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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

#271

Post by TrackerFF »

mountainofdeath wrote: post #82
mips_avatar wrote: post #43

Earlier quoted context omitted.

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?

Basically. It's a filter that proves someone who worked there is smart and hardworking. It also explains their virtually universal requirement for an Ivy league (or similar) background.

Same goes for investment banking, and similar.

You don't hire overachieving 4.0 HYPS grads that have "played the game" since they were 14 because they're the smartest guys / gals around, you do it because they'll work 18 hours a day if needed. It's a great indicator of at least two things

1) The person is able to learn quick, and pick up new things very fast

2) The person has exceptional work ethics, and will do what's expected. You're driven enough to not lose motivation.

And then you set them to do menial grunt-work like fixing spreadsheets and formatting PP slides.

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

#272

Post by cgio »

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…

Consultants fill positions with responsibilities that are short term. You have to ask yourself whether you are in a position that bears saying in what will happen from your long term viewpoint. If not then lobby the consultant to make it so e.g. by changes in operating model, creation of a Centre of Excellence etc. If there is a failure in hearing people ideas the presence of a consultant is as much a symptom as it is an opportunity.

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

#273

Post by btown »

luma wrote: post #247
sailfast wrote: post #219

Earlier quoted context omitted.

But... it’s not your shared idea. It’s their idea, and the company didn’t have a process in place to let them present it except through your consulting engagement. Sure, if it’s a good outcome for the employee to work with you to get things implemented fine, but it still stings a bit that someone from the outside was trusted more than an invested employee before any traction occurred. See also: “let’s hire a consulti…

I don't control the situation I've walked into and the events preceding, but I can control the outcomes. I'm not there to take credit for other people's work, but if management isn't on board with their ideas, I can oftentimes help to frame the message so it will be better received. If the "rank and file" is willing to work with me, I'm going to bend over backwards to make sure they have a seat at the table and that…

This is a really refreshing and inspiring approach, and it speaks to the importance of "tactically deployed empathy." You're one of the good ones :)

Do you have any recommendations on resources/articles/books, either for "rank and file" trying to ensure their messages are framed well, or for consultants or others who find themselves in situations helping ideas to cut through the noise?

I'll share one that I've found incredibly helpful in the past: "Never Split The Difference" by Chris Voss https://www.amazon.com/dp/B014DUR7L2/ref=dp-kindle-redirect?...

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

#274

Post by MFLoon »

TrackerFF wrote: post #263
MFLoon wrote: post #200

Sort of a buried lede here. There's nothing shocking about overpriced, underdelivering consultants. But the bit about how the GSA is essentially profit sharing with said overpriced consultants at the expense of the rest of the government and taxpayers, via the IFF incentive structure, is pretty mind blowing. Another brilliant financial "innovation" by the Clinton Administration that's been quietly burning billions of…

McKinsey, Bain, BCG, et. al. are all extremely close to state and industry in all countries. I'm from Norway, and every now and then someone will publish articles about the governments exorbitant use of consultants (McKinsey at that) for seemingly menial tasks which should be handled internally. Truth is, these management consulting firms have some very good advantages to keep their business model going: 1) Their alm…

Yea, I don't doubt they would remain closely entangled with the US Government even if we changed the IFF incentive structure. But even so, the present incentive structure is particularly perverse because it's creating a positive feedback loop. The GSA has ~$40 billion yearly revenue because of the profit sharing model, which it is incentivized to continually increase, and the consulting firms don't even need to lobby for bigger contracts, the GSA itself lobbies for them.

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

#275

Post by TheMagicHorsey »

I don't know much about this article, but Matt Stoller wrote one of the most garbage articles about Netflix a while back, where he claimed Netflix has a monopoly on online TV show production.

I think he lacks analytical rigor and basically bangs on a keyboard with strong emotions.

Having said that, McKinsey consulting services really are 90% a finishing school for Ivy League liberal arts majors so they can move onto real work.

