Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor • Hacker News Board

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#51

Post by creaghpatr » Thu, Dec 05, 2019, 6:47 PM UTC

txcwpalpha wrote: post #16

There's a lot to unpack here, but the general gist is that McKinsey is overpaid for mediocre services. It's hard to argue against that, and McK in particular does have some insanely unjustifiable rates, but I do think the author has a bit of a misunderstanding of why consultancies are hired in the first place. To be clear, when a consultancy like McK puts a 23 year old analyst on a project, the $50k/week bill isn't j…

I agree especially on the implementations front, when success or failure of a huge implementation project hinges on a single (or small team) of full-time employees, it's often better to just pay a premium to consultants to minimize the risk of a botched integration and have some written recourse, rather than firing an incompetent team and suffering the consequences of a botched project at the scale of a large company.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#52

Post by beaconstudios » Thu, Dec 05, 2019, 6:48 PM UTC

hwbehrens wrote: post #5

The IFF referenced in the article seems like a great example of how good-intentioned changes to incentive structures can have very warped outcomes, potentially years later. These kinds of effects keep popping up for me, even in industry contexts (e.g. stack ranking). Are there accepted mechanisms for systematically identifying these knock-on effects, and if so, what are they and how can they be more broadly applied?…

the general topic would be systems theory / systems thinking. Lots of little scraps of knowledge of these kinds of knock-on effects are scattered around in various fields and disciplines, but I don't know of anywhere where they're gathered in one place for broad consideration or application. Not yet, anyway.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#53

Post by irrationalactor » Thu, Dec 05, 2019, 6:48 PM UTC

xvector wrote: post #23

From the linked article[1]: I find it absolutely INSANE that highly specialized organizations like the NSA rely on McKinsey to direct their future operations. These people have intimate knowledge of their organization and culture, shaped and hardened by years of challenges and learned experiences. What can they possibly think bringing an outsider in to do a complete overhaul will solve!? Why can they not apply their…

Having worked in the field for a few years after graduation myself, I've come to think of "strategy consulting" as mostly bureaucratic arbitrage.

8 times out of 10, the organization knows exactly what needs to be done. However, big organizations have thousands of stakeholders with competing desires. Steering the ship in a different direction can have negative consequences for thousands of people.

Due to this problem...even the people in charge struggle to do what needs to be done without being pitchforked out of the place.

BCG, McKinsey, etc. provide the perfect cover. Their mythical brand image and powerpoint sales abilities allow management to do what needs to be done, while offloading the risk onto a 3rd party. If the changes don't work out, you can fire the consultants! The management was just following the advice of the outside experts.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#54

Post by thanatropism » Thu, Dec 05, 2019, 6:48 PM UTC

txcwpalpha wrote: post #16

There's a lot to unpack here, but the general gist is that McKinsey is overpaid for mediocre services. It's hard to argue against that, and McK in particular does have some insanely unjustifiable rates, but I do think the author has a bit of a misunderstanding of why consultancies are hired in the first place. To be clear, when a consultancy like McK puts a 23 year old analyst on a project, the $50k/week bill isn't j…

> The analyst is really just a vehicle to deliver the expertise of the actually-experienced consultants and knowledgebase of the entire firm.

This will sound stupid but MBB have industry benchmark spreadsheet databases that are a significant competitive advantage against our smaller firm.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#55

Post by projektfu » Thu, Dec 05, 2019, 6:48 PM UTC

mips_avatar wrote: post #43

txcwpalpha wrote: post #16

There's a lot to unpack here, but the general gist is that McKinsey is overpaid for mediocre services. It's hard to argue against that, and McK in particular does have some insanely unjustifiable rates, but I do think the author has a bit of a misunderstanding of why consultancies are hired in the first place. To be clear, when a consultancy like McK puts a 23 year old analyst on a project, the $50k/week bill isn't j…

It seems like people do really well for themselves after they leave McKinsey, do you think this is mostly a function of the cache having McKinsey on your resume brings? What skills are really developed as a management consultant?

McKinsey people develop very useful networks for their own careers.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#56

Post by jariel » Thu, Dec 05, 2019, 6:50 PM UTC

txcwpalpha wrote: post #16

There's a lot to unpack here, but the general gist is that McKinsey is overpaid for mediocre services. It's hard to argue against that, and McK in particular does have some insanely unjustifiable rates, but I do think the author has a bit of a misunderstanding of why consultancies are hired in the first place. To be clear, when a consultancy like McK puts a 23 year old analyst on a project, the $50k/week bill isn't j…

Can concur with this.

The rank and file of many orgs have no thoughts of their own.

But the really shocking thing is how executive level management as so many organisations can't either. Most execs have no idea what their strategy is, they're just the 'responsible people who are in charge'.

FYI in some cases, 'the Firm' may actually have deep knowledge in a particular area - such as 'fast moving goods' or whatever . So the company is actually 'buying' the exposure the consultants will have had to other folks in their industry.

But the prices are boondoggle insane, out of touch with reality.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#57

Post by kfk » Thu, Dec 05, 2019, 6:51 PM UTC

The power point thing is so important though and consultants make amazing power points. It’s so important I’d hire a power point master just for explaining to executive all the concerns and issues me and my team have over our IT practices.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#58

Post by whiddershins » Thu, Dec 05, 2019, 6:51 PM UTC

alexchamberlain wrote: post #41

> ... Work of a 23-Year Old This really bothers me. I understand the point of the article is that they're charging a lot of money for an inexperienced consultant and no bias (discrimination) was meant, however, age is irrelevant. There are a lot of very "experienced" 23 year olds, as long as you're asking them about the work they've done. There are a lot of people in their 50s with very little experience (as their ac…

By definition a 23 year old can’t have 25 years of experience in anything, even tying shoes.

They can’t legally have worked full time in the United States for more than 7 years.

Unless they are a wild outlier, they can’t have an advanced degree and significant years of professional experience doing anything.

You kinda have a point but sensitivity to age discrimination towards the young in this sort of statement is a bit of a stretch imo. It’s also shorthand for absolute realities of time and space.

Edit: Age discrimination also isn't perfectly symmetrical because:

If you’re young, you will very likely get to be old one day.

If you are old, you never get to be young again.

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#59

Post by mac01021 » Thu, Dec 05, 2019, 6:52 PM UTC

hwbehrens wrote: post #5

The IFF referenced in the article seems like a great example of how good-intentioned changes to incentive structures can have very warped outcomes, potentially years later. These kinds of effects keep popping up for me, even in industry contexts (e.g. stack ranking). Are there accepted mechanisms for systematically identifying these knock-on effects, and if so, what are they and how can they be more broadly applied?…

I might just be dense, but I don't fully understand how the IFF was supposed to work. What was its intended effect? Is it just a tax that the contractors have to pay on spending the government's money, to disincentivize them to spend that money?

Re: Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

#60

Post by tylermw » Thu, Dec 05, 2019, 6:52 PM UTC

alexchamberlain wrote: post #41

> ... Work of a 23-Year Old This really bothers me. I understand the point of the article is that they're charging a lot of money for an inexperienced consultant and no bias (discrimination) was meant, however, age is irrelevant. There are a lot of very "experienced" 23 year olds, as long as you're asking them about the work they've done. There are a lot of people in their 50s with very little experience (as their ac…

> There are a lot of very "experienced" 23 year olds

By the definition of the word--no, there aren't. You can have talented, capable, and driven 23 year olds, but not "very experienced." Given a working adults life spans approximately 40-50 years, a 23 year old claiming that title is laughable (exceptions being musical prodigies and athletes who have trained from childhood).