How America Got Hooked On Useless Corporate Consulting
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- เผยแพร่เมื่อ 2 มี.ค. 2023
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#consulting #management #business
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Running a company is hard and no matter how big and successful a business becomes and no matter how many entrepreneur tags the founder puts in their twitter bio, there will always be challenges that are unexpected and outside of the capabilities of anybody within the firm.
Consultants are supposed to be skilled experts in the narrow field of business that they consult in. For example, if a business wants to introduce a new online payment processing system but nobody within the company has any experience setting such a system up a smart manager could employ the help of a consulting firm. If the business hires this firm the consultants will get everything set up and train someone in the company to keep the system operating after they are finished.
This can often be cheaper with much less downtime then trying to train or hire an employee to roll out big projects like this example of a new payment system. But specialized and experienced consultants like these are not the same group that are causing problems, those are the management consultants.
The big three management consulting firms, Bain, Boston Consulting and McKinsey and company make billions of dollars every year by telling corporate executives and government leaders how to do their own jobs.
Consultants can be a very valuable resource if they are giving advice in an area that they have lots of experience in or better yet something that they do over and over again for different businesses employing their services, but senior management challenges are always unique and these prestigious firms might not know nearly as much as they lead people to believe. Management consulting not only costs businesses and governments billions of dollars every year in direct fees it could be costing us all billions more in poor business performance and unnecessary layoffs.
Management consultants will be given access to the company’s operations so that they can observe how the business works, talk to employees and sometimes even customers.
They will use their findings from this investigation to recommend areas of improvement or devise a strategy to achieve goals as easily or cheaply as possible.
Unlike most other consultants the final product they deliver to a business will not be a completed project but it will instead be a serious of recommendations for managers in the company to follow, usually presented in the form of a slide deck with lots of beautiful looking graphs filled with the data they collected during their investigation. Regular non-management consultants typically move into those roles after a long career doing what they will be giving advice on. Senior managers in companies are a lot more rare than typical roles and by the time they have years of experience as a C-Suite executive they are generally looking more towards retirement than starting the next phase of their career as a consultant.
The big three firms hire almost exclusively out of university through graduate programs that top students from prestigious colleges fight very hard to get accepted into.
These young graduates will become analysts at these firms and do a bulk of the grunt work on consulting projects under the supervision of a managing director or partner.
The managing directors and partners are usually promoted from within as the big three management consulting firms have an up or out staffing policy. This means that if after three years junior analysts are not promoted, they are asked to leave.
Despite this obvious flaw management consulting firms continue this practice because it has become ingrained in their corporate culture. The graduates are also much cheaper to hire. Management consulting is based on billable hours, so analysts are expected to put in long weeks. Average salaries at McKinsey for first year analysts range from 90-$110,000 which is a lot but is not that competitive when the expectation is 80 hour weeks with lots of stress and very little job security.
It’s also lower what those same graduates could earn if they went into investment banking, private equity or fintech. The reason they take these consulting jobs over more lucrative alternatives is because of the exit opportunities.
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Hey, HMW. One of my business classes has me reading a McKinsey Article once a week and writing a summary on it.
Is McKinsey still legit for industry analysis, or should I broaden my perspective?
@@Stiggandr1 No one else does it like the large management consulting firms, other than some members of academia. Mainly because they have a large budget dedicated to it (to prove they are knowledgeable at business) and unparalleled access at business. These firms actually guide CEOs at practically all large companies across the world. No one can give that perspective other than them.
With two caveats, they do it for marketing, and whoever wrote the article might or might not have enough projects under his experience to actually become an authority in the subject .
But when a consultant actually knows his subject, now that’s something else entirely - very much worth the large salaries they get. It’s a struggle however to know whether the article is written by an actual expert or a noobie generalizing a project they lived for the entire world as “the only reality there is”.
In summary, no source like them but take them with a grain of salt
This video is silly the logic of they "don't have the experience " so with that logic doctors have to have cancer to give a treatment?
Obviously consulting is a method just like medicine, you don't have to have all disease to treat the problem...
Consulting is like update of apps it's just that because all work office need to be inspected every year to see how they're doing
What’s the song you used in the intro?
My brother was an "energy management consultant." His job was to help companies save energy. However, neither he nor anyone on his team had a background in engineering, science, energy production, or anything related to energy. They just made stuff up that sounded good. My education is in math and physics and when he'd start talking about a project my brain would explode. They had no understanding of basic physics or statistics. However, their customers had less of a clue so all was good.
Can you give an example of some of the things he would say?
Was it anything like Eddie Murphy playing a con artist in a movie saying repeatedly, "the plans have changed.... the plans have changed.....?"😮
Lol
Sounds like he took jobs from real stem majors
Yeah its hilariously easy to scam in business.
You just use whatever technological buzzword you want, and you can make bank
Remember to turn off the lights in the evening when everyone leaves the office.
Dang, I'm a great energy consultant already!
The fact that you can blame failures on consultants is the reason they get paid money, to get blamed for bad decisions instead of the management.
Similarly, a company who wants to make an unpopular decision can hire a consultant to come to that same decision and deflect some blame.
spam
Yup
Ehh, kind of?
I work in one of those specialized consulting fields, not management consulting, so maybe I'm biased. But I don't feel l like these videos bashing on consultants, especially MBB are fair. Yeah, they do some horrible shit, I'd expect some people to leave the company with terrible guilt over what they did if they worked on a particularly unethical project.
But they're paid well because they're smart people. Smart enough that if there is a failure, no one really gives them any shit for it. If all you want is a fall guy, you can just pay a homeless man to take the fall, but obviously no ones gonna accept that. The reason why consultants are paid so much is because, overall, they're genuinely smart people who can be trusted to do reasonable research and come up with reasonable suggestions for management to follow. That's why they're even able to take the blame in the first place. They're competent enough that even when they fail, people generally accept that it was the best anyone could do, and any other group or person would've just failed harder at the job.
You at least need to be smart enough to convince people that your ideas are the best available option, and thats genuinely a difficult bar to to meet when facing the complex problems they're brought in to solve.
@@somebodyintheworld5036 No. That's an easy bar to reach. The rule I've found is the larger the problem the smaller the pool of people in the world able to fix it. Sometimes it's a bare handful. But if a company says they can do it, when I know they can't, they're likely to be believed if the name on the letterhead is right and the quote is high enough. The reason? The problem is complex enough that noone fully understands it, so get a couple executives with the purse strings who have little to no understanding of the problem and the consultant can hoodwink them into believing the expertise is there.
I've walked into meetings and told upper management a company cannot do what they are saying, then told them the company who could fix our problems after doing research. Leave the meeting, and a week later the company I said couldn't do it is hired. Several months later, problem isn't solved. Not even close to solved, it may be worse after they are done.
So why are they hired when someone in the company more conversant with the problem said they can't do it? A few reasons. They're the safe option for an executive that wants to practice CYA. But the big one, the really big one. Upper management is divorced from middle and lower management. I'm some guy who works for the company they may see for a few hours a year total. They're going to spend hours in a stretch dealing with these people before the contract is signed. They know the people selling them a solution that can't be provided better than the person who's telling them those people can't provide it. The executives believe competency of the person they personally know better, which is the outside consultant. Not the person in the company who did the research and is dealing with the problem. I've seen it over and over again.
