From Big Four contracts and partner bonuses, why everyone hates consultants
Consultants get a bad press but they’re having a tough time too. Class35 founder Nick Parminter says a new generation of industry leaders is required.
The bashing of management consultants has gained a lot of momentum, and arguably toppled over from a running joke to a condemnation. Stories like McKinsey’s role in enabling the US’ opioid crisis, big consultancies’ roles in government corruption (see South Africa) and the Big Four making vast project revenues out of the government’s covid interventions, are prevalent.
For some, they are fast becoming the traffic wardens of capitalism. Disliked, derided, unhelpful and parasitic.
Historically characterised as slimy, self-interested, entitled, theorists, and “morally bankrupt”, clients, journalists and increasingly the general public are painting a multi-billion dollar industry, employing millions of people globally, with a very broad and very negative brush.
Many consultancies still measure success on how much pay their partners are able to take home each year and their “profit above all else” motive is increasingly jarring. This is made starker as recent “sacrificial layoffs” have been focused on the middle tier of the hierarchy or non-billers, protecting Partner bonuses in a bid to retain their top revenue generators.
Beyond the obvious misaligned incentives of traditional consultancies, there is a growing scrutiny on the generalist consulting model, with some speculating that recent examples of fee wavering or “investment” is a desperate attempt to retain client incumbency until more abundant times arrive.
Many consultants and firms survive on their ability to pick up almost anything within days, but as problems get tougher, more nuanced and often technical, throwing generalists at any problem isn’t working. Especially when said generalist is a Red Brick grad who has read a few business books, and sat through a three week induction in a Crown Plaza somewhere and now feels equipped to instruct a CEO on how to run their business.
A dedicated strategy of never specialising has its benefits – some of the more established firms that have survived multiple economic cycles are like cockroaches in an apocalypse. They seem to fare as well in bear markets as bulls, changing shape to solve the issue of the day without breaking stride.
Take the Conservative crackdown on Government spending on consultants in the late 2000s, which handsomely coincided with the Global Financial Crisis – top UK consultancies redirected much of its workforce from sprawling government projects to shutting branches or merging/de-merging struggling financial services businesses.
Whether or not the industry can pull off a similar trick this time is still unknown, with not insignificant redundancy rounds, “it’s tough out there” has become a familiar forlorn statement of affairs, across consulting enemy lines.
As a consultant (of sorts) myself, my view is that the recent gear shift in criticism should act as a challenge to the foundations of the industry. It’s not only about a few bad apples, it is ultimately a question of reinvention, in a business age that is defined as much by doing the right things by a range of stakeholders, as it is pleasing shareholders.
A good consultant has always been about bringing perspective, expertise, clarity and execution to clients that need it. There’s never been more of a need for good consultants. Whilst it’s frustrating that a whole industry of largely useful and honest professionals is being caricatured as an image of naive corporate greed, it’s a useful reminder on the pitfalls of putting your own cause over that of your clients.
Hopefully public scrutiny and economic circumstances combine to force some early retirements and to beckon in a new generation of more responsible industry leaders, and with it, a rejuvenated consulting industry.
Nick Parminter is founder and CEO of Class35 and posts on LinkedIn here.