21 Tips & Secrets About Consulting (From Consultants)
9 min read

21 Tips & Secrets About Consulting (From Consultants)

Insiders reveal 21 secrets on how management consulting really works so you can understand the industry and navigate it with inside knowledge.
21 Tips & Secrets About Consulting (From Consultants)

For this post, I interviewed dozens of management consultants and surveyed hundreds more to collect their views on management consulting. The result is a collection of thoughtful and intelligent takes on the professional services world of consulting. Because my research was anonymous, many of the takes are funny and witty, and they are definitely brutally honest.

It's like having a connected friend in consulting telling you all the secrets of how management consultants really work. I hope you find this post illuminating and useful for navigating your relationship with your consultants, or your career in management consulting. Please feel free to contribute if you have anything to add to the discussion.

Top 5 Takeaways

If you only have a few minutes to spare, here are the top 5 takeaways:

  • Consulting is a great place to start your career. Only a few industries are equivalent because consulting gives a recent college graduate a really good toolkit and skill set that can be transferred to many other industries and there are lots of exit opportunities for people with consulting experience.
  • Following the consulting career path to its most senior levels is financially rewarding. The average professional services partner at my firm earns US$1 million per year. That is an insane income. Pay starts well for graduates, and increases dramatically from there.
  • There is a clear career ladder in consulting. You can accurately map out the steps of the ladder, including title and pay for the next 5-10 years. This removes much uncertainty and is actually extremely rare because there are few industries where you know what you’ll get back depending on what you put in.
  • Most consultants are making it up as they go. But this is what you are hiring them for, to solve your problem. If you had the solution already, you wouldn’t be hiring consultants. So rather than give them grief as they ask beginner or innocent questions of your teams, remember that it’s just part of the process and help them along.
  • Think of a consulting firm like a battalion and all the consulting firms like a big army. The firms keep on payroll a legion of professionals ready to be assigned to any problem that comes up at companies, in governments and in society at large. This is a massive asset to any country. Imagine the value of having 100,000 trained professionals ready to be thrown at any problem a country needs to be solved, an economic crisis, an industry collapse or a health crisis. That’s worth a bit of wastage around the edges.

These are just 5 interesting snippets from the interviews and surveys with management consultants, and the full responses are below. Please read on for more insights on management consulting (points #7, #11 #14 and #17 are my favorites). If you’re leaving now, do you want to know how to 10x your impact in your chosen field? You should sign up for free and I’ll show you how.

21 Insights on How Consulting Really Works

1. Consulting is a really good place to start your career. I can think of only a few that are equivalent and none that are definitely better. Consulting gives a recent college graduate a really good toolkit and skill set that can be transferred to many other industries. Skills like structure, clear communication and problem solving. That means, if you don’t want to follow the richly rewarding partner path (which few do!), you have the most optionality for your next step, there are lots of opportunities for junior consultants.

2. Following the consulting career path to its most senior levels is financially rewarding. In the UK the average professional services partner at my firm earns US$1 million per year. That is an insane income. Pay starts well for graduates, and increases dramatically from there.

3. There is a clear career ladder in consulting. You can accurately map out the steps of the ladder, including title and pay for the next 5-10 years. This removes much uncertainty and is actually extremely rare because there are few industries where you know what you’ll get back depending on what you put in. For example, two years at graduate on $80-100K, then if you pass the clear promotion requirements you'll be a consultant for 2-3 years on $100-150K, and so on and so forth until you become a partner. Basically 10% yearly pay rises for 10 years. There are few places you can find this, so enjoy it if you’re on the ladder.

4. Most consulting firms of any size have a competency framework. This is a set of requirements for each job level (e.g. consultant, manager, director, etc.). This is so great because it tells you exactly what you need to do to move up to each new level in your career. You can do an easy gap analysis and actively improve the areas you need to to move ahead. This is an underappreciated feature of consulting that you should capitalize on.

5. Here’s a little known fact until you’re in the industry. Consultants work 40 to 50 hours from Monday to Thursday but are finished at 3pm on Fridays. Some firms leave Friday as a dedicated networking and socializing day. But enjoy the fact that you’ll be having free drinks and talking with colleagues by 3pm on Fridays, it’s a really good feature.

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6. Beware scope creep on consulting projects. This is where many consultants make the bulk of their money, and some make all of the profit. Scope creep is the bane of life for junior consultants (because they actually deliver the work) and the client (because they pay the bill), but the cash cow for consulting firms and their owners. Controlling and minimizing scope creep is the responsibility of the client, you should be staying across this.

7. When you’re a client, always come up with a brief before you hire a consultant. Otherwise you will be in the position where the consultant can convince you that you need way more work done than you actually do. Writing the brief will also allow you to thrash out your thinking and have more clarity on the requirements for the project, leading to a better hiring decision and a better outcome for the project.

8. Clients should hire consultants for two reasons: they need capacity or capability. Clients need capacity when there is an issue that their team is too busy to deal with, and capability when there is an issue that their team can’t deal with. These are the only two reasons to hire a consultant and if you are a client and you don’t fit in either bucket, you should reconsider using a consultant and use your own team instead.

