Reading the testimonies of recent graduates working in consulting, it is a legitimate question to ask how can a graduate, with only 2-3 months business experience, be expected to advise a company director with more than ten years experience how to run his company? Such a scenario is made possible by the fact that consultants rarely work alone. Typically they work in teams of 5-10, so each consultant has access to a pool of knowledge and business expertise as well as any of the research capabilities the firm may possess. Another factor is the consultant’s ability to think "out-of-the-box" and approach a project objectively and from a different perspective to that of internal managers or analysts.
Because consultancy work is characterised by high level projects across several different industries, consultants are able to bring a vast amount of experience and knowledge gained in a wider sphere and apply their skills to each new project. In particular, consultants often have a unique amount of experience and training in the very latest concepts and technologies, which client organisations are able to benefit from.
Another reason for companies choosing to use a consultancy firm is often simply one of contingency. Businesses will occasionally need a particular skill, or certain number of experts, to perform a one-off project and getting external help is often more efficient than having to recruit directly or train up existing employees. A more cynical reason sometimes cited is that managers will use consultants to take the blame for unpopular decisions such as downsizing. Although consultants’ lack of emotional attachment might make them appear as a useful means of burying bad news, it is more likely that their position as outsiders will mean that they are particularly useful for tasks that require a degree of confidentiality, such as a management buyout or merger.
Consultancy work can be divided roughly into five areas: strategic, operational, IT, Human Resources and Financial. In practice, however, a consultant’s work, although specialising in one particular area, is likely to encompass some, if not all, of the other functions. Nevertheless, consulting companies can be grouped into the following areas.
Strategy
Arguably the area of consultancy that enjoys the highest profile, strategy specialists advise on the likely strategic developments within industries, and the strategies a firm needs to adopt to anticipate them. Many of the most prestigious firms specialise in this area, including Bain, McKinsey and BCG, offering the highest salaries and consequently taking the cream of applicants.Strategy consultancies cover a broad range of industries with project assignments frequently involving work at Director-level on the client side. Typically working at the clients’ Headquarters, these projects will normally be staffed by a small (5-10 person) project team and you can expect close contact with Partners from the consulting firm.
Operational
As the title suggests, this is about dealing with the actual goings on in client organisations, providing the processes and infrastructure to enable the implementation of high level strategic decisions. Theoretically, operational projects follow on from strategic ones, although in reality there is a lot of shared ground and so no consultancies would claim to specialise in operations alone.
IT
Businesses rely on IT systems to enable their countless business processes and functions to be performed. IT consultants help to implement and develop these systems by combining their technical skills and knowledge of business processes to engineer successful solutions. This could mean advising on the design, integration and implementation of a new IT system or software application and ensuring it fits as smoothly as possible into the existing infrastructure. Although advantageous, it is not always necessary to have in-depth IT knowledge or experience. More important is a demonstrable interest in technology and an ability to think logically and an aptitude for learning new skills. It is a common misconception that this area is purely technical and an ability to communicate and explain technical concepts to non-technical clients is a key requirement.
Human Resources (HR)
HR specialists advise organisations on how best to manage their investment in the workforce. This involves the creation of HR strategy, including employee development and internal communication schemes, and the design and implementation of benefit and compensation policies. Areas currently in vogue include ‘change management, the management of change’, and ‘knowledge management, the management of knowledge’!
Financial/ Actuarial
This area is often combined with the HR specialism and involves the provision of advice regarding financial and economic issues. As well as strong communication and interpersonal skills, consultants must understand the complexity of financial processes and economic trends and have the deeper analytical expertise to build and interpret mathematical models from which they can provide advice at a strategic level. Many individuals move into this specialism after successfully completing the relevant accountancy or actuarial qualifications.
Full-range
Offer an integrated approach, providing strategic and operational assistance through to economic advice and IT implementations. Typified by the consultancy arms of the "Big Five" accountancy practices: Deloitte Consulting, CapGemini Ernst &Young, KPMG Consulting, PWC, Andersen Business Consulting. The fundamental business rationale is that of selling additional services to an existing client and becoming a client’s "one-stop-shop" for all their consulting requirements. They tend to concentrate on high volume assignments. Typically, project teams will be much larger (30+ not unusual) with less partner contact. Geographically, they are more likely to be based at company facilities, rather than the headquarters. Salaries tend not to be as generous as those paid by more specialist firms, but the training is often more structured and there is a better life-work balance. The entry criteria are also slightly less stringent, reflecting the massive recruitment requirements of such firms.
Niche Boutiques
These firms specialise in a particular industry (telecoms, transportation, etc) or in a particular functional expertise (marketing, finance). Examples of such firms are DiamondCluster (telecoms), Spectrum (media) and Sabre (aviation). If advising on strategy, fee rates can approach those of Top-tier Strategy firms – though a lot of the work will be operational in nature. As with strategy, this area is associated with a significant amount of travel and consultants will typically be onsite at clients’ headquarters.
A particular area of growth in recent years has been in Ecommerce and the internet, due to demand for specialist skills in this area to enable clients to establish a web presence and achieve success online.The biggest, and perhaps most obvious, implication of working for such a firm is the need to specialise from day one, which could result in restricting the range of potential career choices later. Although it is possible to move into a specialist firm having worked in a larger consultancy, a significant amount of experience in the particular field would be required to enable a transfer to a position of similar seniority.