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

#276

Post by sfuller808 »

iudqnolq wrote: post #259
sailfast wrote: post #223

Earlier quoted context omitted.

GSA gets a cut of contract purchases that go through them but this makes sense because it incentivized them to be better alternatives than an agency’s own contract shops. Typically working through a GSA schedule like this can lead to faster turnaround and lower prices - nobody can charge the government more than their best commercial customer, legally, under this framework. If you don’t get value, put your own RFP on…

Thanks for providing the background on how this came about, it makes a bit more sense now. Could we get the same result by allocating the GSA a flat amount based on what they need and then penalize them by cutting the budget if no one uses their services, just like we do for other agencies?

No, the structural/legislative design of the GSA protects it from penalties because most of Gov't procurement is routed through its offices both Military (with caveats of course) & Civilian. The GSA spends money to reduce spending.

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

#277

Post by b0b10101 »

throwaways66722 wrote: post #112
mips_avatar wrote: post #43

Earlier quoted context omitted.

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 data scientist (basically a consultant who codes). Can answer this after following some colleagues who have left and seen many technical teams at clients for my general role. Most data scientists... don't know what to do. And most clients... don't know what to do with them. So they do little data science projects and build dashboards that few people use. Coming out of McKinsey you can quite confidently say y…

I'm guessing your at QB then???

How do you find the split between guys like yourself and the more traditional consultants?

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

#278

Post by dctoedt »

crazygringo wrote: post #217
alistairSH wrote: post #167

Earlier quoted context omitted.

Right up until you realize the 23 year old snot who made the recommendation billed ~$3 million against your ~$100k salary.

If you look at entry-level consultant salaries at McKinsey and then divide by the fact that they're often working 7-day, 100-hour workweeks... you'll quickly discover that your "23 year old snot" is actually making around minimum wage on an hourly basis. They could be flipping burgers instead with a lot less stress. The consultants aren't the ones taking the money home, the firm is. So don't blame the 23 year old. He…

The 23 year old is hoping to become a partner someday and then really rake in the bucks by leveraging successive new crops of 23 year olds.

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

#279

Post by iudqnolq »

sfuller808 wrote: post #276
iudqnolq wrote: post #259

Earlier quoted context omitted.

Thanks for providing the background on how this came about, it makes a bit more sense now. Could we get the same result by allocating the GSA a flat amount based on what they need and then penalize them by cutting the budget if no one uses their services, just like we do for other agencies?

No, the structural/legislative design of the GSA protects it from penalties because most of Gov't procurement is routed through its offices both Military (with caveats of course) & Civilian. The GSA spends money to reduce spending.

Interesting. I was discussing hypothetical possibly better arrangements, however, it's clear from the original article that the GSA doesn't currently operate this way.

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

#280

Post by ramblenode »

bumby wrote: post #244
ndarwincorn wrote: post #227

Earlier quoted context omitted.

I get the impression you're over-simplifying this and grasping for whatever assumption you need just to try to make your point. While some of us have run with my oversimplification, there are plenty of comments in this sub-thread about down-selecting. Your answer to that is a giant assumption on what the article (which again is rigorously sourced) 'implies'. > The article also implies other contractors are also liste…

If anything, my intent was to guard against the oversimplified conclusions by adding some nuance. I concede the point that it's larger than just McKinsey. But it seems like people are extrapolating to make a point that the government is forced into picking between just a few favored firms. That point is central to the author's larger theme about the politics of monopolies. The issue I have is, while there seems to be…

I was also wondering this. There seems like a pretty good case for the headline, but the more interesting question from the article is whether funding the GSA through some alternative (appropriations) would save the government money compared to the IFF. Which may come down to the kind of behavior the IFF incentivizes, whether it be corruption or self-serving yet legal optimizations. The information you provided about the base rate would have benefited the article by giving some idea of the scale on which the GSA operates.
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