The amount of bullshit jobs in big companies always blows my mind. I worked for a subsidiary of major US healthcare insurer. Honestly 1/4 of the people on any team I joined just sat and watched movies all day, and just pretended to work. The other 3/4 would work, but mostly to keep busy: all the projects just ended up getting cancelled at the end of the year during a "re-org", where senior leadership would shuffle around and everyone congratulated everyone else on a job well done. Absolutely surreal place.
dat effeciency
Prices law: square root(number of people in a business) do half the work, 100 people in a company, 10 people are keeping it going.
Yeah and it gets even crazier when that BS job still keeps the wife happy and the kids get to go to University. So...🍷Cheerio to all you, lazy half-ass working paycheck collecting broad daylight robbers out there!! 😜
I look at it as wealth distribution.
better than harboring for the top executives only
There are insurance companies specifically for businesses. and they charge obscene rates bc they're able quote and evaluate legal interpretations in a completely different bracket. Personal experience: I decided to setup an LLC for driving. So I could branch between multiple companies like Uber, Lyft, and other more niche ones for medical. I created the LLC to create a single umbrella to tie my work together and still be considered self-employed. That way if I get in a car accident, my car, registered under my LLC, and my COMPANY is specifically liable for any dmg's incurred in said accident instead of me personally. Bc it's impossible to fit the bill if I'm working for a ton of other companies and don't know which client and for who I'm working for at the time of said accident.
Big issue is for-business insurance companies charge ridiculous rates and it invalidates the entire point of doing all this, bc their clientèle are large groups w/ tons of money to toss around, not individuals.
My old company paid BCG $1,500,000 for a market study. The output was basically work I had done with BCG logo slapped on top. Execs praised consultants non-stop. I quit 3 months later.
Was it the exact same conclusion as your work?
@@zzFishstick it probably used some of his data and analysis as part of something way bigger. Usually what happens in a project. You need to use as much of client resources as possible, and finding what's valuable is part of the job.
That's because the execs can't blame or sue you if anything went wrong. Think about it. If they relied on your market study and the business case doesn't work out, what are they going to do at the next shareholders meeting? If they paid a prestigious firm for the research, they essentially covered not only their butts, but yours too.
@@OtaconF that's as maybe, but isn't it deeply unfair not to credit the sources? In my experience consultants are very quick to assume credit for work and expertise that pre-existed in the team. Those with valuable expertise are undervalued, and then leave the business to the detriment of all, except the consultants. Unless perhaps I've seen a nonrepresentative sample of how this works.
@@alexb2997 That's a great point! I totally agree with you. My firm is particularly proud of working well with clients, so I might be a bit biased on that front. Usually my experience is that we try to give helpful clients as much credit as possible. That should work for everyone, as it makes clients more engaged with the project and keep the ideas/decisions going after we leave (very important).
Having said that, giving specific praise is usually done to the direct manager. CXOs will just get that the "director X team was very helpful"
My personal elevator pitch for consulting is “Give advice, be ignored, get paid.”
It’s an absolutely bonkers business model, but man does the money flow.
where do I sign up?
I hear you, brother!
No, that's not the businesses model. The actual businesses model is: "Figure out what they want to hear, say that thing, get paid"
@@MrMarinus18 As a matter of fact, consultants have different strategies. Yours is definitely one of them. But the original “Give advise, be ignored, get paid” is definitely one as well. I even know consultants who are experts in their field and hence have no lack of clients. Some of those apply the technique "Give advise, stand your ground, get kicked out, get paid, look for the next client". At least they get around a lot ;-)
I view the hiring of management consultants as a sign that a business has an incompetent upper management, and likely a toxic workplace culture too.
I think you're right
i agree
Or a public company
Kinda glad the company I work at is growing without having used any consulting in the last few years
At a previous company, they were trying to use financial wizardry to justify low-paid consultants in India. They were all in on capital expenditures for some reason, but full time employees are operational expenses, so they were hiring consultants like crazy as capital expenditures. After a year or so the senior management cleared out the middle management, bought another company, brought in their middle management, then spun them off without middle managers. And we started hiring FTEs over consultants.
A friend of mine worked in a consulting firm. One of his coworkers quit to open a restaurant, so he asked me for some help. I worked for and owned restaurants for 12+ years, so I became the consultant of the consultant. I asked him why he would quit a well paying job for a hazardous enterprise, and told him restaurant business was very trick and risky. He told me that he crunched the numbers blah blah blah and that he would be rich within 5 years. I did my best to help him but his ego was so inflated by giving advice to big businesses for years, he wouldn't listen.
He failed miserably.
Exactly, the restaruant and bar business is a trip to the Craps table.
Its like one of the least profitable business in existence, he is either dumb as a rock or just never did any research about what he was gonna do(wich is pretty dumb)
No one should own a restaurant, unless you’re a chef and that’s your passion and you’re drive in life. The margin is way too slim. I’ve seen way too many friends, open restaurants and then close down within six months. And I worked in one going through college, it’s a hard business. But that guy with the inflated ego he’s gonna fail at a lot of stuff in life. Learn to be humble, my friends.
As someone who works for a (European) management consulting firm, I can absolutely confirm your point on 11:21 that far too many people in executive functions have absolutely no idea how to do their job either. Getting to the upper echelons of large businesses typically requires only a minor level of competence, but a lot of skill in networking and socializing (or just having the right connections from family to begin with). These people then often look to consultants to either get some "objective research" to back up decisions they already wanted to make anyway, or to make the decision for them.
It is so fucking sad sitting in meetings and realising what people are supposed to make decisions that affect the longterm livelyhood of hundreds and hundreds of people... and you realise they lack some basic understandings in the workings of the company.
I am in one of these MCF's as well. Do you recommend moving from one to another?
What military rank do you need to qualify as a consultant.
@@biggdogg1870 as long as you haven't been to ft. Polk, you qualify
@@nyet_maker7948 first female C-suite i saw on a factory tour put heir hair REAL close to the chuck on a lathe
Damn near lost my job for yelling at her over it
(Not saying female ones are worse, it's just that every single male one i've met got a buzz cut or similar)
I worked for a company that hired one of these Big4 firms. They came in, told us to some basic stuff that we were already doing, made some dumb suggestions that we’d never do, and most importantly, presented a plan to the C-suite for our department to do exactly what we had already planned on doing. They got paid millions and left before seeing any of it through. Honestly, I don’t think it could have gone better.
hohoho
That is the biggest reason CEO's hire management consultants, to provide justification for doing what they already planned to do.
When the plan fails, they can show the board of directors the report from McKinsey or whoever and dodge most of the blame.
@@Ryan-The-Grifter Exactly. The idea that we should be paying any of these 28-year-olds with no experience for actual advice is hilarious. On the other side of the coin, I know a company that did take their advice and it went horribly (turns out cutting costs by drastically cutting the pay of your top sales people is not great for generating sales), that's why I am glad we appeared to escape relatively unscathed.
Hired to do a job; did it. Earned their pay apparently.
You're not alone. Doing work on the ground, we shout ourselves hoarse bring to get the attention of the management to do some simple fixes. But 5 years later, they'd hire a foreign consultant paying $$$ who would basically say the same thing, and then be praised in front of us for bringing such "innovative" changes to the work pattern.
I remember in college all these kids saying they wanted to get into consulting, and I always thought "You're 21 and never had a real job, what can you consult anyone about??" One of my friends got hired by a big firm and they were hired by CVS; his whole job was to figure out how to buy those metal hanger rods for less.
