Career Overview: Management Consulting

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Posted by The Editors on December 3, 2012
Overview
So, you're about to graduate and you think you want to be a management consultant. Or more likely, you think you'll spend a few years as a consultant and then move on to other things. You're not alone. Consulting firms are traditionally among the largest employers of top MBAs and college graduates, and competition for jobs is stiff every year.

More than half the people in top MBA programs and a significant number of college seniors flirt with the idea of becoming a management consultant after graduation. It's a high-paying, high-profile field that offers students the opportunity to take on a lot of responsibility right out of school and quickly learn a great deal about the business world.

The big names in management consulting are well known. Bain & Co., the Boston Consulting Group (BCG), McKinsey & Co., and a solid crop of similar firms vie for contracts from the Fortune 500. Each firm has a slightly different focus, culture, and approach. Pay attention to these differences so you can show in your interviews that you understand why Company X is far superior to the rest of the field, and what makes you the perfect fit for it. Insiders throughout the industry stress that knowing the differences between firm practices and cultures is critical to getting hired.

One word of clarification: "Consulting" is a big, one-size-fits-all term that includes virtually any form of advice-giving in a business setting. Often called "strategy consulting," the management consulting segment of the industry profiled here includes firms that specialize in providing advice about strategic and core operational issues, such as finding new channels for selling products or reducing the costs involved in producing a product. Although some of the highest profile firms populate this segment, they're not the only ones doing consulting.

Thousands of other organizations and individuals call themselves consultants and make money selling their advisory services, and they offer plenty of opportunities for employment. If you like the idea of advising businesses and you have a particular interest in computers, human resources, corporate communications, mobile communications, health care, financial services, real estate, e-commerce, or some other specialized field, there's a good chance that you can find a position within an organization doing precisely that.

The field of IT services in particular has grown up over the past decade. Many of the biggest consulting firms, including IBM Global Services, Capgemini, and Accenture, derive a significant portion of their revenue through systems integration and outsourcing engagements. These firms work with a client to develop hardware and software solutions and then often manage the systems (hence the term "outsourcing").

What You'll Do:
In essence, consultants are hired advisers to corporations. They tackle a wide variety of business problems and provide solutions for their clients. Client companies hire consultants when they are up against problems that require expertise beyond what their staffs can provide, or when they need the fresh perspective of an outsider. Because it's expensive to keep smart, analytical thinkers on staff full-time, should a large enough problem arise, clients view consultancies as rent-a-brain agencies, where they can hire intelligent analysts on an as-needed basis.

For consultants, this means constantly being exposed to the greatest challenges companies face: how to integrate staff and work processes after an acquisition, how to restructure after bankruptcy, where to set up manufacturing facilities abroad, how to attract and retain the right employees. Depending on the size and chosen strategy of the firm, these problems can be as straightforward as researching a new market or as complex as rethinking the client's entire organization. No matter what the project is, it's difficult to scoff at the power that management consultants yield. They can advise a client to acquire a company worth hundreds of millions of dollars, or to reduce the size of its workforce by thousands of employees.

By and large, the things insiders like about consulting are similar across the board. They enjoy the variety afforded by working in different industries for many different clients, the intellectual challenge of pushing themselves to the limit as they tackle complex business problems, and the people with whom they work. And they like the money and the perks. The industry pays very well, and consultants travel in style.

Consulting insiders also have a litany of complaints: 60-hour workweeks are standard (with crunch times often calling for more), extended travel is the rule, and personal plans often must be put on hold. Clients-not you-drive the deadlines, which can severely cut into your social life. In addition, at some point most consultants long for the opportunity to actually implement their great ideas.
Requirements
Undergraduates
Undergraduates generally join consulting firms as analysts, although their titles vary. Traditionally, the analyst program lasts two to three years, after which you're encouraged to go to business school. However, this system has been changing over the past several years. Firms have increasingly been promoting analysts into positions previously reserved for MBAs or into interim roles between the undergraduate and MBA position. Insiders recommend choosing your assignments wisely without over-committing yourself. Pick one or two additional projects in growing areas and give them your all. It's a strategy that may result in a promotion within 12 months of being hired. If you choose to go to business school, many firms will pay your tuition, provided you return to the firm when you're done.

MBAs
Consulting firms hire MBAs and other postgraduates right out of school or from industry. Most new MBA hires will come into a firm as associates; after two or three years they'll move to the next level, where they'll manage case teams. After managing projects for a couple of years, consultants may be promoted to principal, whereupon the focus shifts to more intensive client work and the selling of services. Finally, after seven to ten years with a firm, a consultant might be promoted to partner. The benefits of partnership include big increases in salary and responsibility. The key function of partners at most firms is to cultivate clients and sell them the firm's services.

