october 1999 so you want to be a management consultant? the anderson school at ucla

October 1999

So You Want To Be A Management Consultant?

The Anderson School at UCLA

2

Our agenda for today’s presentation

What a consultant

does

Overview of the

management consulting industry

The client engagement

Interviewing with a

consulting firm

3

First, some ground rules for today

This is NOT a Towers Perrin recruiting presentation We may provide examples from our experiences at Towers,

but this is meant as an introduction to the industry in general

Please ask questions throughout the day We’re helping only if we’re answering the questions you want

answered

There are NO stupid questions It’s better to ask the “silly” questions now, rather than at a

firm’s reception

4

Overview of the



Interviewing with a

consulting firm

What a consultant

does

5

What is a management consultant?

Management consultants are business advisors to companies and other organizations

Client contacts typically are senior- and executive-level managers

Services may be provided in several areas, including:

Functional areas

Strategy

Information technology

Human resources

Operations

Logistics

Specific industries

Financial services

Oil and gas

Chemicals

Health care

High technology

6

This is what you hear a management consultant does . . .

Competitive assessment

Customer satisfaction measurement

Benchmarking

Corporate/business unit strategy

Product positioning

Marketing/distribution strategy

Value chain analysis

Customer retention

Mass customization

Portfolio analysis

Shareholder value analysis

Business process improvement/reengineering

Cycle time reduction

Total quality management

Activity-based costing

Organization design

Change management

All types of analyses must be performed in

light of the client’s strategies

INTERNALEXTERNAL ANALYTIC FOCUS

7

. . . but what does it mean to you?

You will:

Be staffed on a project (as opposed to originating work)

Gather project data Research the client, industry, and market Conduct client interviews, secondary research Work with/lead/facilitate client project teams

Analyze data Tap into company resources and tools Perform quantitative analysis (“crunch” numbers business-school style) Perform qualitative analysis (e.g., use disparate data to develop

findings)

Continued . . .

8

. . . but what does it mean to you?

You will:

Develop recommendations for discussion by project team members

Produce reports/presentations in conjunction with project team members

Participate in firm/internal development projects Marketing/new business Intellectual capital Recruiting

9

So why would anyone in their right mind want to be a consultant?

Learn about lots of different industries Work with bright, dynamic, hard-working people (like those you know in school) Gain exposure to client senior management Make a virtually “no-lose” career choice Believe in the work you do: consultants make business and the world a better

place Travel Find a highly legitimate way to make a transition from one industry to another Develop a strong contact network to help you throughout your career Enjoy the thrill and fast pace, especially as project and report deadlines near Avoid having to figure out what you want to do when you grow up

Source: Adapted from Wet Feet Press (www.wetfeet.com).

10

Why should you choose not to go into consulting?

You don’t have complete control over your schedule Travel can wear you out You don’t like the unstructured, ambiguous nature of the work There is too much variety; you would prefer to develop depth with one

organization You don’t really believe that consultants add much value; you question the

profession The hours can be extreme and unpredictable Your recommendations might not be implemented; final decisions are out of

your hands You prefer to work for or with small companies You prefer being on the line and having profit-and-loss accountability Your clients can fear and perhaps dislike you

Source: Adapted from Wet Feet Press.

11

What reasons should not matter?

The money is too good to pass up; you’ve got student loans to pay

Travel is “glamorous”

Fancy restaurants, cell phones, and expense accounts

You want to impress your friends

“I can do it for a year, then move on to something else”

The Wall Street Journal says everyone’s doing it

12

Consulting allows you flexibility and opportunities for continuous learning, which can prepare you for a wide variety of careers

What positions/careers/opportunities can result from your experience as a consultant?

A career in consulting Consultant Managing Consultant Principal (Partner) Practice Leader Office/Geographic Manager

Skills for a different or enhanced career

Preparation for middle and upper management in industry

Preparation for entrepreneurial ventures

You name it

13

What personal attributes are required for success in consulting?

Intellectual and analytical ability

Ability to understand and work well with people

Ability to communicate, persuade, and motivate

Sense of humor

Intellectual and emotional maturity

Tolerance for ambiguity

Personal drive and initiative

Integrity

Physical and mental stamina

Source: Adopted from Management Consulting: A Guide to the Profession.

14


Interviewing with a

consulting firm

Overview of the


What a consultant

does

15

The management consulting industry continues to grow . . .