Wow... worth going through college for, then!🤣
@@drewt1717 at least pay the debt lol
This is one of the most frustrating parts of working at one of these companies. I met a new hire exactly like you described, 21, fresh out of college, never even had a part time job, majored in music theory or something (self proclaimed expert on Taylor Swift) and one of their first project was with some food conglomerate. What is he going to tell the CEO of that company? Swizzy's new album is dope? haha
Answer: €80.000 a year is all the convincing i need
Procurement/Supply chain specialist could do it in half the time for at leats 25% less. So looks like he got into the right career.
I think it’s worth noting that it’s really hard for consultants to present meaningful recommendations to executives as *really good* recommendations tend to be counter-intuitive. Why are they counter intuitive? Because if they were intuitive, the company would already be doing that. But that’s not what executives are often looking for. More often than not, they want to feed their confirmation bias and paying someone a lot of money to tell them they’re right is a lot more satisfying.
This is a good point and often the best decision is costly, requires too much work and the benefits will not be realised within the pay window of senior management.
@@christieomojo Thanks for the support! I will say that change can happen a lot faster than most managers realize. It’s just that everyone assumes that fast change requires drastic measures like layoffs. The reality is you can get incredible amounts of change just by modifying how people are measured. Employees will respond to incentives if it has a real impact on their daily work. Of course, your average manager thinks that there should be hundreds of *key* performance indicators in a business, so we’re not exactly working with well trained and educated folks here. (Which is partly to blame on this modern failure to train managers, leading to this idea that being a manager is like being a mom for a team.)
@@Puschit1 Also CNN and MSNBC. Especially MSNBC. It’s hard to get any bloody news these days without an agenda smashed in our faces.
@@thewiirocks Yeah, like wtf is the manager as mom thing?
Never in my life as a PM have I ever even once thought about being a mom to the team.
These are grown adults, act like it or GTFO, I don't have time or patience for your trash. Keep it at home.
Not very PM like of me to say, but it has to be said.
This.
Most people don't want solutions they want to feel like they're right. This goes for everyone... twitter hall monitors and executives at fortune 500 companies alike.
I know a consultant for McKinsey who told me, that they were once criticized by their senior partner, because the numbers they were using for an upcoming presentation were "too correct". The idea being that consultants shouldn't offer their clients an accurate picture of their business, but rather a picture that incentivizes their client to adopt the action that McKinsey is advocating for.
That is correct, I have to reports for companies. Being too correct is 110% fine if the company you are reporting on is doing fantastic. However, if the company is struggling terribly and might not even be viable in a year or two and you say in your report that company B is crap and needs to shape up, then that is not probably not liked. The upper management spending money on consultations don't really want to be told that they are doing a bad job and their company is struggling(even if they know it).
That sounds like an ethics problem more than anything else. Which is the heart of the problem these days, not the management science or project techniques that are being questioned by this video!
Wild
@@EatMyShortsAU it hurts their ego.
I work in finance and let me tell you consulting is a swindle. After they win the client , they send the cheapest least experienced grads who will bug you everyday for "help", take furious notes of everything you say only to see it regurgitated word for word in a fancy slide - to which you will receive no credit. Whether the project is delivered successfully or not they will still get paid, and paid way more than full time staff. The sad thing is there is often talent and knowledge in the team already. Management are dismissive and don't want to listen to people on the ground. The only benefit is creating someone to blame if things really go tits up, the consultants are happy to take some blame as long as they get paid, plus there will be a clean up project they can tender for with different "faces". Grimy business.
TANGO UNIFORM! Your post was spot on!
The consulting company gets paid more, the grads they hire don't get paid anywhere near what they get charged out at. For any company above a very small size, you'll generally be far better off (both in terms of decision quality and cost) just hiring the people the consultants hire (or at least the ones with actual relevant skills) than the consulting firm.
@@calculuscondensed812 I know the grads don't get the money personally. The consultancy will charge them out to the business with an excessive margin. Paying £1k plus per day for a grad is lunacy.
@@christieomojo madness indeed
Gotta frame this comment and send it as a gift to all the major companies who pay consultants to do nothing when they could’ve spent that money on their current staff and listened to them in the first place
You can tell the value of a channel when they talk about a subject you know very well and you agree with them. I used to be a consultant. All of it is true
How did they find all this out? Are they like consultants.
It's the fabled Consultant Consultant.
TH-cam channels might be the new "consultants" of today. It's a new world of wannabe experts and Frank Abagnales playing "catch me if you can"
It's easy to understand too. I'm unfamiliar with corporate world so it's good
@@tomsmith6513 I agree 100%.
But at this point, you would be a genuine fool to fall for business channels.
The STEM channels are usually legit, since they work on an actual product.
Such as Great Scott, and Nile Red.
But these other people? Clowns really.
This is the first video I’ve ever seen that actually explains what consultants do. I always thought it was just a buzzword but as it turns out I was partially correct
He missed one key point - they go in to a business, learn all of their practices and tricks of the trade - then sell that knowledge on as consulting expertise to their competitors.
@@chrisjie2127 you may be behind the curve on that one. Businesses have realised they don't need to reveal too much and keep consultants on a need to know basis. It's officially a water carrier role now.
@@rutvikrs water carrier?
@@mattslowikowski3530 meaning deadweight
I always hear about people graduating with a bachelors and then going straight to consulting. I was always trying to figure how a 22 year old with no experience can consult somebody who has been working in a field for years
I was consultant on Marketing and Sales for Consumer Package goods companies in one of the top 3 firms, right after college…
I studied physics 😂😂
You do the grunt work under the guidance of seniors. You are not providing any advice to anybody.
fresh eyes and ignorance serve well when you’ve been stuck in a problem for years
Your experience blinds you to their insights derived from inexperience or so I was told once.
@@jjpp1993 True. But I think all the recruits are too similar in background to add real diversity of thought.
My dad was a management consultant after being a manager for years. I was reminded of him by your point of covering your ass. He said that was basically his job. Because he was an outsider that left after a few months, he could tell things that would normally destroy relationships within the company. Both from the directors to the employees and the other way around. He claimed it was very valuable as there were usually no internal structures to say or do the things that were necessary for the government agencies that hired him.
Well, in any family owned biz there is these mechanics and pathways to tell the owner some unpleasant truth. It is only with absentee ownership and public tjhat these channels are totally broken down. th-cam.com/video/Z2Uy_ODDiZo/w-d-xo.html
That actually makes a hell of a lot of sense. Its moving fast and breaking things, but hopefully the right things? In order for them to hopefully build it back better?
@@nicholasguzak7957 except these companies always stop at the breaking things part and move onto the next victim while underfunded and understaffed agencies have to pick up their mess.
@nicholasguzak7957 pretty late, but an important detail was that we're in the Netherlands (lots of job safety) working purely for governmental agencies (even more job safety). So people were basically stuck with each other. He came in when a department was dysfunctional and broke things that were already broken. I don't know how much he partook in rebuilding. I was a teenager, so I don't really know what he did exactly
Having worked in the government, I can say there are actually plenty of structures to say and do those things, but the politically charged egos at the top don't want to listen to those doing the work. They hire consultants to tell them what they want to hear and justify doing what they planned to do anyway.
I worked at a consultant firm (one of the Big4s) for exactly 5 months. That's how long I could take all the BS that was going on there. Some colleagues were actually open about not delivering any value to the customer, they were at least honest about it. Those who tried acting like they know something and selling real shitty ideas as big solutions were the worst.
