Consulting, also refered to as management consulting, is a service provided by consulting firms to their clients, to help management at these companies solve complex issues that affect their business.
On a typical contract, a number of solutions will be proposed in a large report, which will include forecasts of KPIs over a future period for each scenario.
What is Management Consulting?
Management consultancy is considered to be amongst the most interesting, intellectually stimulating and potentially financially rewarding work available in the professional services market, and as a consequence is highly sought after by job seekers, many of whom come from an accounting background.
Competition for positions at consulting firms is fierce. You will have to show your passion for a career in the field, academic intelligence and knowledge of the industry (best acquired through work experience or an internship) to realistically be in with a chance of attracting an offer from the firms you choose to apply for.
Specialisms in Management Consulting
Management consultancy firms vary in their specialities and are largely dependant on the quality and knowledge of the consultants who work there.
Consulting advice encompasses a wide variety of management issues that can be divided into the following categories:
- Strategy Consulting or Business Strategy Consulting: development of corporate strategy, new market entry, business case development, growth strategy, commercial due diligence of potential acquisitions / disposals, long range planning, re-organisation of a company’s structure, rationalisation of services and products, and a general business appraisal of the company.
- Operational Consulting, Manufacturing Consulting or Business Services: assist in process improvement, cost reduction, review of the layout of a production department, production control, productivity and incentive schemes, address quality control problems.
- Marketing Consulting: conduct market research and business forecasting, implement sales force training, organise retail and wholesale outlets.
- Financial Consulting and Management Controls: installing budgetary control systems, profit planning or capital and revenue budgeting, office reorganisation and administrative arrangements.
- Human Resources Consulting: assist in organisational design, organisational restructuring, talent and rewards strategy, advise on HR/Personnel policy, manpower planning, job enrichment, job evaluation and employee relations.
- Technology Consulting or Information Technology Consulting: development of technology architecture, technology infrasctructure, complex programming, defining information needs, the provision of software, systems analysis and design, computer feasibility studies, implementing computer applications, computer hardware evaluations.
- Applications Consulting: advice provided on issues related to large scale implementation of data software applications such as Oracle, SAP and Siebel
- Environmental Management Consulting: urban area and regional development planning, international economic research, cost benefit and social analysis studies, physical, economic, ecological and sociological studies for the encouragement of quality of lifestyle.
- Quality Management Consulting: setting of policy and strategy, customer satisfaction, performance measurement, people management and processes.
- Outsourcing Consulting: management of outsourcing projects such as IT, HR or finance.
All management consultancies have their own specialisms. Firms such as McKinsey & Company, Bain & Company and the Boston Consulting Group have traditionally based their strengths on strategy consulting and continue to be seen by many as the leaders in their field. Professional service firms including PricewaterhouseCoopers, Deloitte and KPMG have a larger breadth of consulting services, often covering all areas mentioned above. There are firms who specialise in technology consulting such as CapGemini and Accenture, firms that specialise in outsourcing consulting (also CapGemini) and firms who specialise in human resources consulting, such as Towers Perrin and Mercer Human Resources Consulting.
The difference between a consultancy firm and a professional services firm is becoming increasingly blurred. Nowadays it is common for large firms to provide several, or even all, consultancy specialisms. The UK's largest professional services firms with consulting arms include PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young.
Advisory contracts require a consulting or professional services firm to give advice but not to perform any material work for the company. For example, a company may have a financing problem, and will source the advice of a professional services firm (such as the Big 4) to provide a detailed list of possible solutions, forecasts and outcomes. A one-off fee will be charged for this advice, and the receiving company may choose to follow or discard the advice at its own risk.
Consultancy extends the role of advisory to actually performing the work on behalf of the client.
What's the difference between Consulting & Advisory?
A common example in the financial services sector might be the following: if a company is performing an acquisition, a professional services firm may advise on the acquisition. If the decision to acquire goes ahead, the professional services firm may then be required to come in and perform the mechanics of the acquisition, which may include due diligence and legal services (these fall under the category of 'Transaction Services').
Generally speaking, there are restrictions to professional services firms on who can be advisory/consultancy clients, and usually a client cannot be both an audit client and a consultancy client as this violates in the independence of the auditor.
What do Graduate Management Consultants do?
As graduates, Analysts / Associates are expected to go through a steep learning curve from the start after basic training. The role and responsibilities of Analysts / Associates will vary hugely depending on area speciality and company, but typically graduates will do interesting things such as conducting complex analysis, modelling and preparing client presentation materials. Graduates should also be prepared to do the 'less interesting' work such as documentation.
As the work is project driven, a consultant's working week could be spent in an exotic international client location or conversely, a dour business park, or simply in the consultancy's head office. A consultant must be flexible and willing to travel, although the extent to which this is necessary will also vary from firm to firm and speciality to speciality.
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Salaries in Management Consulting
Starting salaries vary depending on which area of consulting you work in (e.g. Strategy / Operations / Technology) but are higher than most other non-investment bank graduate positions. Generaly, starting salaries in London are in the £30,000+ bracket, rising to £45,000 - £50,000 with 3 years experience, but this is also dependant on your performance. Consulting work is project driven with relatively challenging timelines - there might be times when you are expected to work long hours to meet deadlines.
Unlike Audit & Assurance or Tax, often no formal training (such as the ICAEW ACA) is provided as part of an employment contract offered by a consulting firm. You will however, almost certainly take part in numerous in house training courses to build skills relevant to your job, ranging from basic writing and presentation skills to area specific skills such as financial modelling or complex programming.
There are professional qualifications available to management consultants and prospective consultants, although the value of these qualifications is thought by some to be lower than that of qualifications available for Accountants and employees working in other professions. However this is largely a historical view and professional qualifications awarded by the IBC in addition to specialist skills are now sought after.
There are several qualifications available that can lead to becoming a management consultant; these include:
- The internationally recognized Certified Management Consultant (CMC) professional designation.
- Certificate in Management Consulting Essentials ( Institute of Business Consulting (IBC)) - UK, Diploma in Management Consultancy (IBC) - UK
- Accountancy qualifications: Chartered Management Accountant (CIMA), Chartered Certified Accountant (ACCA), Chartered Accountant (CA), Certified Public Accountant (CPA), Certified Management Accountant (CMA) Chartered Cost Accountant CCA Designation from AAFM
- Actuarial qualifications: Casualty Actuarial Society (FCAS) Society of Actuaries (FSA)
- Finance qualifications: Chartered Financial Analyst (CFA), Certified Treasury Professional (CTP)
- Consulting qualifications: Master of Science in Business Consulting (BCM) Hochschule Furtwangen University Germany
- Business Administration qualifications: Master of Science in Management Consultancy (MSc)
- Advanced Professional Degrees such as PhD's, JD's, MBA or Master's degrees in Engineering, Science, etc. are specifically targeted by firms like McKinsey and the Boston Consulting Group.
Management consulting is an extremely desirable career so many who start in this role choose to remain within it for the duration of their career, sometimes swapping larger firms for smaller consulting firms. A very common transition is also into higher strategic management of companies or joining a company board. Frequently, consultants can also go freelance and offer their business consultancy services for a substantial hourly fee.