Pro’s and con’s from an ex-consultant turned startup founder
Should I join a consulting firm?
Having worked in the management consulting industry for a few years, I’ve been asked this question a few times . I honestly don’t have a default “Yes” or “No” answer to this question and a lengthy discussion promptly ensues as there are several positive and negative aspects to draw on.
South Africa’s recent political history does not paint a pretty picture for management consulting. With several big consulting firms implicated in the so called #StateCapture, it is easy to see why people have a pessimistic view on the estimated R120Bn industry. South African politics aside, the global view on the consulting industry is polarizing:
“Private equity investors and management consultants don’t start new businesses; they squeeze extra efficiency from ones with incessant procedural optimizations. It’s no surprise that these fields all attract disproportionate numbers of high-achieving Ivy League optionality chasers; what could be a more appropriate reward for two decades of resume building than a seemingly elite, process oriented career that promised to ’keep options open’?” Peter Thiel
“All too many consultants, when asked, ‘What is 2 and 2?’ respond, ‘What do you have in mind?” Norman Ralph Augustine
“Companies hire consultants just for the sake of saying ‘We even hired consultants and even they couldn’t solve the problem’.” Anonymous
The television series “House of Lies” takes a satirical look at the consulting and corporate world. Even more amusing is that the show is based on a book with the title: House of Lies: How Management Consultants Steal Your Watch and Then Tell You the Time, by Martin Kihn, former consultant at Booz Allen Hamilton.
Even though satirical, the show demonstrates that though consultants don’t start businesses, as Peter Thiel has said, they can still have an incredible influence on these businesses and, more concerningly, important sectors of society such as Banks and governments. The consulting industry is a multi-billion dollar global industry. Most consulting firms have continental head offices with projects spanning multiple countries. And the firms still attract high achieving individuals from various backgrounds. Why is that?
Some personal background
I ended up in consulting through a series of fortunate and unfortunate events. In my matric year I received a bursary to study chemical engineering from an oil and gas company and a bursary to study actuarial science from an insurance company. I went with the former thinking chemical engineering would give me more variety later on in life. Engineering was something I ended up falling in love with (yes, I’m one of those people) and decided to proceed to post-grad immediately after my undergraduate degree. The O&G company was happy to fund my first year MSc studies since it was related to its processes.
Halfway through my second year, my project was upgraded to PhD, but the O&G company requested my services so I could work back my bursary obligation. It felt like being drafted into the army. After some begging and pleading and a letter of motivation from my project supervisor, I managed to convince the O&G company to give me some more time. At the end of the 3rd year they stepped up their pursuits. This time I only managed to get an extra 6 months. After 3 and half years I managed to complete the required work for the PhD, but still had the bulk of the write up remaining. I thought, as many PhD candidates unfortunately do, “I can do the writing part-time, in the evenings”. Easier said than done.
On 1 July 2014 I arrived on site of the O&G company’s main production plant, did one week of training and safety induction, and the very next week I received a section 189 letter announcing retrenchments. In South Africa, companies are obligated by law to notify their employees that restructuring and retrenchments will be taking place. Naturally you’d think the Last in First Out (LIFO) principal would apply but, for the life of me, I still can’t figure out what criteria was used to decide who was to be retrenched. I actually applied, twice, for voluntary retrenchment but was unsuccessful.
I tried my best to add value to the department I was “drafted” into, but understandably, my managers and bosses were distracted by the current work environment. I worked on automating reports and after a while ended up automating my role. I coded some VBA macros so that Excel would run a report and Outlook would send out emails at 7:0Xam (I added a few random minutes as 7:00am sharp everyday would be too suspicious). Sometimes I was still fast asleep while my bosses thought I was hard at work. This was not necessarily because I was lazy, but nobody seemed to notice if I was at my desk or not. Oh, and I wasn’t the only one. One of my colleagues always said “If you give a bunch of smart people an opportunity to not do work, they won’t do it.”
The November of 2014, a friend who was working at a consulting firm was on her way out and informed me of a position that was available. I applied, not thinking too much about it and, long story short, I was offered a position as a consultant from January 2015. I accepted the offer as the opportunity seemed more promising and stable.
Upon arriving in consulting I learned that it was several consulting firms that advised the very same O&G company to restructure. At the same time I was staffed on a mining project that advised one of the biggest mining operations in the country to … wait for it … implement cost saving and restructuring techniques.