I lasted 3 years also at a big 4, but some little things like ‘write your travel time to our internal company event on the last customer you worked for’ really got on my nerves. Why does a client need to pay like $200 cause I drove from their office to my firms office for something that they had nothing to do with? Also emails at 11pm to deliver something the next morning before 9am, and then when you follow up the next day hear ‘yeah sorry I’m busy, I’ll look at it next week’. Like seriously… it’s great for your resume (it really is to be fair), but the culture sucks completely.
Also, I have seen colleagues just out of school working basically alone on audits for clients who are paying through the nose for the supposed high quality audit. They had basically no idea what they were doing and just followed some manual. And clients paid hundreds of dollars an hour for that.. although come to think of it, company’s may have been quite happy with that arrangement. You get a big 4’s approval and your books where checked by someone with basically no knowledge to detect anything out of the ordinary
@@David95111 now you know how wirecard happened lol
Literally same I worked at EY for a v interesting project but the "senior consultants" knew ABSOLUTELY NOTHING I was shocked by that
They had v minimal knowledge, often just acted busy around the office and honestly were not particularly smart either
I managed 9 months. I was proud to be the first person in my graduate intake to quit that year. That was almost 20 years ago and I never regretted it. It was an absolute joke. I was hoping to “learn from experts” (don’t laugh, I was 22), but I don’t think anyone there had a clue, it was awful.
Damn all the top comments in this video looks like a bot wrote them
Oh man thank you so much for making this video. I had a company I worked for hiring a consultancy firm that ended up costing me my job. They looked at my salary vs sales figures, and told management to get rid of one of us. That turned out to be me. What they didn’t take into account was that I was less than a year into a long process of building my client base from scratch, and those numbers were just beginning to turn around when they decided to axe me. A classic example of “it looked like the right thing to do on paper” without giving it any further thought.
Fun story though, the rest of the team liked me enough that they all quit in the next few months anyway, and they ended up without a sales team in the end.
Sally Field?
And then everybody clapped
@@MikeyP201 There is medication to cure that...
Certified bruh moment
There is another problem he didn't really touch on and that is that "consulting" can be used as a cover to hide more nefarious things. Things like union busting and money laundering.
Alright, before I head in: Most consultancy exists not to solve problems, but to externalize responsibility.
Addendum. Ha! Called it.
Pizza Wednesday is too expensive this quarter, but we're still doing the management's training in Cancun. Any questions?
@@dahken417 I'm not high up on the ladder to have things like this happen/my workplace doesn't operate like that, but this is a great example. And make sure it's emphasized that it's an all-expense-paid "training".
I was involved in mopping up after a big management consulting firm. I appreciated it as it paid me quite a lot of money for half a decade. They made the company more 'efficient' by 'streamlining' quality processes. After implementing all the consultants recommendations, they were then inspected by the FDA they were found to be in serious lack of quality controls - of course this opened a can of worms and then everything had to be cleaned up. Consulting fees 10 million, clean up and lost sales 1 billion. But I thank them as my crew (actual technical consultants not management consultants) billed 50 million over those 5 years. I wish they'd do more management consulting to be honest as its great for the follow up crew.
What's fun is that often technical consulting like what you're talking about is called "Operations Management". People don't get the difference between "streamlining workflow" by examining and documenting a process to find obvious improvements, versus just removing "extra steps" like QC!
@@arthurmoore9488it reminds me of the military, officials and NCOs .
They were not hiring out of graduate programs… they were hiring straight out of undergrad
They recruit hard for undergrads, and the pay is usually peanuts.
Well that's a step forward, Jackie. I mean, what is even the point of college education now? Why not skip most of it?
@@noneofyourbusiness4830 That's a huge issue to address; can't do it justice here. But yes, there is a benefit to a college education (a good one, at least). And no, you can't just skip it & get the same benefit. This is a current popular delusion - bit of a market fad that may or may not last.
They hire both, but into different positions with the project team structure of the management consulting firms.
@@jamesthompson7282 Depends. Most positions now wont cover any college tuition debt, and no US average family can afford tuition. The median average salary of the home is 78k, which yes, is more from 50 years ago since the last major wage increase nationally.
This is until you factor in, 50 years ago that was a single person income and is the equivalent of 259k today, which is the required salary to function as middle class with your own home, investments, and portfolios. So no, its not a "market fad." that College Tuition is not worth it for most, because for most, it actually is a net negative in value.
Imagine spending billions on consultants on how to make money and improve moral when you could just pay your employees more and improve moral and save money from constantly having to hire and train new people.
Hahahaha! so true...
Sounds good on paper, but likely won't happen until corporate culture shifts paradigm to understand the net positive benefits of investing in their employees. It's full of uncertainties and doesn't produce immediate fiscal year benefits, so they probably don't want to take that risk until many other companies lead first. This just means slow adoption, if at all
Paying more may not always be the solution, but you’re right, in essence. The companies need to put in the work to understand what they & the employees actually need, and spend time and resources addressing those, instead of the current consulting boots & suits that march into the workplace.
Correlative studies show that paying more does NOT significantly improve performance. The coworkers and company culture have far, far more of a correlation but go ahead and spout political talking points.
Rarely does a pay boost increase the productivity enough to remotely cover the increase cost.
Anyone who told you otherwise is lying or a fool.
I have a cousin working for 20 years in the same company. He is a top executive in an major subsidiary in Europe and knows the business very well
He told that the ‘transformation plan’ implemented by McKinsey is gradually destroying the company but the headquarter is happy because the EBITDA is getting better
Which company?
That it is interesting but not surprising. A company I worked at paid an external company to sort of quantify all the work the employees did on a day to day basis, like how many payments you process, how many client enquirers you did, how many reports you did etc. I think this probably increase productivity but I also exploited it as once I reached my mandated 7.5 hours for the day I would just take it easy for the rest of the day. Basically I would work hard for the first 1/2 of the day then cruise the second half. However, using this system probably did increase productivity overall etc but the share price over the medium went to dirt lol.
That's classic consulting for you. The hospital my brother works for hired consultants to cut costs. Their solution was to fire some doctors. The hospitals told them it couldn't treat patients with less doctors. Total cost: 4 million in consulting fees. All for nothing.
@@swisswildpicsswp3095 Wow, that was their solution?
And part of that blame belongs on the HQ mgmt accepting that recommendation and implementing it! That is indicative of short-term-ism, which is also affect society negatively these days.
Having worked for 30+ years in various large companies, I find that it is all about ego. A company will hire an ex consultant for a senior position "he must be good he worked for [insert consulting firm here]". The ex consultant thinks that fellow employees cannot be as good because they don't come from a consulting background. His first thought is therefore to engage consultants (usually from the firm that he used to work for) to do even the most basic analysis, rather than ask people who have worked for years in the area affected.
To make things worse, the ex consultant will only fill permanent roles by recruiting consultants. You then a group of people who want to talk "strategy" but never actually do any practical work.
Thank you for making this documentary because I worked at two companies that hired parasitic consultants who never left and offered nothing in return yet CEOs continue to hire these guys constantly
^^ [spam bot] hell, this guy seems more trustworthy then the consultants
I worked as an associate at an Expert Network, and our whole job was to find people from different companies, (such as Microsoft, Telsa, or whatever company they ask us for) screen then with some basic ass questions e.g. their experiences etc and some technical questions, and then set up a consultation with the consultants (people from MCK, BCG, Bain etc). They would just note down what the person would say and forward that to their clients verbatim
It was at that point when I realized that all these big ass management consultancys are nothing but a sham.
I literally worked as a middle man for a middle man
Now we just need to figure out how we can close this loop for perfection.
Sorry, that's a separate project.
