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Do McKinsey and other consultants do anything useful?

daftandbarmy

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They hate us 'cause they ain't us.

Thought bubble: cunning of McKinsey to get that kind of product placement, for free ;)


Do McKinsey and other consultants do anything useful?​

Though hated, they often provide a valuable service to the economy​


If a list were made of the most reviled species in the professional world, only investment bankers would stand between management consultants and the top spot. Sceptics portray these corporate consiglieri as snake-oil salesmen, bamboozling chief executives and politicians with management gibberish and glossy charts while gorging on fat fees. Indeed, the profession was once the subject of a five-season skewering in a star-studded tv series. Its title: “House of Lies”.

Recent events have provided even more reasons to hate consultants. “When McKinsey Comes to Town”, an exposé published on October 4th, drags its subject through the mud with evidence of decades of scandalous behaviour. On September 30th prosecutors in South Africa brought criminal charges against the firm. (McKinsey says the book is a misrepresentation and denies the charges brought against it.) Its two big rivals, Bain & Company and the Boston Consulting Group (bcg), have also faced controversies. In France President Emmanuel Macron has come under attack after an inquiry this year found the government had spent $1bn on consulting firms with “tentacular” links with the state.

Despite evidence of dubious conduct, business has never been better. The big three firms’ total revenue has tripled since 2010, to about $30bn; the trio now employ around 70,000 people. That implies revenue per employee of over $400,000, hinting at juicy pay packets for the people at the top. By comparison, the figure for the big four accountancy firms—Deloitte, pwc, ey and kpmg—is a comparatively meagre $140,000.

What explains the boom? A shroud of secrecy makes it hard to calculate how much value the industry adds: few bosses or politicians would credit consultants for a successful turnaround. As a result there is a widespread view that all consultants are parasites and those who hire them are fools. In fact the firms have grown because they provide two services that bosses want—one more economically beneficial than the other.

The first is an outside opinion. When firms or governments make decisions, it can pay to buy in rigorous analysis. The danger is that this becomes a self-protection racket. When bosses want to push through controversial decisions, from firing staff to breaking up a firm, a consultant’s backing can bolster their credibility. And legitimate scrutiny, whether from political opponents or board directors, can be easier to dodge using consultants’ reports in pleasing fonts with scientific-looking tables.

The second service is unambiguously good, both for the people in charge and the wider economy: making available specialist knowledge that may not exist within some organisations, from deploying cloud computing to assessing climate change’s impact on supply chains. By performing similar work for many clients, consultants spread productivity-enhancing practices.

One defence against an explosion of bogus advice would be better disclosure. Companies are already required to reveal how much they spend on their auditors and on investment bankers’ fees on deals. The sums that individual firms spend on consultants often exceed this, running into the tens of millions of dollars a year, and should be made public too.

So far the industry has escaped the formal rules that govern lawyers and bankers. If it wishes to keep it that way, it should adopt a second measure: a code of conduct that all responsible consultancies adhere to. They should eschew providing advice that helps bigwigs at the expense of the institutions they run, or helps autocrats oppress their people. They should also police the revolving door between government jobs and consultancies. Consultants have much to offer, but also much still to prove.

 
More on Mckinsey and its more than cosy relationship with the Trudeau Liberals


Excerpt:

McKinsey, the pedigreed consulting firm that has been plagued by a series of conflict-of-interest scandals spanning several countries, has been practically wedded at the hip to Mr. Trudeau’s government since the firm’s then-global managing partner, Dominic Barton, was picked to head up Ottawa’s advisory council on economic growth in 2016.

Out of the supposed generosity of its heart, McKinsey provided pro bono research support to the council. We are told that this had absolutely no influence on the Trudeau government’s subsequent awarding of a string of multimillion-dollar contracts to the firm, including, as The Globe and Mail reported last year, a $24.8-million deal to advise the Department of Immigration, Refugees and Citizenship Canada (IRCC) on
“transformation strategies,” whatever that means.

So we are going to hire more civil servants and hire more consultants to help them? I need to get into this game.
 
So we are going to hire more civil servants and hire more consultants to help them? I need to get into this game.

Where public servants don't know how to procure or manage consultants properly, chaos and waste usually ensues.

The need for experienced staff, who are good leaders, is of paramount importance to governments getting their money's worth out of any contractor.
 
Where public servants don't know how to procure or manage consultants properly, chaos and waste usually ensues.

The need for experienced staff, who are good leaders, is of paramount importance to governments getting their money's worth out of any contractor.
Alternately, asking the opinion of experienced staff who are good leaders should be of paramount importance on issues within their area of expertise.

We frequently bring contractors in to get 'outside opinions' on things we already know about, and then spend a lot of time explaining the context of how the government works to them. That's great when we are talking about something the GoC doesn't do (ie build ships) but there are entire departments for PR, financial reviews etc.

Contractors should fill gaps in PS experience knowledge, not duplicate SMEs.
 
Contractors should fill gaps in PS experience knowledge, not duplicate SMEs.

Sadly, due to poor leadership cultures and gross underinvestment in professional development at all levels, sometimes those 'special skill' include facilitating great solutions from their front line staff, and suppliers and clients, as an objective third party.
 
Sadly, due to poor leadership cultures and gross underinvestment in professional development at all levels, sometimes those 'special skill' include facilitating great solutions from their front line staff, and suppliers and clients, as an objective third party.
I've lost count of the times we've already done the analysis, sent it up in details (with a simplified BN coverpage) and then we still brought in consultants anyway. Off the top of my head, the same work we did in 3 months cumulatively, took over a year of 3rd parties, cost north of $1M, and came to the same conclusion.

