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

#151

Post by JoshTko » Thu, Dec 05, 2019, 8:20 PM UTC

ndarwincorn wrote: post #116

z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

This entirely misses the forest for the trees. And granted the author's bias gets in the way of his attempt to point out that forest. Their bias aligns with mine, but with less editorialization IMO the following would be more clear: It's not that the work is or isn't valuable, or where that value is. It's that McKinsey charges 72% more than a competitor for the same consulting, and that there's a massive perverse inc…

I've seen this trend get worse on HN were top voted comment is just a response to the title and not the actual heart of the article.

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

#152

Post by wil421 » Thu, Dec 05, 2019, 8:21 PM UTC

cafard wrote: post #123

I don't remember seeing HN articles about McKinsey before this month or last. Now there are three articles about McKinsey on HN, including one that says that the Houston Astros' sign-stealing exemplifies the decline of a McKinsified America. (Or maybe it's the Astros that are M'd.) How did it become the flavor of the month?

McKinsey comes up because they are an elitist consulting firm and HN is somewhat of an elitist forum. I am using elitist in a good way, although there’s certainly elitist attitudes on here.

As someone who might join a Big 4 in IT consulting soon it’s nice to see what McKinsey is up to. It’s much nicer to see accountability for one’s actions.

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

#153

Post by bonestamp2 » Thu, Dec 05, 2019, 8:24 PM UTC

underdown wrote: post #117

slg wrote: post #107

Earlier quoted context omitted.

>Also, this lets the CEO appear unbiased to all the people who "lost". So they can get on board with the new policy but not feel like the CEO shot them down personally, which is bad for morale, can lead them to quit, etc. The flip side is that it is also bad for morale for someone to be recommending a solution for some time, the recommendation is ignored, a consultant is hired, the consultant recommends the same solu…

Wouldn't one enjoy some benefits from being proven right?

Ideally, but unless that person was well known for their opinion then the consultants usually get all the credit.

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

#154

Post by ownagefool » Thu, Dec 05, 2019, 8:25 PM UTC

z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

I don't know if this is always the case.

High end consultancies have sold oursourcing that decimated the UKs IT orgs, and are now selling in-sourcing, whilst in reality many are just selling outsourcing to them with new buzzwords like DevOps and microservices.

It might be what the businesses wanted to do all along, but I'm not sure it's what they "knew they should be doing".

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

#155

Post by csa » Thu, Dec 05, 2019, 8:25 PM UTC

tootie wrote: post #31

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 piece I don't get is why the agencies didn't revolt. I get how it's a warped incentive for the GSA but isn't the GSA working at the behest of agencies like ICE? Shouldn't ICE be up in arms that their budget is being squandered?

Oversimplified answer...

Because the agencies were (and still are) told that they must use GSA first. The theory is that GSA market will provide a competitive price or that the GSA sole source will be a competitive price.

Reality does not match the theory.

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

#156

Post by bonestamp2 » Thu, Dec 05, 2019, 8:28 PM UTC

braythwayt wrote: post #36

z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

This. I have done lots and lots and lots of enterprise sales and consulting, and a big part of bringing in outsiders is to provide the illusion of social proof. "Well, we had the experts in, and they found..." That sounds really, really terrible when put so cynically, but the flip side of that is to view it as insurance. If you bring the consultants in, hoping that they will recommend Plan A, and Plan A is truly terr…

Agreed, and even if the consultants aren't more credible than the intern people, they at least have less bias than internal people, which can sometimes give their opinion a little more weight.

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

#157

Post by markhall » Thu, Dec 05, 2019, 8:28 PM UTC

abeppu wrote: post #145

On glassdoor it seems like that recent grad business analyst is taking home ~100k [1]. One of the articles earlier this week about McKinsey as "Capital's Willing Executioners" [2] talked about how the firm spreads a specific capitalist ideology. Given that (in this instance), the company is charging a 30x markup for the labor of that recent grad business analyst ... should we be thinking of McKinsey analysts as misgu…

While I understand the frame of thinking, you'll have a difficult time convincing any advocating party that someone making $100K+ is 'exploited'. Multiple examples probably can be found across a number of industries

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

#158

Post by [deleted] » Thu, Dec 05, 2019, 8:28 PM UTC

UltimateFloofy wrote: post #67

This is true for most NOVA contractors. In 2010-2012, Accenture and KPMG was pretty new to Federal IT Auditing and most of their consultants had never done anything IT related in their lives. It's ridiculous that accounting and tax firms like Arthur Andersen was able to rise out of Enron's scandal and were able to create catch-all IT divisions and win those contracts from the US government when they had no expertise.

[deleted]

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

#159

Post by bumby » Thu, Dec 05, 2019, 8:29 PM UTC

ndarwincorn wrote: post #116

z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

This entirely misses the forest for the trees. And granted the author's bias gets in the way of his attempt to point out that forest. Their bias aligns with mine, but with less editorialization IMO the following would be more clear: It's not that the work is or isn't valuable, or where that value is. It's that McKinsey charges 72% more than a competitor for the same consulting, and that there's a massive perverse inc…

> there's a massive perverse incentive for public servants in charge of awarding contracts to pick the most expensive one.

I'm not quite following your logic here, could you elaborate a bit more? There's nothing prohibiting well-funded competitors from similar GSA approval, is there? My understanding is that this method is used to streamline contract awards...being listed on a GSA schedule means you've gotten a stamp of pre-approval (i.e., you've checked all the boxes to meet government contract requirements).

An overly simplified example would be that an agency can go from a whole soup-to-nuts bid process that takes, say, nine months to award. Or, they could select a contractor from a GSA schedule list of contractors and have it awarded in two months. Those numbers are arbitrary, but hopefully you get the point. Agencies have a variety of reasons they may want to hurry the process along, but over-paying isn't likely one of them.

Further, most government contracts go to "lowest bidder"; in order to be awarded to a higher priced contractor, they usually need to be part of a "best value" contract that is generally more difficult to justify.

I could be off on this, but understanding has been that the government is almost overly incentivized to award to the lower bidder, even when the lower bidder is the riskier bet.

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

#160

Post by choppaface » Thu, Dec 05, 2019, 8:33 PM UTC

code4tee wrote: post #146

Have been on the receiving end of several McKinsey engagements. The work itself was generally not all that good. The knowledge of “experts” brought into meetings rarely contributed more than what a reasonably intelligent person could dig up on Google search results in an hour. They were also often farmed out on random staff augmentation functions that just annoyed the hell out of people. “Hi I need you to fill out th…

Have worked with two ex-McKinsey consultants (hired as employees) and want to echo the observation that they tend to use their fast execution to generate excessive BS like large spreadsheets to win office politics.

In one case, the guy had built a small org to fulfill a need that we had previously outsourced to a vendor. The company was thinking of signing a large contract with the vendor and he created a barrage of 20-page spreadsheets to try to justify his budget. He made me sit with him for an hour to extract random cost estimates for one of his sheets. The vendor ended up turning into a Silicon Valley unicorn... exactly the sort of opponent he wanted I guess.

I think the trouble with McKinsey is they breed competitors who have never seen working products. If a product works, there’s probably a clear vision and a clear definition of value. When products are broken, winning office politics looks valuable, hence the McKinsey fascination.