Will need to charge extra xD
It's interesting that you found some forward notes to clients verbatim. Being someone who hires a lot of expert networks I find that there is typically a lot of aggregation (i.e. we talked to 10 procurement managers driving most of the spend in the market you're considering.... here are top 3 unintuitive insights that came out of it). Ofc the end client could run these calls themselves and I'm sure plenty of non-consulting/PE firms have relationships with the Tegus/GLG/Alphasites/Guidepoint/Thirdbridge of the world.
@@MatthieuVlogs yep, I was surprised too but I guess clients usually don't care since being part of an expert network I saw things that made no sense, like we were charging our clients a min of $1000/h for a consultation while only paying the expert like 25-30% of that. I can only imagine what our client would be charging to their end client. And yes, you're right we did have non management consulting clients as well, especially in the pharma and automotive sector, however, most of the projects that we received from those companies were from the consultancies which was very weird since they were paying atleast 6-7x for the same services
@@talalhassan3369
After a good career in my industry, guess what I’m doing part-time now ?
yes, I am one of those “subject matter expert “ subcontractors that you’ve gone out and seeked! ;-}
And indeed, my own rate is quite less than $1000 an hour .
I guess I can’t complain. It’s easy work. It’s literally just Zooming & talking ad nauseam after putting on a nice shirt in my home office!
But yes, I’ve often wondered how much my insights eventually get “up-charged” to the final client ...?!
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my inherited portfolio of about $2.5m. I’m used to just buying and holding assets which doesn’t seem applicable to the current rollercoaster market plus inflation is catching up with my portfolio. I’m really worried about survival after retirement.
My dad is a retired consultant, a real consultant, he has always been talking to me about this, when he got power on companies he cut contracts and fired anyone who had this “consultant mindset” he told the CEO’s that paying fees alter firing was low compared to the demage they do to companies by talking bad decisions and cutting costs on workers paycheck, safety, machinery, etc.
The purpose is to get better as a company, not cutting cost and screwing the quality of your product or service, or fucking up workers lives.
Ps: When my dad left the last company where he worked, workers (factory workers) cried and till this day he has guilt of leaving and probably opening the space of a corporate consultant firm to take that empty spot and start that cancer like cycle.
I work for a Japanese IT company. One day they hired this guy on his early 50s, with a juicy salary, gave him a big position with a say over any decision from any team even though he just came out of nowhere, he’s not even a programmer nor does he seem to have any technical expertise. All he does is to say some platitudes or super obvious remarks after each meeting. Then after he says something, the managers who hired him and the CEO are just like “this guy is a genius!” even though he might have said the most empty basic remark like “we need to work harder”, “we need to be more aggressive in this competitive market”. Maybe he’s doing some things behind curtains that are justifying his salary, but I just can’t see it.
_WE_ which really means _YOU_
I have been long enough in Japanese IT industry. He does absolutely nothing I can guarantee you.
So management consultants are literally "Get rich quick" gurus. People with no experience in business charging you to teach you how to do business.
Just get others to pay you what they want to hear.
🤮
I hate everything about this world.
It's important to keep in mind that CEO's and managers are humans. They are just as susceptible to grifters as ordinary people.
I was running with my ex girlfriend her catering start up and we catered to deloitte. Once they offered us 10 hours of free consulting for her start up. My girlfriend said that was the most useless consulting she ever had and she didn't even use the full 10 hours.
Well, that's the problem! The best slide was the last one.
How’s her startup doing?
You ever get that bad manager who doesn't know how to do your job or even their own job, but you're stuck with whatever decisions they unilaterally make? That's what a consultant is. Except at least with managers, you'll sometimes get a good one. You never get a good consultant because they are guaranteed to not know how to do your job or your manager's job.
Eh no .. consultant don't even need to grapple with fallout of their bad advices
I work as a tech consultant
It's basically a tech job, except we're employed by the consulting company
Same here, but IT consulting works quite different than strategy
@@RJ-gu3wb true
I'd say it's basically a tech job
@@TheAlchemist1089 yep, and I think that that’s something people don’t understand
There are certain jobs that are basically only worth to be done by consultants, especially in IT
@@RJ-gu3wb interesting, like what?
@@TheAlchemist1089 im working in a department that does all kinds of It-infrastructure programs. As an example, I’m working right now with a client who has a certain budget and wants to implement an ERP system. If the client would go directly to one of our partner, say SAP as an example, he would definitely get a working software. But maybe there would have been a better or cheaper solution from an Adobe, a Salesforce or one of the others.
My job is just the pure consulting part; we make an offer on which software we want to implement and how.
If we get the client, we’ll give it to one of our implementation teams. Different than the software company, we get more money if we end the project cheaper. Also, many of those IT-companies are much smaller and don’t have the structures to recruit and build up talent
I’m an independent consultant and I get paid to fix things that the big consulting get wrong. But it is easy to make management consulting companies the scapegoats (not letting them off the hook, cause they do bad things, but it takes two to tango). Many big companies have a lot of b***S**t jobs (btw a great video you made) and they often all lead up to someone in top management that has built tight relationships in the company. When I tried to get rid of a whole department, in a company that is ranked in the top 50 of Fortune 500 companies, I couldn’t believe all the people that came to their defense. When literally their department became redundant. Even their head of IT was not able to get rid of this department. So what often happens is the plan you put into place gets changed to fit the whims of the company because what will make things better doesn’t work for all of those managing it.
So basically you come in to make changes and clean up lose ends, and then it's all "but my friend/sibling works there!". It reminds me of that guy (well known millionaire) who took over a railway wagon company. There were 40 floors of pen pushers ACHIEVING NOTHING as the place was going bankrupt. They only made a few financial statements and the new owner fired all 40 floors and sold the building which was MILES away from the manufacturing and maintenance yards. He had a few accountants take the place of 40 floors, located AT the main rail yards.
How did you get into this job? So interesting!
That is very interesting!
I have been a consultant very recently and I would love to share with you how you gree your business.
Could we find a way to contact each other?
To alleviate this problem I'll start a consulting firm to consult companies on which consultant is the right for them. Not having any experience about it doesn't seem to be too much of a problem anyway
😂 Honestly, seems like a great idea
Consultception.
Imagine hiring a life coach with no longterm romantic partner, kids, no major successes in their career, no awards, who hasnt actually done the things you want to do. And then imagine them hiring a coach of similar background to coach them. And yet intelligent CEOs do this for their companies.
Maybe you don’t know the whole picture, there’s a reason every one uses them.
@@jimbojimbo6873 Nobody ever knows the whole picture on anything, even in their own personal lives. We're forced to make general observations based on the data available. The data available indicates something is broken with the corporate consulting system, and that something stinks behind the scenes. In fact what I DON'T know is probably the worst of it.
I am a consultant and have been for a very long time. This is totally accurate, especially number two. What they're not mentioning is why do executives hire consultants. It's because the executive does not want anybody else inside the company to realize they don't know how to do their job. So they hire somebody. And most of what the consulting agency provides is the ability to say that they know what they're doing
It's a strange feeling to know that I, a mouthy antisocial autistic college dropout who fell his way into the corporate world, was not "crazy", "inexperienced" or a "dumb kid" as I was called by senior management when I pointed all this out (fallout and all) to them over 25 years ago. Being Cassandra really sucks.
I Feel you. It's all theater (and not even the good kind) meant to justify the exploitation of workers by the owning class. As a smart old guy once said, the comfort of the rich depends on an abundant supply of the poor.