9. When you hire a consulting firm, the team staffed on your project is never the one that is included in the proposal. This is a fact of life and you should just assume it. In fact, it’s almost pointless to include “Our team” sections in proposals. There is a fair reason for this, in larger firms the problem of staffing is complex and changes all the time, so it’s hard to properly forecast availability of team members. Clients should hire their consultant assuming that a different team will show up, and still be happy with their selection.

10. Most consultants are making it up as they go. But this is what you are hiring them for, to solve your problem. If you had the solution already, you wouldn’t be hiring consultants. So rather than give them grief as they ask beginner or innocent questions of your teams, remember that it’s just part of the process and help them along.

11. Succeeding in professional services, and especially consulting, is all about shot selection. Time is so limited. If you waste time on winning work or completing work that’s low value, low margin or unprofitable you can blow your entire year. You need to spend time on projects and clients that stand a chance of paying off handsomely. Imagine having to win and deliver 100 projects a year (two per week!) at $50,000 each just to hit a $5 million target. Much better to spend that time winning and delivering one $5 million project with a client you have a good relationship with, and that is likely to be wildly profitable.

12. There are many internal fights about resourcing. Getting your hands on the best juniors to deliver work is a major ongoing battle when you work for a consulting firm. You may sell the work, but you can’t even be guaranteed that the right team (or any team) will be available to deliver it. That’s why people befriend, cajole and warehouse talent for their teams. It makes life so much easier for professional services partners. It is a great use of time to buy juniors drinks and make them like you. I don’t understand people who are rude to them.

13. Typical margins at a large professional services firm are as follows: 50% gross profit margin, 30% overheads and 20% distributable profit margin. Those are super healthy numbers when averaged out across the firm.

14. I’ve been banging on at my firm about this for years to no avail. So I’ll share it here. Value-based billing is criminally underused. I’ve seen big projects with 80% gross margins because they used clever outcome-based pricing. I saw the public accounts of a competitor where 25% of their revenue was coming from these projects, at super high margins. It aligns our interest with our clients interest, I think it will become a bigger thing and there is so much opportunity here for entrepreneurial consultants. Just not at my firm unfortunately.

15. Cash collection is paramount to professional services firms. Consulting businesses are like all other businesses, cash is the lifeblood. They also have fairly large payrolls. We can forget this, or it can get lost in the busyness, but it’s worth remembering and finding ways to keep it front of mind.

16. Internal politics is everywhere. I know that. Every business, organization, all my clients. But the internal politics at professional services firms are in a whole new class. There is a group of people who specialize in “politicking” their way to success. They have never sold or delivered engagements worth a dime, but snake their way into “leadership” and “management” positions that provide little value, but somehow need to be well remunerated.

17. For the most part, a ham sandwich could run a professional services firm (and a lot of firms have a ham sandwich at the helm). These things pretty much run themselves, the partners are largely owner-operators who are motivated and incentivized to hit their individual target, and the pay structures and development opportunities attract all the talent we need. Our leadership teams are mostly window dressings.

18. Some of the big firms talk about how innovative they are. I see this all the time. Having worked at the big firms for a long time, and being close to the internal innovation functions, I can tell you that innovation at professional services firms is a joke. There is almost nothing innovative about the work they do, and the internal teams are mere marketing functions to convince the market that the firm is doing things differently. They are not. I fear they convince themselves they are though and that’s okay. But for the firm and the clients say, this time, energy and money is better spent giving more resources to client work.

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19. Consulting and other professional services firms might try to sell you their own in-house software as part of an engagement. Do not buy it. This software is subpar, lacks internal investment and is generally not supported by the firm once it has been deployed. There are few software engineers working for professional services firms, and even fewer teams dedicated to maintaining the software they produce. This, of course, is a generalization but it’s true over 95% of the time so be careful.

20. Consultants cop a lot of grief. They bring a lot on themselves as a collective to be sure, but it’s not all fair. Studies show that consulting spend has a 5x return, so for every dollar spent on a consultant, on average, $5 in value is created. This is a massive multiple for an economy as a whole. It’s a simplification, but an economy with $10 billion in consulting spend is generating $40 billion in incremental value for its constituents.

21. Think of a consulting firm like a battalion and all the consulting firms like a big army. The firms keep on payroll a legion of professionals ready to be assigned to any problem that comes up at companies, in governments and in society at large. This is a massive asset to any country. Imagine the value of having 100,000 trained professionals ready to be thrown at any problem a country needs to be solved, an economic crisis, an industry collapse or a health crisis. That’s worth a bit of wastage around the edges.

Final Thoughts

I hope these insights from current and former management consultants informed you about the true nature of the consulting industry. Hopefully it provided useful information on how to navigate your relationship with your consultants, or career in consulting.

Management consulting is a competitive industry. To make it in consulting you need to be on top of your game. You need all your actions to be as impactful as possible. If you want to find ways to 10x your impact, you should sign up for free and I’ll show you how.

I have interviewed 500+ professionals, surveyed thousands more, and I am always probing for their best tips, tricks and hacks to get ahead. There are five that stand out above the rest and you can get them right now by joining my free email list. You won’t find these ideas anywhere else.