Consulting is Back
The MBA Tour has surveyed our client schools about the 2006 consulting market and all are reporting increased hiring activity from consulting firms. Schools considered traditional avenues for consulting continue to experience strong consulting recruiting. Wharton is reporting that at least 26 percent of the class of 2006 will choose consulting over a low of 19 percent in 2002. London Business School (LBS) reported a 40 percent increase in 2005 over 2004 with hiring activity on par with 2005 in 2006. At some of the top schools, consultancies no longer have to be "pursued" by placement directors. All a good sign that next year's graduating class at the top schools could find consulting companies arriving earlier on campus if the economies remains strong in North America and Europe.
Also interesting is that consultancies are increasing their recruiting presence elsewhere. While McKinsey has recruited at schools like NYU and Cornell for example, they are elevating schools like Cornell to priority recruiting schools. The Judge Business School at Cambridge reported 35 percent of its MBA class going into consulting with twice the number of consulting firms recruiting on campus since 2004. Georgetown also saw a similar increase in firms recruiting on campus of 50 percent.
This is all good news for applicants looking to finance their MBAs with a career in consulting. While the traditional consulting schools are reporting heavier recruiting activity, consulting firms are looking elsewhere to attract top notch students. So long as the demand for consulting remains, schools will see the same or higher level of activity next Fall. If campus recruiting happens earlier, that is the first indication of another strong season. Salaries are also increasing
Salaries are also on the rise especially for the top schools where recruiting for the best students is very competitive. While they have not reached the pre-2001 year-over-year increases during the Internet bubble, some schools have reported sign on bonuses and guaranteed year-end bonuses that can increase the base salary by as much as 50 percent.
Wharton reports a modest increase over 2005's median salary of $110,000. With sign on bonuses and guaranteed year-end bonuses, starting compensation in consulting can increase to nearly $150,000 at a top-notch firm. In reviewing salaries of graduating MBAs, most schools are reporting the same or slightly higher salaries as last year. However a slight increase may indicate a possible cooling of the market. In fact, first year class sentiment at one top school indicates fear of just that as many of them rushed to secure summer internships, the best strategy for securing a full time position upon graduation.
Getting an Offer
Landing a starting position at a top-notch consulting firm out of business school is challenging.
Consulting firms spend huge amounts of money recruiting and hiring professionals. The most competitive
firms have a rigorous process for "weeding out" candidates. For many firms there are three pipelines for
hiring, and each has its own level of risk.
- Former Consultants. This pipeline consists of former Analysts hired from undergraduate programs. This group has a strong appeal for consulting firms as they have a track record working in the profession and understand the culture and work ethic. They tend to know how to interview, as they know what will be expected of them once they return. This is the lowest risk group especially for those returning to their former consultancies. Those who choose another firm will undergo a similar evaluation process as other pipelines but their risk of failure is considered low.
- Summer Interns. This pipeline consists of students landing an internship. For US students in traditional two-year programs, internships are offered over the summer between their first and second year. This is a "try and buy" pipeline. For those interns obtaining an internship and achieving a good track record on a project or case team, it is almost as good as being in the first pipeline. Sometimes, top-performing US interns will return to their second year with an offer in hand.
- Graduating Second Years. This pipeline is the toughest for anyone. MBA School grades, GMAT scores and recommendations all count. With no track record in consulting, you could be at a disadvantage for hiring at the top firms unless you are a stellar student, or something else about you makes you an attractive candidate. Language proficiency and international work experience are key differentiators especially when combined with relevant and meaningful work experience and demonstrated leadership. Direct experience with a major client or industry is considered relevant work experience. Meaningful work experience would be experience that the consulting firm could easily leverage with an existing project or client.
If you are interested in a consulting career, but have no experience in consulting, you need to decide early to improve your chances of landing a position at a top firm. This is a tough, demanding profession with long hours. While short-term success at lower level positions requires good analytical and organizational skills, long-term success is a result of good selling skills to colleagues and clients.
The Interview Process
The interview process is designed to weed out candidates that are weak analytically. There are three hurdles that consulting firms may throw at you. The first is a case interview. This is designed to test your thinking ability and to determine how well you approach a problem. Getting the right answer is not the objective. They want to see how you think. For example, if you were asked to estimate the market size for pool balls in the United States or Europe, you would do better by avoiding a market estimate before demonstrating how you would arrive at that estimate. The best consulting prospect, outlines his or her approach and then derives an answer with the information provided by the interviewer. If information is not forthcoming from the interviewer from questions, make your own assumptions and justify them with anecdotal evidence or known factual evidence. It may sound obvious, but many prospective students fall into the trap of deriving an answer without being able to justify it. Many firms post case examples on their web sites. Get to know them.
The second barrier and much less common is an analytical test. This may be a short analytical test that simply measures your math ability. Scores from analytical tests if used are only a threshold indicator, meaning those scoring below a relatively low score are eliminated from the interview process.
The third and final barrier and most important is the personality profile. Here is where you need to make sure you are working for a firm that fits your personality. Whether you are choosing McKinsey, Bain, or Deloitte, they all have their own cultures. Make sure your personality matches their culture. How they decide if you match their culture is really a subjective decision, but here is a general framework you might use for interviewing in consulting.
Consider each profile to be a data point on you to be discovered in the interview process. Some, but not all of these profiles are detected in the case interview. "We have seen a significant increase in the number of consultancies wanting to recruit on campus with many
calling us up to ask to come on campus, rather than us having to chase after them."
Associate Director, Consulting
London Business School
"The school (Johnson) has been making numerous changes over the last few years …these changes are visible from
the tremendous increase in the number of students the school has been placing in consulting firms over the
last 4 years. Just in this year, McKinsey, BCG and Bain together gave out 15 offers for full-time; which
is a great achievement considering we have one of the smallest class sizes and generally have a smaller
percentage of the class interested in consulting than most other schools."
Cornell's Johnson School
"Along with other top-tier business schools, NYU Stern School of Business is definitely benefiting from
the consulting industry's renewed interest in hiring MBA talent. We work very closely with our alumni
in the ranks in the industry, which is an asset for our students interested in pursuing careers in
consulting. This recruitment season (2005-6), we're tracking ahead in terms of the number of
interviews conducted and offers received for consulting positions compared to last year."
Career Services and Student Activities
NYU Stern School of Business
"The strategy courses offered at Tepper (Carnegie Mellon), combined with my interview case preparation,
have recalibrated my approach to solving business problems. I've sharpened my skills in isolating business
problems and identifying the core levers for adjustment. I am returning to a career in consulting, but
now I have the advantage of new analytical abilities and a more solid understanding of a range of business
"The 'case-versus-fit' interview dichotomy proved to be false. They're both fit - the case reveals how you
attack a problem and how you think. They want to see if your innate approach fits theirs. Similarly, firm
culture came out loud and clear in the interview. I was quite thankful that our second year class had prepared
me to field these differences so well. Our school's placement office has done a great job building
relationships with the top firms. My school's success in consulting this year reflects the placement
office long-term focus with the firms."
Graduating Second Year