Dropping out at least saves some of your sanity.
It's very difficult to teach a man the truth when his income relies on being ignorant. I think it was Mark Twain who pointed that out.
Unfortunately, in society it is most often the case that being early is the same as being wrong, at least in the eyes of others.
> management needs to make a difficult decision on business strategy
> let's hire a consultancy firm that will help us make that decision and we will be able to shift blame if things go wrong
> consultancy firm states in their agreement that they cannot be liable for any of their recommendations
> strategy fails miserably
> nobody's responsible
> moving on
> let's take a loan or ask government for help for a new business strategy
What I've learned working in the corporate world is that making "defensible" decisions is more important than making "good" decisions. The consultants could easily be wrong, but if the shareholders complain it's easier to defend the decisions if you can say "we hired experts and trusted their advise" versus something hard to defend like "Gary had a gut feeling."
I went to business school and in the whole it was a worthwhile experience. I did find it amusing however that one of my lectures was a management consultant in his side gig having never left academia in his life.
Thank you for clarifying that specialized consultants are different from management consultants! That difference is important.
Eh only a little?
So many specialised consultants aren’t experts or even knowledgeable in the speciality. They just apply the same template to every client.
@@ironized you are underestimating how important those templates are or knowing how to apply that template. Even more important, when not to apply that template.
@@nikpalagaming8610 No I’m not.
These fields are specialities, they’re niche areas for a reason. One size fits all solutions are always shit. The amount of consultants that say “this is how you” is way too high.
A professional in these fields needs to be able to understand the topic and the organisation and develop the right solution for that organisation and yet all I ever see is dogmatic cut and copy solutions that are never optimised for the organisation.
I very rarely meet a big four consultant who understands my area beyond “I apply this template”.
@@ironized I mean I’m going in to economics consulting which I’d argue is a specialization that it’s applicable to enter in out of grad. Very few have a background in mathematical or computational economics for applied research
@@nikpalagaming8610 yeah, I was friends with a few actuary consultants and that made a lot of sense for their field. Yeah, it was definitely expensive for the consulting but hiring actuaries full time for your company is also expensive lol.
If this pisses you off, may I introduce you to the world of nonprofit management consultants! Yes, these people are real!
Ha! I worked at a non profit and this is exactly what happened!
fuck those leeches man it's mainly just MBA brainrot too at a lot of these nonprofits where they think hiring consultants is some kinda magic bullet
When the consultants said “It’s consultin’ time” and consulted the consulting consultants for consulting consultant-consulting consultants, I burst into consultears. Truly the most emotionally gripping consultation of all time. I consulted on the edge of my seat the entire time!
Been saying this for years. You have an army of people who’ve worked in the company for years and know every nook and cranny of it, but instead of listening to them, you hire an outsider who basically tells you only what you want to hear and not real hard solutions.
Sometimes my employer will hire consultants for tasks that my employer has a near-monopoly over, so the consultants have no idea what they're doing and basically do the corporate equivalent of rephrasing questions as statements instead of providing real answers.
I guess the idea is that my employer is trying to avoid hiring more permanent employees and hope they can use the consultant to temporarily increase their productivity, but yeah, the results are bad.
I served in IDF as a tank mechanic. Our strategy was simple - a vehicle arrive, the engine pulled out and goes to engine mechanics, the turret pulled out and goes to turret mechanics, the body goes to body mechanics who have two teams - for the for the body itself and for the track system (the grease monkeys, one of which was I). As work in every team is not really synchronized, we would work on 3-4 vehicles at a time. We finished the body, but engine not ready? Go work on another vehicle. Our base would complete 60 vehicles a year on average.
But our commander was overdue for promotion, and wanted to raise efficiency, so they hired American consultant company. Rumor says, they got paid 29 mil(either USD or ILS(8-9mil USD), at this point really doesn't matter). Weve seen them like twice in the garages. Their advice - there is a lot of downtime (WHERE ?!!) and because every type of mechanic is basically a mechanic, make organic teams of 10-12 people each, with 2-3 of every mechanic type, and let them all jump on the tank at once, and when one group finished their part, they can work on another part, thus raising efficiency (for example, the 3 turret mechanics finished the turret, go help track mechanics). The entire company screamed at the top of their lungs what a morronic idea that was. By the time it was implemented, I already left, But I met guys I served with, they told me it was discontinued after 4 months, in which only one vehicle was completed and two more nearing completion (usually, it would've been 20).
Ford is crying
Hurts me reading this. It's really not hard to be a good consultant yourself. The commander could have easily just walked down to the garage and talked to his fucking people about the process. They're the ones doing the work and majority of the time they want to produce good work. A day or two of probing for inefficiencies on his own and he'd probably been able to find some legitimate inefficiency that could be corrected, or laud you guys for maximizing the process.
But at least some asshats got $8mil for nothing.
@@Snollygoster- Haha, yes and no. Honestly, it worked as well as it was possible. Most soldiers advice centered around shorter hours and better amenities, which actually, probably could help. But it was seen as just soldiers being lazy. Plus, it would cost money. Much better to pay 50 times more to this company. The problem was systemic, soldiers had no desire, no inventive and no reason to be good at this, due to set up. Everyone did their work well, but basically, everyone were quiet quitters. And managerial advice short of changing the entire set up of large section of army could help with that.
@@Alloccer Could you have a few generalists? Where there is a base team for each function, but a few people that can be shuffled around wherever there is the most demand.
@@thiagolucas893 Sounds good on paper, and kinda what those consultant guys tried to do, but no. I didn't want to get my post too long, so didn't actually go in detail on how specialized everything was, and how large it was. In Hebrew it's called Tier 3 Repair Shop, that's where you fix everything. Mostly it was maintenance, but if you had a tank blown by anti tank round - that's where you bring it. Also, 60 a year may not sound a lot, but consider this - there is a one to four month work on EACH vehicle. So we had an equivalent of couple tank battalions being worked on at every given time. The company was about 300 people, divided into about 40 teams. You didn't just had 3 teams I mentioned (turret, body, engine), but you had those 3 for every type of heavy tracked vehicle(and there are about dozen of those regularly used in the army, plus once in a while they would just dump some obscure wuderwaffle no one ever heard about and say - figure it out. Also, not every vehicle have turret, so -1 team) In addition you had teams not specialized per vehicle, but per type - hydraulics, Electronics, optics, electricians, welders, painters etc. Another thing I didn't go into details about - I said we had 2 teams - body and tracks - technically, we didn't. This was our internal division. The firs day I arrived, I was told - you are a big guy, here is a 7kg hammer, go insert pins into tracks. Oh, you did it very well. Great. From that moment, I mostly worked on tracks. Our team all went thru same course, and I could do everything inside the body. It would just take me 5 times as long, as I didn't do it often. And because it would take me long, I was not given it often. In time everyone got dexterous in their thing. And that's the problem with generalists, you cannot develop experience and dexterity in every thing. Turret guys had their internal division as well, I just don't know what it was, as I don't even know what they do. You can send me to turret, give me wrench, and tell me what to do, and sure I could do it, it just wouldn't be as efficient, which kinda defeat the purpose when the whole point here is to maximize efficiency.
As an ex-consultant that was once hired to consult the consultants that were consulting the consultants that were consulting a major insurance company this video just gives me pain. Glad I’m only peripherally involved in the industry now.
There's a lot to criticise in management consulting, but this video is more often wrong than right. Doesn't really understand management consulting; works on stereotypes & unfortunately, those stereotypes are incorrect.
