How top consulting firms lost their edge in the job market

In recent years, the management consulting industry has experienced a seismic shift in its appeal to top talent. Once considered the pinnacle of corporate success, consulting firms are now grappling with increased employee turnover and a waning allure among young professionals. This article delves into the factors contributing to this trend and explores the implications for both the industry and its workforce.

The Golden Age of Consulting: A Brief Look Back

For decades, consulting firms like McKinsey, Boston Consulting Group (BCG), and Accenture were synonymous with prestige, high salaries, and unparalleled professional development opportunities. Fresh graduates and MBAs flocked to these firms, eager to gain exposure to various industries and hone their business acumen.

The promise of consulting was clear: work on challenging projects, interact with top executives, and fast-track your career. As one former Accenture consultant shared, "I became a whiz with tools like Excel and Tableau and I learned how to speak to executives".

The Cracks Begin to Show: Disillusionment Sets In

However, the reality of consulting work has begun to clash with the expectations of many young professionals. The same Accenture consultant who initially praised the learning opportunities later expressed frustration with the nature of the work:

"A lot of junior consultants don't realize how many of these projects are actually already what I call 'predestined,'" she explained. "There's an end destination, but you kind of have to go through the motions, and that's just super demoralizing for the people on the team".

This sentiment is echoed across the industry, with many consultants feeling that their work lacks genuine impact or innovation.

The Great Consulting Exodus: Why Talent is Leaving

1. Seeking More Fulfilling Work

Many consultants are leaving the industry in search of more meaningful and impactful work. The tech industry and startups, in particular, have become attractive alternatives.

Jyothi Vallurupalli, a former McKinsey consultant who transitioned to venture capital, explained her decision: "When I was leaving consulting, I realized VC would allow me to partner with passionate founders across various industries from the early days of their journeys, and I saw it as an opportunity to contribute to building something meaningful".

2. Changing Perceptions of Prestige

The prestige associated with consulting firms is no longer enough to retain talent. Gorick Ng, a Harvard University career advisor, noted that many students intern at consulting firms but choose not to return for full-time roles. He observed that students are increasingly asking themselves, "Is this a day-to-day that I would find fulfilling, and is this something that I can really see myself doing long term?"

3. Industry Challenges and Cutbacks

Recent challenges in the consulting industry, including layoffs and delayed start dates for new hires, have contributed to its declining appeal. Matt Sternberg, a former BCG managing director and partner, expressed concern about the impact of these cutbacks:

"I worry they have started to erode their culture," he said, adding that some firms also pulled back on benefits.

4. The Remote Work Dilemma

The shift to remote work has also played a role in diminishing the appeal of consulting. A Reddit post from a Big Four consultant in London highlighted how the lack of in-person interaction has made the job less enjoyable:

"Constantly tapping away from in front of my screen on my kitchen table in a shared flat is more depressing than 1,000 cringe pizza parties".

The Changing Face of Consulting Careers

From Lifetime Career to Stepping Stone

Younger consultants are increasingly viewing consulting roles as a stepping stone rather than a lifelong career path. Ezra Gershanok, a former McKinsey consultant who founded a startup, now runs internships for college students interested in consulting. He noted:

"When I was an interviewer at McKinsey, one of the pillars that they would hire for was entrepreneurship".

However, many of his interns ultimately seek opportunities in startups or other industries after gaining consulting experience.

The Lure of Tech and Startups

The tech industry and startups have become major competitors for consulting talent. These sectors offer the promise of innovation, autonomy, and the potential for significant financial rewards.

Atli Thorkelsson, who helps startups recruit at Redpoint Ventures, observed a shift in founders' preferences: "I'm seeing less excitement from founders about workers who have consulting on their résumé than there had been around 2017 to 2018".

The Industry's Response: Adapting to New Realities

Continued High Application Rates

Despite the challenges, consulting firms continue to receive a high volume of applications. A McKinsey spokesperson reported that the firm plans to hire fewer than 1% of applicants, with about 1 million résumés received each year.

Similarly, Ernst & Young received over 4 million applications in the past year and hired about 140,000 people. These numbers suggest that consulting still holds appeal for many job seekers, particularly those early in their careers.

Rethinking Culture and Benefits

To address the talent exodus, consulting firms are reevaluating their culture and benefits packages. Some are exploring ways to offer more flexible work arrangements and opportunities for meaningful impact.

Emphasizing Long-term Career Development

Firms are also focusing on showcasing the long-term career benefits of consulting experience. They're highlighting success stories of former consultants who have gone on to leadership roles in various industries.

The Future of Consulting: Challenges and Opportunities

As the consulting industry navigates these changes, several key challenges and opportunities emerge:

Attracting and retaining top talent: Firms must find new ways to appeal to a generation that values work-life balance and meaningful impact.

Adapting to remote work: The industry needs to reimagine how to deliver its services and maintain team cohesion in a more distributed work environment.

Demonstrating value: Consulting firms must clearly articulate their value proposition to both clients and employees in an era of increased scrutiny.

Embracing innovation: To stay relevant, the industry needs to incorporate new technologies and methodologies into its practices.

Fostering entrepreneurship: Firms may need to create pathways for consultants to pursue entrepreneurial ventures while remaining connected to the firm.

The consulting industry is at a crossroads. While it continues to attract a large number of applicants, it faces significant challenges in retaining top talent and maintaining its prestigious image. As one former consultant reflected on leaving the industry, "That part was scary, to be honest".

However, this period of change also presents opportunities for innovation and growth. By adapting to the evolving needs and aspirations of its workforce, the consulting industry can redefine its value proposition and continue to play a crucial role in shaping the business world.

As the industry evolves, both consultants and clients will need to reassess their expectations and find new ways to create value in an increasingly complex and dynamic business environment.