The Consulting Division of an Audit Firm (#241)

In this podcast episode, we discuss what it is like to work for the consulting division of an audit firm. Key points made are noted below.

Selling Requirements

There are many differences between the management consulting group and everyone else in an audit firm. One of the key differences is the need for way more sales activity. In auditing and tax, you may pick up a new client and then stick with it for years, so it’s recurring business. On the consulting side, projects tend to be discrete – which means that they happen once and then they’re done.

So, consultants are expected to dig a lot harder to find new business. Otherwise, the department runs out of projects and people get laid off – so there’s quite an incentive. Where possible, the senior managers and partners will try to work their relationships to get a sole source deal for a consulting project. That way, they don’t have to bid against any competitors, so their prices are higher. But a lot of the time, the consulting staff has to respond to a request for proposals document that’s issued by a prospective client.

Which means that a large difference between working in consulting, versus or audit or tax, is that you’ll become very good at writing these RFP responses. You could be involved in several dozen of them each year. Some firms have a group of specialists who only respond to RFPs – they don’t do any other work.

Project Size

Another key difference is the size of the projects. On the consulting side, there’s a lot of overhead cost involved in responding to RFPs, and of course you may win only a fraction of these bidding contests – which means that the size of the projects being considered needs to be large. It’s just not cost-effective to even bid on a small project. Instead, you want to park a bunch of staff on a consulting project for a long time – preferably a year or more.

For example, when I used to work at Ernst & Young, the most famous consulting project was a massive redo of the computer systems for Farmers Insurance. The project ran for way over a decade – so long that at least one person spent his entire career on just that one project. Those projects make a lot of money.

Which brings up the issue of what kinds of projects can last a really long time. Historically, these have been related to information systems. A consulting group loves these projects, because it takes forever to define the project specifications, write the software, test it, and roll it out. Yes, this means that a lot of hard core IT types work in the consulting division. But not everyone. They hire lots of accountants, because they need people to work on system specifications relating to accounting, as well as people to help roll out the software, which means writing training materials and training people on how to use the software.

Special Projects

Accountants are also needed for any number of special projects. For example, I was involved in examining the cost accounting systems for a slaughterhouse – which also wiped out any interest in eating sausages for about ten years. I also worked on the accounting procedures for a national health club chain, any number of software selection projects, and even did a best practices review of the administration of a college. So the work is quite varied. But in general, the work tends to focus on large systems projects.

Types of Personnel Needed

What kinds of people are they looking for? If the consulting group has landed an IT project, then they’ll need to staff it up with a lot of software developers. To do that, they could possibly recruit from colleges. But most of the time, they want more experience, so they won’t appear on college campuses. Instead, they’d rather hire you maybe five years into your career.

This delay in hiring isn’t just about getting more seasoned recruits. There are two other factors. One is that clients will hire a consulting firm based on the quality of the resumes they include in their RFP responses. And someone fresh out of college doesn’t yet have much of a resume. Instead, they need someone who’s piled up some accomplishments that makes them look impressive on paper. This is not a small matter. In some of these bidding competitions, there isn’t really much of a difference between the competing consulting firms, other than the quality of their staffs.

This has an odd side effect, which is that some consulting departments are very heavy on managers and very light on junior staff. And that’s because clients are willing to pay for managers – they want their projects to succeed, so they hire the very best. Some clients don’t even want to see junior staff on their projects.

Promotion Track

As you might expect, this means the promotion track in consulting is quite different from auditing and tax, where you start at the bottom and work your way up. In consulting, you’re more likely to come in as senior staff or a manager, and then start working your way up.

Travel Requirements

I had mentioned that there were two factors involved in delaying the hiring of consulting staff. The first issue was waiting for people to gain experience. The second issue is to not wait too long, because then people start settling down, buying houses, and having kids. And that means they aren’t willing to travel. And consulting is all about travel. You go where the work is, and the work could be absolutely anywhere. For example, I was based out of Denver, but almost never worked there. Instead, I was in places like Seattle, Houston, Kansas City, and San Antonio. And some much smaller places, like Denison, Iowa.

And then there’s the weekend commute. You typically head for the airport mid-afternoon on Friday, so you’ll get home later in the evening on Friday. And in many cases, you’re expected to be back at work Monday morning, so you have to fly back on Sunday afternoon. Which means that you only get Saturday completely off. And in other cases, there’s not enough of a travel budget to go home every weekend, so you’re expected to stay on-site, sometimes for months.

Now the travel may sound hard, but it’s actually kind of fun – for a certain age group. I would say the prime age range for consulting is from 25 to 35. During that time, living in different parts of the country feels more like an adventure than a burden. After that age range, not so much. I did consulting for five years, and enjoyed it most of the time.

Partner Requirements

The criteria for partner are different from what it takes to be an audit or tax partner. In consulting, the ability to sell completely overwhelms every other skill. And in addition, partners never really stop working – they’re always on call. A friend of ours is a consulting partner, and almost every time we take her up into the mountains for a ski trip, she’s in the back seat checking e-mails and doing conference calls. Because of the heavy workload and travel, a lot of partners retire well before the mandatory retirement age.