Perspective from the other side
At this point it would be easy to grab the pitchforks and start slating consulting companies for eroding value, not having people’s best interest at heart, etc. But let’s take a step back.
“You cannot enjoy life without skill” Alan Watts
Consulting houses attract top tier talent because they offer people the opportunity, or more astutely, offer them the challenge, to rapidly increase their skill set. One of these skills was to take a critical look at data/information and offer solutions, even if they don’t satisfy everyone.
At the end of 2014 / beginning of 2015 all the markets were down, the oil prices were the lowest they’ve been in six years, platinum, gold, iron all down, South Africa was on the verge of being in a recession. Times were tough. On my first consulting project we realized the mining company was operating at a significant loss, barring a drastic change in metal prices. It was a situation of let 5,000 people go to save the jobs of 25,000 or take a chance and put all 30,000 jobs at risk. And I can imagine the environment at the O&G company I worked at previously wasn’t much different.
Management consulting is designed to help organizations improve and optimize performance. On several occasions consultants are contracted to make tough choices in challenging situations. They are still human, and are not magic. Managing expectations is a big part of the job.
Consulting houses operate by selling projects to other companies. Individuals are assigned to a project team depending on the skills required and availability. It’s not uncommon to work with a different team on each project. The team consists of management, one or several senior employees who oversee the project and maintain the relationship with the client, and consultants, worker bees who collect and analyze data, prepare presentations, conduct interviews, and build models and tools. The types of projects vary from strategic and innovative to administrative and auditing. No two projects are the same.
From day one I tried to position myself as the “Data guy” or the “Modeling guy”. I was good at it and felt it was an easy way to impress, both the clients and the firm. I can honestly say I learned a great deal about the corporate world in the first year; how some of the industry behemoths operate. I was privileged enough to receive international training. I also managed to gain some niche technical skills like building an artificial neural network, creating a deterministic labour management model, and learning Python for big data manipulations.
In hindsight this was perfect for me at the time. It allowed me to develop some business acumen in a short amount of time, the advantage of on-the-job training. Most firms also tend to have specialized subject matter experts, so you get to learn from the best.
But something interesting happens at about the 18 month / 2 year mark. Consulting companies tend to retain very little of their staff in the long term. I noticed it initially with colleagues, and then with friends in the industry. It’s really due to a number of things; some people don’t like the work, some people figure this isn’t quite for them, some people don’t like the travel and the hours, and interestingly, some people get inspired to start businesses of their own. Consulting also shows that the business world isn’t half as complicated as many people think it is.
As far as I am concerned, consulting is one of the better corporate career paths to follow but it is by no means perfect. Like most things in life, you have to know what you want to get out of the experience before you dive in. When people ask me if they should join a firm or not, I’ll draw from the following Pros and Cons.
My Pros:
- An immense amount of experience and exposure in a short period of time
In the two years I’ve worked at the firm I’ve been on 7 mining industry projects, 2 Oil and Gas industry projects and one long term utilities industry project. The projects ranged from strategic planning projects to execution and delivery-based projects.
- A look at the business world in detail
On a project you will have access to everything you need to carry out the task. This means you’ll see processes, procedures, company finances, salary and wage bands, strategic plans and objects, tools, etc. You will also see how this varies from big industries to small industries.
- You learn from the best
As mentioned above, consulting attracts high performing individuals and as a result you will learn from people highly knowledgeable in particular fields. Most firms also have a wide variety of training course and a library of resources. Firms are open to funding postgraduate degrees, like an MBA, or other courses such as PRINCE and the sort.
- Critical thinking
Consultants are asked to analyze several aspects of a business and rationalize if it’s needed or not and if it can be improved. On several occasions they may not have much exposure to the field in question but can rely on frameworks and methodologies for making rational decisions.
- Learning to work in a team
The projects require a great deal of teamwork. Sometimes the team will be shipped off to a foreign or remote part of the world for months on end. As a result you really get to learn from and understand your colleagues and often form strong friendships. Firms are very aware of this and as a result, a big part of the interview process is to determine if and how you can work with the current resource pool. Even after leaving the firm, I’ve still remained friends with several of my former colleagues.
- You will build a wide network of contacts
Most projects require a significant amount of engagement with the client and their employees. You naturally create a diverse network of contacts from a variety of industries.
- Learning to work under pressure (you’ll surprise yourself)
Some deadlines can be very short but are never really missed. The team pulls together and can achieve heroic amounts of work, sometimes overnight. Some people may find this stressful and consider it a deal breaker.
