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

mattstoller.substack.com

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

#201

Post by Spooky23 »

Aunche wrote: post #103
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…

The director of the NSA gets a modest salary of $180,000. That's roughly the comp of an associate at Mckinsey or entry level at a FAANG. I doubt that they can attract the top talent with the amount they're paying. https://cryptome.org/2014/03/nsa-salaries.htm#:~:targetText=... .

As someone who has been a underpaid .gov person, that’s not really true. When you factor benefits, pensions, etc, the compensation isn’t that bad.

You also have the mission. Contributing to the defense of the country, ensuring that people get social services or that the roads are safe is more rewarding that making some billionaires some more cash!

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

#203

Post by draw_down »

crazygringo wrote: post #66
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.

It's exactly this. Within any organization, you can have 3 or 6 important people pushing in completely different strategic directions. And it can be clear to any unbiased observer that there's only one good, responsible choice, but within your org that gets met with essentially "but that's just your opinion , man". So you call in a consulting firm and they deliver what most of the people already know. The consultants…

Seems like other parties to the disagreement could do the same thing, at which point you're back where you started except with less money.

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

#204

Post by icandoit »

codesforhugs wrote: post #81
smacktoward wrote: post #26

Earlier quoted context omitted.

In terms of lawmaking, the usual way to deal with this problem isn't with front-end analysis, but rather by adding a "sunset provision" (see https://en.wikipedia.org/wiki/Sunset_provision ). That's a clause in a bill that requires it to be re-authorized periodically in order to stay in effect. If a law with a sunset provision ends up causing unintended consequences, then lawmakers can let it die just by doing nothing…

If I were writing the constitution for a representative democracy today, I think it would include mandatory sunsets for all legislation. Yes, this would lead to the legislature spending a lot of time just reauthorizing existing legislation, but I would argue that the majority of new legislation being passed in modern representative democracies would be better off as revamps of existing legislation anyway.

Idaho does this. Through disfunction they repealed the entire state regulatory code in May of this year.

https://www.mercatus.org/bridge/commentary/idaho-repeals-its...

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

#205

Post by MiracleUser »

slg wrote: post #107
crazygringo wrote: post #66

Earlier quoted context omitted.

It's exactly this. Within any organization, you can have 3 or 6 important people pushing in completely different strategic directions. And it can be clear to any unbiased observer that there's only one good, responsible choice, but within your org that gets met with essentially "but that's just your opinion , man". So you call in a consulting firm and they deliver what most of the people already know. The consultants…

>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…

I completely agree with this sentiment, and now I add any and all analyst responsibilities I come across to my desk just so that I can better articulate my recommendations in c-level business language

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

#206

Post by MFLoon »

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…

This isn't a matter of unconscious bias. People can (and, arguably, should) have a conscious, intentional bias, against inexperience, when it comes to selecting for skilled work. Age drops off as a useful proxy for experience once someone's been in the workforce for some time, but as others point out, a 23 year old is still going to be definitionally inexperienced in most domains.

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

#207

Post by luma »

slg wrote: post #107
crazygringo wrote: post #66

Earlier quoted context omitted.

It's exactly this. Within any organization, you can have 3 or 6 important people pushing in completely different strategic directions. And it can be clear to any unbiased observer that there's only one good, responsible choice, but within your org that gets met with essentially "but that's just your opinion , man". So you call in a consulting firm and they deliver what most of the people already know. The consultants…

>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…

As a consultant I like to flip this situation around, and let the internal staff who are already advocating for the direction I feel is best to be my biggest cheerleaders. Engage them early, let them know you're there to help them personally, and they'll help you do a better job when presenting your shared ideas to the brass.

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

#208

Post by ndarwincorn »

bumby wrote: post #194
ndarwincorn wrote: post #190

Earlier quoted context omitted.

Everyone replying answered this, I'd just like to point out that the answer to 'could you elaborate a bit more' is to read the parent article. Another excerpt: > In 2013, the GSA Inspector General traced a similar situation with different contractors. Managers at GSA overruled line contracting officers to raise prices taxpayer pay for contractors Carahsoft, Deloitte and Oracle. Government managers at GSA micro-manage…

Thanks, what I'm not quite getting is that the other contractors are listed. What seems to get lost is that the GSA doesn't select the contractors, they just list them. The connecting dot that's missing is why agencies choose the more expensive option when it benefits the GSA, not the agency using their schedule. For the perverse IFF incentive structure logic to hold true, it seems like GSA would be incentivized to a…

This is reading more and more like you're begging the question. One of the sibling replies that predates this comment by a quarter of an hour already addresses your specific missing connecting dot here. Not to mention the article itself, which is also well cited.

It's good. I suggest you read it. Interrogating my two sentence oversimplification of the forest is not a useful way to learn about this.

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

#209

Post by naravara »

slg wrote: post #107
crazygringo wrote: post #66

Earlier quoted context omitted.

It's exactly this. Within any organization, you can have 3 or 6 important people pushing in completely different strategic directions. And it can be clear to any unbiased observer that there's only one good, responsible choice, but within your org that gets met with essentially "but that's just your opinion , man". So you call in a consulting firm and they deliver what most of the people already know. The consultants…

>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…

>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 solution, and then the recommendation is implemented.

Speaking as a consultant, my experience has been the opposite. I have walked into many organizations, said , and been hailed as a hero by the handful of folks who had been saying all along because FINALLY someone gets it! These are people who have been killing themselves in the trenches fighting this fight forever. When you finally show up and resolve it it's like the Army of the Dead in Return of the King. Fight's over, you can go bask in your "told you so" afterglow now.

It also turns out that most of the time, those people may have been smart enough to get , but were pretty bad at communicating the value of to anyone who mattered or at making a plan for how to get from to .

All of this is not to credit McKinsey or any of big consulting. They mostly provide a "signature method" to launder your your obvious observations into a glitzy powerpoint presentation to make it look like you applied rigorous testing and experience to what was really a cursory observation your entry level analyst made. All the people with actual experience are too busy killing themselves at business development and facilitating this "observation laundering" process to apply their brain power to developing actual insights.

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

#210

Post by sincerely »

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?

Presidential candidate Pete Buttigieg has been relatively outspoken about his time working at McKinsey (although he can't discuss specifics due to an NDA), which may have sparked a wave of 'what does McKinsey actually do'
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