So just like everything else in the modern world, its about how well you can make people think you know what you're doing, rather than actually knowing what you're doing.
One thing I'd add for IT consultancies is that they love to shill any new tech trend - regardless of whether they understand it or not. Blockchain, big data, AI... they will claim expertise in it and say it's game changing tech for a business to use - but it's just so that they can be hired as consultants by businesses who don't know any better.
So be cautious of all the hype around new tech, especially when you see someone linking to a study by PWC, IBM, EY etc. I saw enough people quoting those consultancies to legitimize rubbish like Blockchain.
Speaking for France here, the issue is mainly that those young graduates from top schools used to be public servants eventually due to how structured were the top schools, but now they are going into the private sectors for higher salaries
US : First time?
France is a different world. Both the academic scene and business market are vastly different than N America. Probably share some issues, likely there are common stereotypes in the consulting racket, but the environment is significantly different. Very different culture.
Speaking from France
What Emmanuel writes is not wrong but too general
Former civil servants are numerous in very big companies but they don’t dominate
Big consulting firms are dominated by people from business schools applying methods from their Headquarters Anyway former public servants making money in big private companies are completely fascinated by the current neoliberal ideology and the supposed efficiency . The problem is the domination of a technocratic class. They come from the private or public sector but they’re all technocrats, i.e. people whose career relies on their ability to implement what the hierarchy wants and the dominant ideology of the time
If the economic conception and models are reasonable these people will implement them without imagination but efficiently and the outcomes will be good ; if the models they apply are stupid their actions will fail with a great efficiency
It’s a systemic problem not a matter of individuals
Personally I think one way to make it better is to give consulting firms a level of liability. That if a project they worked on fails they have to pay reperations to the company in question.
Management consultants are an insurance policy so that the executives can take credit for having the ‘wisdom’ to engage them if it goes well and someone to tack the blame on if it doesn’t.
Having done consulting in banking I will put it like this: "Those that need to hear it, don't want to hear it. Those that want to hear it already don't need to hear it".
I can only assume the multiple sets of "three reasons" is also a subtle consulting joke lol
Fun fact I was at open house day at a consultancy (one of Big 3) and they made so many remarks that were just shocking:
- oh yeh we put someone with no experience in an industry or field
- oh we consider someone an expert on a field after working on 1 or 2 cases in that field
- oh we got hired to investigate how a company could use AI or metaverse. Then they gave presentation about it and literally it sounds like those jokes you hear. Where company comes with question that 'metaverse' sounds like it buzzing around, i don't know what it is but I want it in my company as well. Followed by some idiots making high school presentation about futuristic nonsense about how the company should use it and THAT they should use it because it will be guaranteed to be the next biggest thing.
- oh yeh our CEO had end talk with a major company. The job was done and we were laying out the next possible routes. We gave them 3 options and used the standard trick. The decoy effect. present them with 1 underwhelming option, 1 good option and 1 over extreme option. Then we can get them to take option we want, instead of giving them 3 good options.
Basically it all sounded like people who bullshit and manipulate. I was completely shocked, especially how they openly said all this and with pride.
Half my job feels like it's fighting the bullshit the ""consultants"" we hire come up with. Truly a great system.
So what you're saying is consultants are the best thing for America because they create jobs! Look, half of your FTE is spent on the work they created. Truly, they drive the economy.
@@Demmrir but they also stupidly decide to fire a bunch of people when they get into management after consulting, so it also destroys a bunch more.
I worked for a company that spent a bunch of money on Consultants to change their name. To update it for the 21st century. The Consultants took their money and told them to keep the same name because everybody in the industry already knew it
Finally. I never understood how 22 yr old recent college graduates could get jobs as “consultants.”
I feel like consultants should be experts in their field/industries like Senior Managers, VPs, Directors and then go into it because you're bringing your experience to help businesses make better decisions.
Thing is though powerful people with a lot of money and fragile ego's don't like to hire people who will tell them they are doing a bad job.
Senior management aren't really supposed to be the SMEs in their industry, that's the individual contributors' job.
*for some reason this issue reminds me of when some countries during the medieval/early modern age decided to replace their regular troops with mercenaries as a cost cutting measure, which hastened their demise*
We're actually doing that, I flew with a bunch of people from a civilian "consulting" firm on the way to Al Udeid.
... They were literally just mercs, lol. The US likes to use "consulting firms" for work that is outside of what is entirely legal for the US military to do.
As a consultant I was going to write a comment disagreeing with the title, but then I saw that you made a point of what type of consultant you were talking about, and I fit the first category as an IT consultant who actually build and deliver stuff. Was also nice to see the company I workfor in the vid, hehe
I was managing a subsidiary in APAC region. The HQ came in with a brilliant idea: we want a consultant company to tell us how to do our job. They came, we spent so much money and the report given was such poor with general ideas and bullet points such as : E-commerce, client base, CRM.... The top management was happy and we on the frontline were super annoyed and disappointed. I quit few months after because the consulting company said that a change of management is better. Now, the subsidiary is on the brink of bankruptcy :D Glad I quit.
Superb....the reasons stated are real eye openers ...thanks for presenting them in a crisp and straightforward manner .
Keep up the good work .
So they hire someone to make a decision for them that might not even be en expert in that field, but get to point the finger at them when their idea/suggestion fails. What a great system.
I'm no consultant but working closely with IT consultant, and I'm always baffled for how little expertise management consultants actually have.
They have reputation and experience in the industry, who says that. Themselves.
I work in a big consulting firm and I work in one of the IT departments. We just had a project with the management consultants and I was surprised by how little they knew about what they were talking about.
IT consultants can be extremely valuable because their output is immediately tangible.
If you hire someone to make your backed more efficient, when they're done you run a query and it's going to be faster or it won't and you know they fucked up.
If you hire them to help you scale or integrate something, it's ether going to work or it isn't.
The end result has to be immediately visible and tangible.
Management consulting can be helpful, but I believe that the main issue is twofold. Whereas in software you know exactly what your issue is an you're getting a specialist, in management you're getting a generalist who almost certainly doesn't know your business as good as you do. Secondly, even if the consultants give good advice in the abstract, unlike in software, they can't implement what they're suggesting and the impact isn't going to be immediate, so there's a million things that can go wrong.
There's also a secret third issue that's actually shared with software consulting. The consultant can't tell you that you're the problem. In software, they can't really tell you that your chosen stack that you're extremely proficient with is not fit for the task and management consultants can't say that management is the problem.
These factors combined create the issues. Management might ignore good advice because they think they know better or they might heed bad advice because they didn't realize that the experts missed something that would be obvious to someone in their business.
Economic conditions might change or changing economic conditions might be used to excuse the consultants mistakes.
Management might be driving the business into the ground but the consultants were hired to push through project nosedive so they will do their best to make a case for project nosedive.
Honestly, bad consulting in my experience is more frequently a symptom of bad management than bad consultants, though there are absolutely some very, very bad consultants
@@RJ-gu3wbhat do you think about Data Analyst role, in I.T? How possible is it to get into the role with no prior professional experience but, have the skills.
Luckily I work as a consultant in a niche technical field which does hire industry experts who have real life experiences.
Some of the consultancy cons still exist and as a junior who's always been in consulting I do end up making pretty slide decks but at least with support of actual experts who have strong recommendations.
We use alot of consultants in government because its not popular to increase the size of the civil service. They also rack up the hours because, especially big projects, have alot of delay due to things like gaining political support, changes in timings, scope etc.