Advanced -Degree Candidates
Consulting firms often tap nontraditional candidate pools, including JDs, PhDs, and MDs. If you are one of these candidates, find out at which level you'll come in: that of undergrads, MBAs, or experienced hires. Also, you should ask about the type of support you'll receive once you join the firm. Some organizations offer a mini-MBA training program, while others rely more heavily on mentorship. Job Outlook
Overall, the outlook for the management consulting industry is positive. Kennedy Information predicts a steady 7-percent annual increase in consulting revenue across the board through the end of the decade. And despite tough economic times in 2008 and 2009, the position of management consultant ranked on U.S. News and World Report's "Best Careers 2009" list. Reasons listed include having great corporate influence at a young age, earning a solid salary, and the "recession-resistant niches" available-such as healthcare, alternative energy, and information technology.

Consulting companies heavily recruited MBAs from 2004 to 2007, facing competition from other industries, such as technology firms, financial services, real estate, and government agencies. But the 2008 and 2009 recruiting seasons led to increased competition because of the recession. MBAs normally lured to lucrative investment banking turned to consulting as a safe backup, and a recruiter at Boston Consulting Group said attendance doubled at some campus recruiting events in 2008.

For the next few years, MBAs should expect tough competition in the recruitment pool. Top firms get more than 10,000 resumes for entry-level consultant positions and hire only 100 to 250 new consultants each year. "I would guesstimate that on average, less than 90 percent of the people who interview with consulting firms get an offer," says a consultant. "You have to be ready to play the game and really prepare for the interview process." Interview with as many firms as you can, and be sure you know why you want to work in the industry. You can make a lot of money in this industry, and you can also be miserable if it's not right for you. But if you love the work, it makes up for the sacrifices.

Be aware of the changing dynamics of the industry as well. It's becoming more mature, and the major sectors- IT, HR, strategy, and operations-are increasingly becoming specialty markets with growth drivers unconnected to the other sectors. Meanwhile, clients have become savvier, in some cases creating their own in-house consulting teams, which has put pressure on billing rates and has heightened demand for consultants with industry experience. If you're coming into a firm out of college and plan to get an MBA later, you'll help your career by gaining substantial industry experience in the type of client engagements you want to work in after you earn your MBA.
Career Tracks
As each firm has its favorite buzzwords, it also has unique terminology for its rank and file. While the titles might vary from firm to firm, the roles can basically be divided as follows: analyst (also called research associate or staff consultant at some firms), consultant (or senior consultant), manager, and partner or vice president. In addition, consulting firms hire a cadre of highly capable nonprofessional staff to fill administrative and support positions. (This is not a bad place to be if you've got skills in PowerPoint and you like to create slides.)

Administrative Assistant

Most consulting firms have a fairly large pool of college-educated administrative assistants and support staff on board so that the consultants can focus on tasks that justify their $200-plus per-hour billing rates. In addition to performing standard support functions, many have specific roles (recruiting, office administration, or website maintenance, for example). Most firms also have a group of graphic designers on staff to prepare materials for presentations.

Analyst/Research Associate/Staff Consultant

This is the position at the bottom of the professional pyramid. The vast bulk of analysts are young, talented, and hungry college graduates. Many firms structure this position to last for two to three years, after which the analyst is expected to move on-perhaps to graduate school or another employer. (Some firms do allow people to progress up the management ladder without leaving the firm.) The work itself-as well as the hours-can be quite demanding. It often includes field research, data analysis, customer and competitor interviews, and client meetings. In IT, analysts might do heavy-duty programming.

Associate/Consultant/Senior Consultant

This is the typical port of entry for newly minted MBAs (and increasingly for other graduate students as well). Senior consultants often perform research and analysis, formulate recommendations, and present findings to the client. Oh, and at many firms, they have to implement those great ideas, too. Although this is usually a tenure-track position, a fair number of consultants will leave the business after two or three years to pursue entrepreneurial or industry positions.

Manager
After a few years, a senior consultant will move up to manager. As the title implies, this usually means leading a team of consultants and analysts toward project completion. Some firms may hire MBAs with significant work experience directly into the manager's position, particularly in their IT practices. In addition to having more rigorous responsibilities for managing the project team, the manager will typically be a primary point person for client interactions.

Partner or Vice President

Congratulations! You've forded the River Jordan of consulting and arrived at the Promised Land. Note that some firms further subdivide partners into junior and senior grades. And if you aspire to it, there's always chairman or CEO. As a partner, one of your big responsibilities will be to bring in new work. Fortunately, as with other big-ticket sales jobs, the pay can be quite rewarding.

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