Over 60% of this revenue is generated by the top 50 firms

Projected at 13% per year through 2000

Growth varies by consulting service line ‘92-96: IT 16%, Operations Mgmt. 14%, HR 10%, Strategy

18% ‘97: IT 29%, Operations Mgmt. 16%, HR 15%,

Strategy 11%

Source: Adapted from Consultants News.

Total Worldwide and U.S.Management Consulting Revenues

Rev

enue

(in b

illio

ns)

Size

Growth

$17.4 $21.0 $23.9$39.0

$47.1

$0

$10

$20

$30

$40

$50

$60

$70

$80

1994 1995 1996 1997 1998

Total Worldwide

United States

$34.0$40.0

$45.0

$73.0$89.0

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. . . is still one of the mostpopular choice for Anderson graduates . . .

Percentage of Anderson Graduating ClassEntering Consulting

Source: 1993-1999 MBA Program Placement Reports

14.0%

18.4%

21.8%

32.0% 31.6% 32.6%30.6%

20.3%

0%

10%

20%

30%

40%

1992 1993 1994 1995 1996 1997 1998 1999

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. . . and is an increasingly lucrative choice as well

45.0 45.038.0

45.0 45.0

60.0

45.0

68.0

180.0

85.0

130.0

100.0112.5

130.0

100.0

145.0

63.5 63.075.0 80.0 82.5 85.7 87.2

95.5

$30

$60

$90

$120

$150

$180

1992 1993 1994 1995 1996 1997 1998 1999

Starting Salaries (mean and range) of Anderson Graduates Entering Consulting

In Thousands

Source: 1993-1999 MBA Program Placement Reports

18

Many major consulting firms trace their roots to other firms

1910

1920

1930

1940

1950

1960

1970

1980

Booz-Allen1914

Cresap1946

McKinsey1926

Arthur D.Little1886

TowersPerrin1934

BostonConsulting

Group1963

Bain1973

LEK1983

Monitor1983

Braxton

1976 Towers PerrinGeneral

Management Services

1983

Alliance1986

Quantum

1989

Strategic Planning

Associates1972

One major parent

Parented by two firms or more

Acquisition

Source: Adapted from Bain & Company, Inc.

19

McKinsey & Co. Gemini Consulting Booz-Allen &

Hamilton The Boston

Consulting Group A. T. Kearney Bain & Company Monitor Company Marakon

Associates

CPAHUMAN

RESOURCES/BENEFITS

INFORMATION TECHNOLOGY

GENERALIST/ STRATEGY

IBM CSC American

Management Systems

EDS Metrius Diamond

Technology Partners

Mercer Consulting Group

Towers Perrin Watson Wyatt

Worldwide Hewitt Associates

LLC Sedgwick Noble

Lowndes Milliman &

Robertson Buck Consultants Alexander

Consulting Group A. Foster Higgins &

Co. Godwins

International The Segal Co.

Ernst & Young Andersen

Consulting KPMG Peat Marwick Price Waterhouse

Coopers Deloitte & Touche Arthur Andersen Grant Thornton

Source: Consultants News, July/August 1995.

The major management consulting firms often are grouped into categories on the basis of their origin, but this can be misleading

E-COMMERCE

Agency.com Razorfish USWeb/CKS Viant Zefer

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The ten largest consulting firms generate over one-third of the industry’s revenues

Firm Worldwide U.S.

Andersen Consulting $7,129 $3,578

PricewaterhouseCoopers $6,000 $2,700

Ernst & Young $3,870 $2,400

Deloitte Consulting $3,240 $1,480

CSC $3,000 $1,900

KPMG $3,000 $1,516

McKinsey & Co. $2,500 $1,023

Cap Gemini Group $2,261 $272

Mercer Consulting Group $1,543 $926

Arthur Andersen $1,368 $691

Source: Consultants News, June 1999.

*Revenues in millions.

1998 Management Consulting Revenues*

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Overview of the


Interviewing with a

consulting firm


What a consultant

does

22

Steps in a consulting engagement

Staffing theengagement

Scopingthe job

Sellingthe job

Identifying the lead

Identifyingnext steps

Performing the work

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Marketing Image/advertising General promotion “Events”

New business development (sales) Market analysis Internal referrals (LOBs) Client referrals Previous/repeat client work Previous career contacts (industry and former

consultants) Personal or family contacts


Scopingthe job

Sellingthe job


Performing the work


Steps in a consulting engagement: identifying the lead

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Steps in a consulting engagement: selling the job

Identifying the issues Selling = listening “What keeps you awake at night?” Probing for possible root causes