So, you spend more money to spend less money? Sounds like corruption and incompetence all right.
@@ethanstump its more about optics for the government of the day, its poltical fuel to be the one who expands the civil service. Lots of money on contractors can also look bad but less often as, in theory, they should be great short term.
@@marcus7564 i rarely take received wisdom on face value. plus you know what is even worse optic's? consultant's. it's like someone saying eating meat is a bad look, so they only subsist on cocaine and vodka.
@@ethanstump the thing is voters throw a hissy fit when more civil servants are hired because “muh government waste” it’s the Catch 22 of Western politics, voters hate the bureaucracy so the bureaucracy just moves to the private sector because the admin grunt work still needs to be done by someone
@@zandaroos553 it's based on the ideological hypocrisy of the "rightwing libertarian" Murray Rothbard.
also, if self administration was a thing, the overall size of the administrative work that needed to be done would be far more manageable, centralization of authority lead's to duplication and escalation. then again, self administration is only possible in a world without a permanent military industrial complex.
in other word's, the central paradox of control of you by other's, is that the relationship between the ruling and the ruled is often an abusive relationship that lead's to diminishing returns. and in order to counteract those diminishing return's, the go to is always more information, rather than correct action with the information we have. then again, "correct action" by an abuser is to never address toxicity, and when necessary spread duplicitous future commitment's that don't sever the toxic relationship.
"i can change baby, i swear!"
_“We were proud of the way we used to make things up as we went along… It’s like robbing a bank but legal. We could take somebody straight off the street, teach them a few simple tricks in a couple of hours and easily charge them out to our clients for more than £7,000 per week.” It consisted, he says, of “lies, lies and even more lies.”_ - former consultant David Craig in his memoir *Rip Off!*
" I have never seen a management consultant's report in my long life that didn't end with the following paragraph: “What this situation really needs is more management consulting.” Charlie Munger
As a low level tech consultant, my job is mostly about taking the blame off the manager that ignored my advice.
and that's even though tech consultants is probably the least BS branch of consulting. Imagine what the rest is like...
@@davidp.7620 😱
OMG so well done! I was both laughing and feeling absolutely livid listening to this. You nailed it.
During my internship, we had a few consultants in our team. I still don't know what the hell they do besides make unnecessary meetings.
“Hi, I’m your new consultant. Yeah, sure, McKinsey or whatever. So before I even talk to anyone, I’d like to assure you that I have a huge amount of history auditing workplaces like this one and I’m very good at my job.
Anyways, the best way to keep your business healthy and effective is to not do any layoffs at all, cut C-suite pay by 55% each, and increase worker pay by at least 35% each. Invest any leftover money into the business.
That’ll be $3.14 million please.”
Sounds like pi
C-suite: “hell nah anyway we’re failing and we blame you”
Wow, so it's a revolving door of greed and self interest. Thank you for this insight!
When we got a new CEO, the first thing I noticed was a ridiculous influx of consulting invoices that came in the first 6 months in his role. This made me think this guy basically had a team of consultants he brought with him to every company to milk it dry. They all seemed to be his friends with how casual they were in our email exchanges.
I always have the urge to watch or re-watch the movies and shows this channel shows clips from 😊
That's the reason I clicked on this, because of "the Bobs" from Office Space. 😂
Awesome video! My experience is that consultants are an expensive cover for management to avoid responsibility. Management can 🤷♂️ and say they followed recommendation, consultants can say they only made recommendations - everyone is covered.
It's cheaper for the CEO to pay $500K for a failed project via consultant, than to give their teams a $100K in bonuses for a successful project.
cheaper how?
@@hy8606 is a matter of responsibility and ego
@@hy8606 The tax code
I’m so happy this video exists, it absolutely nails every issue with consultants.
Great to see one of my favorite TH-camrs @SecondThought being featured. 0:01
I'm surprised this didn't touch on another wrinkle in that a lot of consultants are hired for projects that are capital expenses but cannot be brought on until the project is underway so unqualified business managers gather requirements and agree to contracts for projects before engaging consultants who now have to operate in a framework that cannot succeed causing project overages and delays because the original project as scoped is unfeasible.. Although in fairness this is less management consulting and more project consulting.
In ancient times, whenever the ancient Romans built a bridge, it was law that the chief architect/engineer would have to spend a night under the bridge when it was finished. Imagine if management consultants were held to the same standard.
It would be easier to just ban or heavily regulate consulting firms as nothing more than a scam most of the time.
In REAL jobs, that is sometimes still a thing. Some civilian airlines make their mechanics fly on planes they just did heavy maintenance on.
@@hatman4818 Which is perfect, any lazy mechanic is quickly eliminated from the staff.
The British used to do so in the 19th century.
I am in the industry and always avoided the bigger companies for the same exact reason you are presenting. I always followed the principle of job security based on knowledge and experience. After a few years I tried to do only high profile projects to gain very specific experience that now pays of
Thank you. You closed a huge gap on "whys" that I couldn't answer. I now have better understanding after watching your video.
I really like how you dispell conspiracy theories with transparency. So refreshing to see actual decent content about big business.
I had the misfortune of working at McKinsey, no one had any idea what anyone was doing 🤣🤣🤣
But they got paid good money to do it.
George Costanza would have excelled there.
@@EliSkylander ooohhh, insane amount of money, it would put FAANG to shame
@@rossamullen5918 🤣
And they only hire from top names schools, don't they?
Great to see you bringing the good Second Tought to the masses. Yo have my like, good sir.
It's very nice to have the crossover between you and Second Thought.
Re. Consultants, it's not only the US, but the UK too. In the company I work for we offer SaaS consultancy services, which is typically hired by PR consultants. In turn, we require consultancy to filter the "newsworthy" things from those that are not. Have I already mentioned we now have internal commercial enablement consultants?
Lol
I worked in IT for a construction firm. They brought in a consultant, who basically made the IT dept make a bunch of flow charts for our existing processes, then told us we were doing a "surprisingly good job" (she knew we hated her), and then we never heard anything else. I guess she got paid for that.
whenever the company i worked for brought in a cunsulting firm, we knew that layoffs were coming.
Ugh, I worked at a smaller consulting firm in my 20s in Nowhere, MI. I worked there for about a year as a stopgap job.
This video perfectly lays out exactly how it worked, and my experience there still haunts me to this day, 15 years later.
Thank you. I need it this
Can confirm this isn’t just management consulting. Technology consulting (especially big 4) runs just the same damn way.
How Money Works quoting Second Thoughts. A surprise to be sure, but a welcome one.
Great episode, I'd love to see one on charter schools
Been saying this for awhile now. Nice video 👍
Ah. The crossover I've been waiting for. "A second thought on how money works"👌🏾
I worked for Alcoa for 13 years and my plant go from being competitive to having the wheels fall off and curtail. There were deep systemic and cyclical problems that they couldn't fix at my plant. I have to give some credit for the attempt to right the ship near the end but it was too little too late. It was interesting seeing the death spiral of a company. It was a good career and I was actually sad to see it go because I worked for them for over 1/3 of my life so far. I've moved on to bring a government contractor. It's been interesting work for them too.
When I worked in the consulting space it was pretty much doing analysis and then sending out a bunch of PowerPoint decks just before we rolled off. We would almost NEVER actually execute anything that was recommended. The hands-off approach drove me nuts. One time I decided to actually execute what I had recommended to a client. When I did that, I won an award, and I got a $1000 bonus. I know the money was small. I did it for the recognition and to prove that a person can actually do what said person recommend others to do.