Graduates flock to the consulting industry for the opportunity to work on interesting cases, get experience across a variety of industries, and build a valuable professional skill-set. But there’s an emerging threat to this value proposition, and it’s coming from within.
If you happen to know a young consultant at a top tier firm, you’ve probably heard them talking about it: the consulting industry is moving away from short-term strategy work, and towards long-term transformations.
Transformations, in short, are cases where consulting firms are embedded to support the client towards a long-term goal – perhaps revenue or (more often) savings targets, the re-organisation of its business, or the launch of new business lines. The goal(s) are split into different ‘tracks’ or ‘streams’, each of which has specific activities and associated targets, and consultants help the business to implement and track their progress towards the goal, usually in bi-weekly progress meetings. A consultant may be responsible for their own track, or may work in the central ‘project management office’, collating progress reports from all the other tracks.
The value for consulting firms is clear: longer cases are not just valuable in terms of locking in billings for long periods, but also help firms stay ‘in the building’ with their clients, building relationships, pitching additional pieces of work, all while keeping other consulting firms out and ensuring first dibs and inside knowledge on any new projects. Some long transformations are so valuable, consulting firms will conduct the work with up to 100% of fees at risk – only charging the client if targets are met, or taking a percentage of all savings or revenues realised at the end of the project.
There is some upside to this new way of working, to be sure: consultants on long-term transformation cases get highly operational experience – implementing strategy instead of dropping a deck over the wall before rolling off. Transformations often give visibility over the whole company – a view not always possible in a short-term case. The predictability of the work may help ensure greater work-life balance, which can be a valuable thing on the back of a high-travel schedule. And a longer case can be a good opportunity to show improvement over time; useful for feedback and promotions (no manager wants to show that the person underneath them hasn’t improved in six months!). Finally, transformation teams are often blended with clients, sometimes giving consultants first-hand experience of a line role in industry.
However, while working with clients can be a blessing, it can also be a curse. Many consultants in blended teams complain about having responsibility over their clients’ day jobs as well as their own work, or having to work in hostile environments – sometimes five days a week instead of the usual four – where clients are not pleased to have consultants alongside. And that’s far from the only downside of working on transformations.
Transformations are often slow-moving: consultants may be waiting on a whole business to turn around, and remain heavily reliant on client counterparts for data, operational work, and reporting towards milestones. This means consultants are less likely to get the rapid upskilling that comes over short-term assignments, and development is generally perceived to be slower while on a transformation. The work can also be relatively boring, especially in the project management office, which reports on progress and updates the same sets of slides week-in, week-out. For a consultant hoping to get the most out of a short stint in consulting, being assigned to a transformation project may mean seeing only two clients in two years – unthinkable even two or three years ago.
Finally, as a top-tier consultant, you may not have much influence over whether or not you work on a transformation. While some employees are hired directly into subsidiary firms – for example, McKinsey & Company’s RTS – consultants on the generalist and expert tracks are often drafted into transformation work for anywhere from six to twelve months. And once a consultant has built up client experience, it’s common to be extended for ever longer stays.
The last point is a potential downside for clients used to free and frank advice from their consultants. Consulting firms can be a useful whip-cracker to speed up the progress of company-wide change, and in theory, fees-at-risk models align consultants’ incentives with their clients. However, the success of such strategies relies heavily on whether the incentives are in fact aligned.
If a consulting firm has fees at risk, a potential conflict arises between doing what’s best for the client, and doing whatever ensures targets are met and fees delivered. If incentives are slightly mis-aligned – perhaps short-term targets undermine longer-term goals – a transformation project can create a lot of losers.
Sam Smith worked in a top-tier management consulting firm for two years before taking time out for study. They write under a pseudonym to bring you honest reflections and insider information.
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