- 1 What is Management Consulting?
- 2 Management Consulting in Canada
- 3 Rationale for Hiring a Management Consultant
- 4 Why Management Consulting?
- 5 Breaking into Management Consulting
- 6 Management Consulting Salaries and Exit Opportunities
- 7 How to Prepare for a Management Consulting Interview
What is Management Consulting?
Management consulting is a professional service offered to organizations which aims to help internal management improve operating performance. Consultancies are brought in to tackle individual problems (falling revenue, rising costs, geographical expansion) or to evaluate the company through a deep dive of operations for a modest fee ($1-2 million for these engagements).
The management consulting value chain encompasses strategy (idea origination, analysis and presentation of findings), implementation, operations and maintenance/feedback. Strategy consulting is the most human capital intensive and highest margin segment of management consulting, and the terms are used interchangeably.
Management Consulting in Canada
The hours are less gruelling (factoring out travel) than those in investment banking but average 55-70 a week.
Traditionally, strategy consulting firms have operated independently from the rest of the consulting value chain, with prominent firms including McKinsey, Bain, BCG, AT Kearney, Booz & Co, Monitor, ZS Associates, Booz Allen Hamilton (Government & Defense) having busy practices. Accenture, Deloitte and the rest of the Big 4 accounting firms were previously more on the operational side.
The industry has undergone considerable consolidation as clients migrate towards one stop solutions and competition for fees tightens. Deloitte has since purchased Monitor, PwC has purchased Booz, and KPMG has purchased SECOR as firms look to poach client bases and cross-sell products. Even traditional strategy consultants are expanding further downstream in the value chain with McKinsey and BCG starting “Knowledge” and “Implementation” practices.
IT consulting (Accenture, IBM) has recently come into prominence, with the proliferation of big data and the internet of things. Other reputable firms with operations in Canada include Oliver Wyman and Roland Berger.
The Big 3 Strategy Consultancies (McKinsey, Bain, Boston Consulting Group) are top feeders and employers for elite MBA programs (Harvard Business School, Stanford Graduate School of Business, Wharton, Columbia, INSEAD, Kellogg).
Along with the prestige, a career in consulting is alluring to graduates with well known tenets of the job including exposure to C-level executives from day one, frequent business class travel, complimentary fine food and beverage, and extensive training and mentorship.
Rationale for Hiring a Management Consultant
Management consultants can be brought in by management to justify unpopular decisions. Often, management wants to act on an issue in a certain way, but require external buy-in to overcome internal resistance. Hiring a consultancy also insulates management from the fallout of a failed strategy.
By hiring a consultant to solve a problem, management indirectly has access to data from the consultancy that consider numerous past projects (including those for competitors). Although data and corporate best practices from other projects are strictly confidential, the consultancy has internalized the information and will formulate the best solution based on that experience.
Bringing in a consultancy may be cost effective outsourcing. An engagement entails bringing in a team of industry experts that work extensive hours. This can be cost effective compared to reallocating internal resources and training staff to operate outside of their core competency.
Cross Functional Problem Solving
In many large companies, functional groups are siloed off, with little communication across departments. Not only do consultants get an unbiased view of the problem through interviews across departments, they create an impetus for communication that promotes cross functional problem solving. Similarly, consultants interview and shadow employees throughout the organizational structure, where they gain insight on issues from various layers of management.
Why Management Consulting?
Ex-McKinseyites are ubiquitous amongst the C-suite for Fortune 500’s and strategy consultancy alumni are common at all levels of management. Consultants have a head start on most other corporate workers as they are interviewing CEOs from day one and pushed to conduct analysis and original thought leadership that is actionable (albeit no guarantee the client organization will follow the advice).
Many Ivy League graduates will choose to start a consulting career in Toronto, so McKinsey, Bain and BCG tend to provide a more global initiation to the workforce versus investment banking.
Breaking into Management Consulting
Aspiring management consultants do not need a business degree to break in. McKinsey/Bain/BCG often prefer STEM majors over business majors. Steps to be well positioned for a career in management consulting include:
- Getting a prestigious undergrad
- Achieving a minimum GPA of 3.5 (GPA is used as a screen for candidates) – 3.7 is ideal for interviews and lower grades may require standardized testing (via GMAT/GRE) or a problem solving test to compensate
- Taking on internships and co-op at well known corporates that involve data analysis and problem solving
- Joining programs such as UBC’s SCMP (or equivalent)
- Attending consulting conferences and participating in case competitions
If no consulting job is lined up after undergraduate studies, a master’s or MBA may be required to reinvent a resume. Industry experience with extensive networking may be enough, but breaking in with that method is certainly the exception rather than the rule.
Management Consulting Salaries and Exit Opportunities
At McKinsey/Bain/BCG, ~$80,000 base salary is standard as an entry level business analyst/associate, with a $5,000 to $10,000 bonus. At the big four (Deloitte, PWC, KPMG, EY), $65,000 to $75,000 base salary and a ~$5,000 bonus is standard.
Grad school/MBA consultants and experienced hires start with $130,000 to $170,000 for all-in salary.
Exit opportunities are outstanding for management consulting – one of the biggest non-monetary benefits of a career in management consulting is the strength of its alumni network. McKinsey, for example, has more current and former Fortune 500 CEOs that are alumni than of any other company.
Exits are outstanding in terms of managerial positions in corporates, especially in strategy, but McKinsey and Bain have the added bonus of being great private equity feeders due to their focus on valuation. Megafund Bain Capital originated from Bain.
How to Prepare for a Management Consulting Interview
Management consulting interviews are usually in 2 parts, the behavioural portion and the case portion.
In the case portion of the interview, the interviewer is looking for a structured, logical approach to problem solving. Mental math is an important prerequisite to this part of the interview, where questions like “how many basketballs can you fit in a 747?” are commonplace. To get ready for the case interview, brain teasers and mental math should be practiced. When practicing the case questions, remember to apply the MECE (Mutually Exclusive, Collectively Exhaustive) principle.
Mutually Exclusive, Collectively Exhaustive may seem like a difficult concept, but with enough practice, it is rather easy to apply. Specifically, an answer should be structured so that the scenarios do not overlap, and cover the entire universe of possible scenarios. Consider the basketball example:
- Come up with a list of possible scenarios, notice how the scenarios do not overlap
- The 747 can be full with passengers, void of passengers, and void of chairs, washrooms etc. (note that some of these scenarios are uncommon and may help you exhibit your out-of-the-box problem solving skills)
- The basketball can be inflated or deflated, while deflated it can be neatly stacked or randomly stacked (note that the stacking orientation is contingent upon state of inflation, this gives the interviewee a chance to show the interviewer the depth of your logic)
- Roughly estimate the volume of the 747 (you can assume cylinder) and the volume of a basketball, and divide to get the answer (here is when mental math and common sense comes in, the interviewer wants to see quick calculations and a reasonable estimate on the volume)
An interviewee will want to be able to explain how the changes will affect their answer.
In the behavioural portion, the interviewer is trying to gauge for the ability to communicate and collaborate with others. Consultants need to be able to solve problems in politically sensitive environments, and the interviewer needs to be sure that the candidate can represent the firm with poise under that pressure.