Proposing solutions Alternatives/scenarios Methodologies/approaches to determining desired results

Reaching agreement on how to proceed Discussion/agreement Letter of intent Formal RFP (request for proposal) or direct proposal Budget estimate (if appropriate)


Scopingthe job

Sellingthe job


Performing the work


25

Steps in a consulting engagement: scoping the job

Defining the scope Identifying the approach and resources required

Tools/analyses to be used

� Gap analysis

� Roles and responsibilities Client and consulting resources available

� People for teams

� Experts

� Internal and external data/information Developing the project plan Identifying the deliverables Defining the budget


Sellingthe job


Performing the work


Scopingthe job

26

Steps in a consulting engagement: staffing the engagement

People involved Principal Managing Consultant Consultant Associate Other LOBs/experts

Roles of each/rationale for involvement Experience Expertise Billing rate

Availability, geographic, and development considerations

Sellingthe job


Performing the work


Scopingthe job


27

Steps in a consulting engagement: performing the work

Working with client teams Gathering data

Client interviews Primary/secondary research Surveys

Analyzing data Creating the work product

Documentation� Working papers� Interim findings� Analytics

Recommendations Presentations

� Written product� Oral presentation


Sellingthe job


Performing the work


Scopingthe job

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A real-life example: an aerospace/electronics firm


Sellingthe job


Performing the work


Scopingthe job

Phase I Phase II Phase III

Go/No-Go Decision

Go/No-Go Decision

29

The project design specifies the consultants’ and client’s responsibilities

PHASE:

DELIVERABLES:

Requirements definition

Issue and problem determination

Root cause analysis

Improvement opportunity identification

Process and roles and responsibilities documentation

Detailed issue, problem, and opportunity analyses

Improvement alternative evaluation

Recommendation Implementation plans

Defined processes, structures, roles, responsibilities, and technologies

Trained staff Pilot testing Operational capability

I II III

Establish the improvement business case

Perform detailed analysis and develop recommendations

Implement recommendations

CLIENT COMMITMENT:

One phase at a time Go/no-go decision

points Go/no-go decision

criteria

Go/No-Go Decision

Go/No-Go Decision

30

Steps in a consulting engagement: identifying next steps

Immediate actions or analyses (for client) Possible follow-on business (internal)


Sellingthe job


Performing the work


Scopingthe job

31

Issues in a consulting engagement:managing the client and changing priorities

Managing the client Schedules/agendas Access to client information Education/coaching of team leaders Unwilling client participants Internal politics/agendas Weak leadership/managers

Changing priorities Vague/shifting/evolving scope of work Budget limits/changes Mid-project “discoveries” /new or different issue definition Change in client project management Loss of interest/new priorities Corporate changes affecting the project

(leadership/structural/ownership)

32

Issues in the consulting engagement: communication

Consultants

Partners(often offsite)

ClientTeam

Members

External Influences

Press/Analysts Customers/Suppliers

Client Executives “No surprises”

Client Workforce Worry/

uncertainty

Project Team

33

Overview of the


What a consultant

does


Interviewing with a

consulting firm

34

Laying the foundation for your success in the interview process

Assess yourself Interests Skills Personality traits Values

Formulate your career goals, narrow your focus

Find criteria to compare various career options Don’t become frustrated; this step is difficult and time

consuming

35

Preparing for the consulting interview

Visit the firm’s web site Read the firm’s brochure cover to cover

Identify the particular industry/functional focuses of the firm

Become familiar with the firm’s organization structure/key terminology

Compare the firm’s core businesses with your interests Use library resources for additional information

Lexis/Nexis, Hoover’s, Gladis, Internet, WetFeet, etc. Attend the firm’s on-campus presentations/workshops Search your school’s alumni database for company contacts Talk to people at the firm and previous summer interns about

specific questions you have Practice case interviews

36

Other issues to consider in evaluating firms

Size of firm and clients Marketing of the firm (i.e., image) Degree of specialization (firm’s and yours) Culture

Lifestyle issues Travel Overall environment/”feel”

Entry levels and promotion cycles Typically staff consultants, project managers, and partners

Training and development philosophy Defined core program On-the-job training Mentoring/development advisor

Profit model How does the firm make money, and how does this affect you? “Billability” targets

37

Questions and Answers

What questions have we not yet answered?

38

Thanks for your time — and good luck at Anderson!

october 1999 so you want to be a management consultant? the anderson school at ucla

Documents

client senior management

management consulting

management consultants

ucla slide

client engagement interviewing

project data research

firms reception slide

project team members