Google, Facebook and Amazon might grab more of the headlines, but consulting firms are still snapping up the most students at top business schools as they remain the largest recruiters, according to the latest MBA placement statistics.
Amid a surge of interest in technology companies, consulting’s enduring appeal — particularly that of McKinsey, Boston Consulting and Bain, or the “big three” — comes at the expense of finance and banking, which are still recovering from recession.
Recent surveys suggest little more than a third of those who enter consulting after graduation are still working in the field six to eight years later. However, MBA students continue to find attractive the high starting salaries — up to $145,000 a year — and the fast career progression offered by consulting firms.
Still, some observers worry the influence of consulting is now so great that it may be influencing business schools to serve the needs of the profession.
Among the schools to report placement statistics for their classes of 2015, Chicago Booth says the consulting sector has recruited 32 per cent of its MBAs, a rise of 4 per cent on last year and the first time consulting has come close at the school to toppling financial services.
Consulting firms hired the most MBAs at Dartmouth’s Tuck School of Business in 2015 for the second consecutive year. More than a third of its MBAs this year have entered consulting, with the big three snapping up 18 per cent.
“For the past few years, about a fifth of Tuck’s graduating students have gone to work for the big three consulting companies and this current recruiting cycle looks to continue that trend,” says Stephen Pidgeon, the school’s associate director for career development who joined McKinsey when he graduated from Tuck in 2007. “Consulting provides a very good match for the interests of MBA students in that it looks for intellectually curious people with a strong mix of hard and soft skills — a top business school is one of the best places to find a rich mix of these people.”
Throughout the financial crisis, Harvard Business School has placed a steady quarter of its MBAs in consulting. And its appeal is not restricted to the US. Insead reported that consulting firms hired 41 per cent of its 1,011 MBAs in 2014, more than a quarter hired by the trio of top firms.
A glance back at history suggests that in the early days of consulting it was the strategy firms that needed business schools to help legitimise their emerging profession. Now their influence spreads beyond recruitment. Joe O’Mahoney, senior lecturer at Cardiff Business School says several European schools, such as Grenoble and Cardiff, now run consulting modules. Others, such as UCD Smurfit, run MScs in management consulting while Lancaster invites Accenture consultants to teach on one of its MScs.
However, Prof Sturdy says that even if these services are on an MBA curriculum, good business school academics are not afraid to subject them to significant critique. “Even the best consulting firms rely on correlation rather than causality when selling ideas,” he says. “This problem would come up in any research methods class.” Prof Sturdy argues that consulting firms could contribute further to MBA learning by discussing more practical examples, but thinks they are hindered by their need to be associated only with success.
The top firms believe their relationship with schools is a win-win for both sides, but their lead recruiters are keen to stress their future as well as current recruitment needs. “We’d like MBAs to learn more about organisational dynamics and the science of decision-making,” explains Mel Wolfgang, head of global recruitment at BCG. “That would help clients absorb the work we do and change their decision-making for the better.”
Brian Rolfes, director of global recruiting at McKinsey, says client work continues to expand outside traditional strategy consulting and into implementation, restructuring, transformation and digital. “Clients are also looking for more specialised experience so people with a MBA and experience in certain functions or industries are more important than ever,” he says.
The mutual benefit has been most evident between McKinsey and Harvard Business School — so entwined that writer Martin Kihn coined the term McHarvard in House of Lies, his controversial book on consulting. Through its case study method, McKinsey helped bolster Harvard’s MBA, giving it real-world cachet. McKinsey still uses the case-based interview to recruit MBAs. “The case study method ingrains a consulting mindset on students from an early age,” says Andrew Sturdy, a management professor at Bristol University. “Harvard pioneered this method with the explicit support of McKinsey.”
In his unauthorised biography of McKinsey, The Firm, business journalist Duff McDonald writes that when Harvard president Derek Bok proposed jettisoning case study methods in 1979, McKinsey chief executive Marvin Bower wrote a 52-page retort. The proposal was scrapped. In return, Harvard acted as a breeding ground for future McKinsey consultants who understood the firm long before they started working there.
McKinsey became the first to focus on hiring business schools’ crème de la crème — at Harvard these were the Baker Scholars, the top 5 per cent of each class — prioritising youth and potential on the grounds that it was easier to mould a young mind. By the mid 1960s, at least two of every five McKinsey consultants had gone to Harvard. “The practice of hiring from top schools really took off when BCG started to compete with McKinsey for talent in the 1960s and 1970s,” says business journalist Walter Kiechel and author of Lords of Strategy, “and business schools had to demonstrate success in placing their students with the firms.”
In recent years, the big three have widened their search to a broader range of business schools, but the bulk of recruits comes from elite schools: Harvard, Yale, Kellogg, Duke, Wharton, Chicaco Booth, Michigan Ross, MIT Sloan, Tuck, Darden, London and Insead. Being top employers puts them in a strong, some would say dominant, position at some schools. “Consulting firms use greater resources than many other employers can,” says Prof Sturdy. “Business schools are not always effective in regulating this and [it] can crowd out other options.”