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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

#61

Post by joshgachnang »

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.

Yup, definitely true. I just got paid a fairly handsome sum for a one week gig at a large organization to write a report about a technical change. It was clear what the outcome was supposed to be and that the manager (who was just taking over some new orgs) already knew what they wanted to do, and just needed an external report to both bolster their decision and CYA. Luckily, what the manager wanted to do is also what I would have recommended, or it could have gotten a bit awkward.

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

#62

Post by [deleted] »

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.

[deleted]

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

#63

Post by creaghpatr »

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?

Brand has an impact, but I'd guess most alumni probably came in as already competent and ambitious, even if the projects during their tenure were mundane.

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

#64

Post by xvector »

txcwpalpha wrote: post #40
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…

>It seems like you’re just paying people for critical thinking. That's exactly what it is. Unfortunately most organizations, probably even ones like the NSA, really struggle with doing any kind of critical thinking on their own. This is especially true when trying to decide on a future direction for the org: the org itself is most likely biased to just doing things the way it's always been done. In that regard, havin…

Getting an outsider perspective - sure. That I can get behind, it can obviously be helpful.

But getting an outsider to tell you what to do? A complete overhaul? That’s a leap. You’re going from getting perspective to getting directed by an outsider. A recipe for disaster, and from what we’re seeing here, that’s exactly what has happened.

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

#65

Post by gowld »

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 is why consultants hire Ivy League graduates. To create a myth of "Ivy League" "quality" justifying the decisions they are hired to recommend.

The other thing management consultants do is industrial espionage -- they go into a company to learn how it work, and then advise other companies on how "industry leaders" operate.

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

#66

Post by crazygringo »

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 don't need to be rocket scientists.

But afterwards, nobody can say it's just your opinion any more. It's now expert analysis that you paid good $$$ for, and everybody who disagreed before now basically has to get on board.

So it's not even necessarily political "cover", but almost like a referee that brings enough credibility to settle otherwise intractable internal disputes.

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. (Just because they believed in the wrong strategy doesn't mean they still can't be super-valuable in the future in executing the right strategy.)

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

#67

Post by UltimateFloofy »

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.

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

#68

Post by txcwpalpha »

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?

> What skills are really developed as a management consultant?

Hard to answer because "management consultant "(MC) is really an umbrella term for a lot of different roles. One MC might gain quite a lot of experience analyzing the financials of mergers & acquisitions, and so they would develop those skills and be valuable to a company looking to acquire another. Another MC might specialize in projects doing market research for athletic clothes. A third might specialize in finding inefficient processes in a supply chain.

Outside of niche specializations like that, most MC firms (especially the 'elite' ones) work you really hard and expect you to be able to adapt very quickly to new types of projects. This requires a lot of dedication to your work (and willingness to sacrifice non-work obligations) and the ability to learn new things very quickly. If you survive that work for a few years, then, having something like McKinsey on your resume is more like a certification that you are willing to work hard and can learn quickly, which is obviously valued by a lot of companies.

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

#69

Post by surak »

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…

In all kindness, let me ensure you that experience is rarely gained until your forties. Early on we may feel on top and hold important positions, but it is not the same thing as understanding the other side. To gain wisdom, not there yet, probably take another 20 years.

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

#70

Post by Scoundreller »

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…

> that the average corporate worker bee is in fact not competent enough to do the most basic tasks, such as refer to documentation, without hand-holding.

I think a lot of this ability is selected-out or outright discouraged in a lot of environments.

If the new employee starts fixing broken things, they’re often crushed for stepping out of line.

And god help them if the problem becomes worse (caused by them or not) when it wasn’t their job to touch it.

New employee: why do we do X in Y way?

Veteran: because that’s the way we always did it

Reminds me of when I made my own way-finding signs for visitors. While my director loved it and wrote me a thank you card, that didn’t stop janitorial from ripping them down. While they were 100% helpful, they were 100% unapproved.

I still oil door hinges and clean some of the uncleaned areas myself. And fix other things that aren’t “my problem”, but it’s a fine line.

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