They had more details (which is easy when you don't have a 2 page limit) and better graphics (which again is easier when you have access to more than than ppt for making graphics), but still came to the same conclusion.

I think that's a different kind of poor leadership; after a year of that I realized they really didn't value our expertise so stopped trying to be proactive (other than proactively just fobbing it off to a contractor).
 
Only $100M?

Pfffft.... rounding error level stuff ... ;)

MPs will call 7 cabinet ministers to testify on $100M in contracts awarded to McKinsey

Parliamentary committee asks for all contracts, invoices awarded to firm since 2011

Seven senior cabinet ministers will be called before a parliamentary committee to explain why their departments have issued more than $100 million in consulting contracts to McKinsey & Company since the Trudeau government came to power in 2015.

The news comes after Radio-Canada revealed that the Liberal government awarded $66 million in business to the firm — a number that rises to $100 million when new contracts, signed in recent months, are included in the total.

McKinsey, an American firm with 30,000 consultants in 130 offices in 65 countries, provides advice to both private and public entities. In the nine years of the Harper government, McKinsey was awarded $2.2 million in federal contracts.

MPs on the House of Commons government operations and estimates committee said they also want to hear testimony from the most senior McKinsey executive in Canada and from McKinsey's former global managing director Dominic Barton.

Barton, who worked for the firm for 30 years, left in 2018 and was appointed Canada's ambassador to China in 2019. Barton held the position for two years before leaving to join the mining firm Rio Tinto.


 
Something definitely smells off here. So on average 12 million a year or so, I wonder if that is across all departments or a limited few.

I’d be curious to see what those contracts entail exactly.

And the fact that Barton somehow gets an ambassadorship to what is a very critical embassy? Yeesh.

Édit: ok, just saw that 34 million was with DND. Apparently DND has the highest use of this firm.
 
Something definitely smells off here. So on average 12 million a year or so, I wonder if that is across all departments or a limited few.

I’d be curious to see what those contracts entail exactly.

And the fact that Barton somehow gets an ambassadorship to what is a very critical embassy? Yeesh.

Édit: ok, just saw that 34 million was with DND. Apparently DND has the highest use of this firm.
I suspect that DND has been beaten into risk aversion by it's "own goals", and a media constantly looking for a juicy defence story. If they bring in consultants they can at least say they went outside to get a sober second look at whatever it is they are doing.

It's taken me a while to really come to grips with how risk adverse the CAF/DND is, but it is staggering.
 
Only $100M?

Pfffft.... rounding error level stuff ... ;)

MPs will call 7 cabinet ministers to testify on $100M in contracts awarded to McKinsey

Parliamentary committee asks for all contracts, invoices awarded to firm since 2011

Seven senior cabinet ministers will be called before a parliamentary committee to explain why their departments have issued more than $100 million in consulting contracts to McKinsey & Company since the Trudeau government came to power in 2015.

The news comes after Radio-Canada revealed that the Liberal government awarded $66 million in business to the firm — a number that rises to $100 million when new contracts, signed in recent months, are included in the total.

McKinsey, an American firm with 30,000 consultants in 130 offices in 65 countries, provides advice to both private and public entities. In the nine years of the Harper government, McKinsey was awarded $2.2 million in federal contracts.

MPs on the House of Commons government operations and estimates committee said they also want to hear testimony from the most senior McKinsey executive in Canada and from McKinsey's former global managing director Dominic Barton.

Barton, who worked for the firm for 30 years, left in 2018 and was appointed Canada's ambassador to China in 2019. Barton held the position for two years before leaving to join the mining firm Rio Tinto.



Stand by for the Government to threaten to sue Parliament (again)…
 
Alternately, asking the opinion of experienced staff who are good leaders should be of paramount importance on issues within their area of expertise.

We frequently bring contractors in to get 'outside opinions' on things we already know about, and then spend a lot of time explaining the context of how the government works to them. That's great when we are talking about something the GoC doesn't do (ie build ships) but there are entire departments for PR, financial reviews etc.

Contractors should fill gaps in PS experience knowledge, not duplicate SMEs.

Often the consultants are brought in by new bosses because they/he/she doesn't know enough to interact with their new department - so they hire a consultant to write them a primer to bring them up to speed. Good ideas abound and must be implemented to justify the expense of training the boss otherwise they won't be promoted and moved on in two years.

And in two years time the next boss will demand another study.
 
Lots of standing offers are in place for professional services for the Federal government. It's relatively simple to do call-ups as the qualifying competitive process is already done.

Not to say that there is no payrolling done...
 
Lots of standing offers are in place for professional services for the Federal government. It's relatively simple to do call-ups as the qualifying competitive process is already done.

Not to say that there is no payrolling done...
The NSS one was funny; we ended up getting the guy that previously run the UK NSS to 'advise' our government, the Aussies got the guy that was largely behind our program to advise them on their version, and the UK apparently asked some folks from other countries to do the same.

It was funny because they seemed to have more influence on other countries as consultants then they did when they were in senior executive positions on the program they were trying to get/keep going.

Largely ended using similar 3rd party experts as well, and speaking to them ignoring internal expertise is common.
 
Largely ended using similar 3rd party experts as well, and speaking to them ignoring internal expertise is common.

I'm always amazed at how alot of senior leaders don't know how to talk to their staff, in a 'How's it going?' kind of fashion, and building their feedback into various going forward plans.

If there's one thing the CAF could teach the 'Non-CAF' sectors it would be along the lines of getting your ass out of your office and talking to the troops in the trenches... where that's done well in the CAF of course ;)
 
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