and they also pay their employees a lot more generously.
In the industry, if one says he/she is with McKinsey, everybody immediately pays respect, admiration, and (in some cases) jealousy.
McKinsey vs BCG vs Bain
McKinsey has a slight edge over BCG and Bain, charging clients on average 30% more consulting fee than BCG and Bain for the same scope of work. McKinsey is generally considered as more prestigious and a more desirable place to work.
This is not to devalue BCG and Bain. Landing a job on any of the three firms above is a dream for everybody. But if one gets offers from all 3 firms, he/she would most likely join McKinsey.
3. Quick Facts about A Consulting Project
Here are some facts about a typical consulting project for busy people.
- Fee: McKinsey typically charges ~$750,000 US – $1,000,000 US per month per standard team. So you can imagine a 6-month project would cost about $4 ~ 5 US million.
- Team size: A typical McKinsey team has 1 Engagement Manager (EM), 1 ~ 2 Associates, 2-3 Analysts, 1 Team Assistant, and support staff depending on the project (translator, researcher, etc.). On top of that, there are part-time Partners and Directors chipping in at times.
- Length: 3 months, 6 months, one year… Usually, the consulting firm and the client sign a short-term deal first (diagnostic or strategy). This lasts about 2 – 3 months. Then if things go well, they commit to a longer deal.
- Support system: You can see from the video here that, it’s not just the project team fighting alone. In fact, the majority of the work power comes from the “back end”. There is a big network of support centers of various functions, industries, and specialties pouring help. The project team is there to unlock and “channel” that endless energy into the right place.
3.1 Why do companies pay consultants SO MUCH money?
Consulting has been charging that ridiculous fee for decades now and there are always big clients after big clients writing the checks. So there must be real values. What are they?
- Best practice!
Consulting firms also consult many other clients in the same industry across the globe. So even though nobody is 100% certain the advice would work, everybody knows that consulting firms will bring the “best practice”, the most updated, the most current, and the most proven solutions to the table.
Sometimes, hiring consulting firms is as about standing out as it is about not being left behind! Everybody is doing this “best practice”, we can’t afford to not even know about it!
Big conglomerates are complicated! Sometimes (sadly), consulting firms are used as a political tool to create buy-ins, to raise the stake, or to eliminate rivals.
For example, if there are 2 rivaling sides with 2 opposing ideas on how to run the conglomerates. Is there any better way to add weight to one’s argument than saying it comes from fact-based, independent, and highly smart McKinsey people?
3.2 Do the clients always listen to consultants’ recommendations?
Most of the time, but not really…
It’s not always black and white. Consultants’ recommendations are never something simple like let’s do A or let’s do B. It’s a complicated set of big strategies with many detailed actions with respective milestones and conditions. Plus, implementing those recommendations is not like eating a piece of cake. There will always be adjustments here and there to suit the specific context and the ever-changing market condition.
3.3 Do consultants’ advice really help clients?
Anybody saying a definite yes / no is not telling the whole story.
- First of all, similar to the above, it’s never a black and white thing. The advice is a set of many detailed actions with specific conditions corresponding to each situations. Some are well implemented while some are not. And the situations will always be changing.
- Secondly, we never know for sure! In fact, we don’t even know if a particular company is being consulted or not. And even if we do, there’s no way to tell if the company’s action is according to the consultants’ advice or not. When a client discards advice, does its own thing, fails, and blames the consultants; the consultants would never confirm nor deny their innocence.
3.4 People say consulting is the most prestigious field, WHY?
- Consulting salary is one of the highest, starting at ~$90,000/year for entry-level, without bonus. One can argue investment bankers make more. But they only make 30% more for almost double the working hours. For the company to pay you that much money, the work you do must be very valuable of some sort.
- The work is challenging. Imagine getting thrown into a table with people being in this industry for 20 years, hold your own, and tell them what to do.
Even the brightest people get overwhelmed sometimes. But you either get smart or get kicked!
- No environment gets you closer to that many exceptional people. The good news is: we are the average of 5 people you spend the most time with. Everybody in consulting is smart, driven, and special in his/her own way.
- One year in consulting equals 3-5 years of learning in a conventional job. Maybe even more. Many of these lessons will remain and serve you for life. This video talks about what I personally learned most from the time being a management consultant.
- Exit options are incredible! Nobody works in consulting forever. But normally, people leave consulting for things even better (at least in terms of earning). And did I mention McKinsey produces the most Fortune 500 CEOs?