- Opportunity to travel
International and local travel is always on the cards and on several occasions you’ll even get to travel business class. You can also build up a significant amount of frequent flyer miles and hotel group points, which you can use as you please.
- You get what you need to get the job done
Expenses aren’t spared if something is needed, be it software, last minute flights and accommodation for a meeting, food and snacks to keep the team going, etc. Most consulting firms have an army of support staff that can assist with several tasks and help keep you focused on executing the task at hand.
- Royal treatment
Most firms realize that their staff make big sacrifices and put in incredible efforts to get the job done. These efforts are rewarded with team outings, company parties and breakaways. At my firm, one particular team was rewarded with an all expenses paid weekend away to Mauritius for them and their partners. Most firms will also have employee training in exotic locations such as Barcelona or Majorca.
My Cons:
- Everyone is moulded into managerial roles
I personally didn’t want to be a consultant manager but after my two years at the firm this was my next and only step. I looked at the managers above me and most of them were overworked, over caffeinated and over stressed. Furthermore, one of the main focuses of a consulting manager is to make sales, an aspect I was not interested in at the time.
- Consultants do the jobs others don’t want to do
As I mentioned above, their may be times when people’s jobs are in your hands. You will have to envision scenarios and develop models where different amounts of people are dismissed; the terms “Lean” and “Barebones” are often used to describe varying degrees of what’s left of the company. This is something that can give you sleepless nights. On occasion the project may even be to straighten out a mess the client has made. A consultants decisions can have a negative impact on someone else’s life.
- The hours are brutal, the work can be tedious, and you become a slide jockey
I can appreciate that building a good presentation deck and laying out information that is easy to follow is an important skill but I was not a huge fan of slide building and it was unfortunately a significant part of the job. You will have nights if not weeks working on and “perfecting” the same presentation deck. I was in a team that built a 187 slide deck, of which the clients saw about 10. Even if the work is not tedious, the hours will still be long. Our office had the running joke of “Taking a Half-day huh” if someone was packing up at 5pm. As a result, some people end up doing work for works sake, never a good situation. As much as the travelling can be fun, be prepared to fly at obscure hours of the day. A project may require flying out Monday mornings at 6am and returning Thursday evenings 6pm for several months. Don’t be surprised if you end up doing work on the flight as well, it’s actually expected
- You have little time for personal interest and hobbies
Building on the point above about the long working hours, most of your down time will be spent resting and recovering. Before consulting it was easy to maintain a 5 day workout routine. Once I became a consultant this number gradually decreased and before I left the firm, I was happy if I went once a week.
- The infamous Golden Hand-Cuffs
Consulting salaries are not low by any stretch of the imagination. Most consulting firms tend to offer salaries in the 90th percentile and above (www.payscale.com). Furthermore, the more involved with projects you get, you see how much these projects are sold for and how much you as an individual get billed for. The first time you see that number, you will be shocked.
While the royal treatment is enjoyable you should realize that it is a tool used to encourage employees to stay at the company or organization instead of moving on. It is very easy to get accustomed to a high standard of living and several individuals become dependent on high salaries to fund high-end purchases like exotic cars and expensive whiskeys. Companies will also see nothing wrong with making vast demands and requesting sacrifices since the employee is being thoroughly compensated.
- You will feel under appreciated at times and you’ll need a thick skin
Consulting houses are notorious for setting ridiculously high standards and expectations of their employees. Even once a task is completed and agreed upon, if time permits, you are expected to find more value and give more time. You are billed per hour after all and if you do the job in half the time, you need to find something else to do. Appreciation of the work you do may only happen during a planned event like a year-end function of annual “Prize-giving”. At times you may have to deal with difficult clients and /or difficult managers. It takes all sorts to make a world and not all sorts are teddy bears who offer continuous support and encouragement. Try not to take it personally, most people don’t mean ill on others. Try rather to describe them as pragmatic, pedantic or discerning. If things do get really bad most firms do have what is termed an “upward feedback” system where constructive feedback is given regarding management, the effectiveness of these systems is another topic.
To conclude, if you are unsure about what career path to follow, want exposure to a variety of industries and don’t mind being thrown in the deep end, then consulting would be a great choice. You could see it as gaining all the skills of an MBA, while getting paid. But if you don’t want to get worked to the bone and are looking for something cushy, with a nice slow learning curve, this is most likely not a good fit for you.
Even though I have found the overall experience to be a bit restrictive , I have personally had more positive experiences than negative experiences during my consulting career.