4. What Does a Consultant Do?
Anybody saying a management consultant solves “business problems”
either over-simplifies it or doesn’t know much about consulting!
We know that consultants solve business problems, but how do we do it, exactly? To answer that question, I present to you one of the best all-time videos about management consulting.
If you don’t have the time right now to watch the video, here is the 20-seconds summary. Spoilers, of course!
Think of each management consultant like a “Content ambassador”, connecting a massive back-end support network of experts and a complicated client context with moving pieces.
- A typical consultant would come to the client, analyze the problem, break it down, then break it further down.
- At the most granular (deep) layer, he/she brings in experts who know about that particular item best (either function or industry experts).
- After that weeks-long process, the consultant consolidates every small item into the big picture again and articulates everything into specific recommendations to the client.
If you want to learn in detail about the management consulting job, and you prefer to read, this article talks in-depth about what management consultants do.
In almost every consulting firm, there are 2 career tracks: the Consulting track and the Support track; basically the consultants and everybody else.
While the support tracks vary a great deal from firms to firms, the consulting track is much more standardized, and strictly follows the org-chart in a bottom-up fashion.
5.1 Consulting track
- Entry: Open to ANY study background. No business knowledge is required to get in. This is one of the greatest things in consulting. You have smart people from various backgrounds. Always fun to sit in a team with a Math PhD, a music engineering bachelor, etc.
- Up or out every 2 years. You can not stay in one rank forever. Either move up the ladder or leave the firms.
- Ranks: each firm has its own naming scheme but generally 3 notable major groups of ranks where responsibility clearly separates them from others: the Staffs, the Project Managers, and the Project Owners. See the map below for the specific naming scheme of major management consulting firms.
5.2 Support track
In the “How McKinsey is organized as a company” video, you see that the scale and diversity of support centers are tremendous. There are hundreds of different centers within McKinsey, ranging across many functions, industries, location, task supports, etc. So you can imagine, each of those centers would have one or a few career tracks for their own staff.
Here, let’s look at some notable ones, whose work has similarities with the consultants themselves.
- Research & Intelligent (R&I): often based in Offices, taking “orders” from projects all over the world about the specialized location. R&I people are often the “near-miss” aspired consultants, who just fall really short and get offered by the office they interview with.
- Industry specialists: based in the respective Industry Support Center. These people have deep knowledge and experience in the industry and are often hired from the outside.
- Function specialists: based in the respective Function Support Center, similar to the industry specialists. But many of these people transfer from the consulting track thanks to the discovered interest in the particular function.
- Implementation consultants: this is a new and trendy career track emerging to the scene. They are called “consultants” because their work nature is very “consulting-like”: working directly with clients, etc. But their focus is mainly on the “implementation” of recommendations made from past projects and their track is separate from the traditional consulting one.
6. How Can I Become a Management Consultant?
As good as it is to be a management consultant, getting in is brutally difficult. The passing ratio is usually lower than 1% in most MBB offices.
The recruiting process goes from: Resume, Standardized Tests, then Case Interview. Each step includes multiple baby steps:
Each of these steps is a unique game on its own. And to make it really challenging, consulting people has their own styles in all of the above steps.
- Consulting resume is very much different from a normal resume
- Standardized tests require you to take them seriously like a full-fledge GMAT, SAT, etc.
- The case interview is an interactive business case-study working session. The interviewer would have you solve a substance-rich case with him/her, instead of just answering some lame behavior questions like in traditional interviews.
It’s a long and challenging process that you should start as early as possible. Many of the above take time to absorb. But when you make it, I can guarantee it’s one of the best things that can ever happen to you. You will join an elite group of people. You will suffer at times but will learn so much. Your career and your life turn to a new page.
Everyone can make it
Just a few years at McKinsey completely changed who I am, both personally and professionally. In a postive way, that is. I also see it changing the lives of almost all the colleagues I ever know. I sincerely believe you can and you should do it. Nobody said you have to stay there forever. But the lessons, the toughness, the desire, the structured mindset, etc. will remain
It’s ridiculously difficult to even get your foot in the doors of the top management consulting firms. Most applicants don’t even get to see the interviewers, and the few that does must undergo the most strenous, high-stake job interviews existing on this planet.
However, with systematic and careful preparation – in the same manner that consultants approach their projects – I believe anyone can make it to consulting.
Are you a believer?
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