This is spot on. There isn't anything inherently difficult about what entry-level professionals (as defined in the article) get up to. You'll be doing powerpoint slides or reading documents until you fall asleep, but it's a skill that many, many more people have than are needed. Basically anyone can bone up on a few accounting ratios (what is xyz technical term?), read a book about brainteasers (100 people on an island...ugh), and read the general news (tell me something interesting?).
So who do you pick? You have all these well-educated, similar people. So of course you go for the ones you like. You ask them stupid brainteasers and stock questions (what's your greatest weakness? Where do you see yourself in 5 years?) and just see who will say something you like. They are just as capable as the ones you don't like. This is also the reason you need to have gone to a top uni: why bother looking for a skill that everyone has? Nobody ever got fired for hiring IBM.
Oh, one exception: the children of the powerful. A buddy of mine worked in investment banking and there were a number of kids whose parents were CEOs of known firms, or other important people. Those kids are going to be able to do the job at hand as well as the future job of getting business. It does tighten the pyramid for the other capable kids, but they know the game.
Contrast that with a job where the skill is roughly as available as the demand. Where it is possible that the random guy off the street cannot do it (eg iOS developer). What do you do then? Well, now you can't just show up to the interview unprepared. You need to spend time asking real, discriminating questions (How do optionals work in Swift?). You also might need to balance your opinion about the person's character with your need to have that skill in house.
For entry-level positions, you're absolutely right.
But the authors fail to mention that these firms have turnover approaching 50% per year for new employees. As a new employee fresh out of college, they work you like a dog and wait for those who can't hack it to quit. The first two years are screening for work ethic (though by "work ethic", they mean how much of your life you're willing to sacrifice to the job).
And likability is the core criteria because not only are these professional jobs, they are professional service jobs. As in you work directly with clients. So it's a huge asset to the firm if you're a likable person because you'll have better client relationships that lead to you selling more work.
I've worked in management consulting for a while and that's just the game. Executives at large companies almost invariably have consulting backgrounds themselves, so they know how it works.
My experiences during my first job at an investment bank were very similar to with what you described. I was surprised by how high the turnover was, but also by how easily it was to get re-hired. It seemed very common to switched to another firm for a few years and then decide to come back.
Upon reflection, I definitely felt that the first few years were a test to see how much of your time you were willing to let the job consume. There was overt pressure to work long hours and come in on weekends, but ultimately people who wanted to maintain better balance between work and personal time ended up leaving of their own volition rather than being forced out.
I don't think it's so surprising that personality and likability are valued so highly for entry-level hires. These institutions are so large and bureaucratic that there's a real limit to what one person can do, especially early in their career.
I know what a consultant is, and I know what a manager is... But I'm not sure I know what a "management consultant" is.. You sound like a contractor who shows up and tells managers better ways to do their jobs? If that is true, why don't they ask you why they should trust your opinion over their own?
You don't tell them better ways to do their jobs, you tell them what they want to hear and provide political cover for them to do what they wanted to do anyway. If you're a CEO and you want to make a change, consultants will sell you data and benchmarks and best practices to back you up when you need to sell it to the rest of the execs and the board.
Say you're a successful startup founder. You're technical, good at raising money, and good at getting your team to deliver a high-quality product on time.
Fast-forward 10 years, and now you're a pretty big company. You want to start manufacturing your product yourself instead of sending that work out to someone else. Do you know anything about managing a manufacturing operation? Say you want to acquire a company. Do you know anything about integrating it?
Do the 20-something-year-old MBAs know either? Gosh, no. But they can whip up a MECE and crunch some numbers in their heads which look totally plausible.
I think it provides some value, but I am not a huge fan. In my experience, the devil is in the details and the failures come during the implementation, and the management consultancies in the Marvin Bower tradition explicitly side-step implementation.
No, the 20-something-year-old MBA doesn't know. But the 50 year old partner who the MBA works for is likely a world-class expert who has done this a dozen times. And if he's not, he usually knows someone who is that can be brought in to advise - at a price, of course. The partner is usually the one who sold the work and has the trust relationship with the client. So it fucks with the partner's money if the MBA delivers shit work. Management consulting is an apprenticeship business, so the partner is incentivized to make sure the MBA learns how to do things quickly so he can be billed out at higher rates, develop his own relationships with clients, etc. Do that for long enough and you can be a partner pulling in $10 million a year too.
Most big management consulting firms these days also do both management consulting and system integration. The margin on management consulting work is sick, but the projects aren't that big (a few million dollars over a couple months). The margin on implementation projects is much lower, but the projects themselves can be enormous (think hundreds of millions over several years). So you're fucking your implementation guys if you deliver an unimplementable plan. And in a partnership model, if the implementation project fails, the partner who did the management consulting piece of the work still takes a hit.
The 20-something MBA is just a conduit for the knowledge and experience of the firm and its partners. Their job is to take the established rules and apply them to the customer's specific problem.
That is also a practical reason why consulting firms hire from Harvard and care about SAT scores. Getting a 1600 SAT doesn't mean you're a good manager. It's probably a good indication you're good applying abstractions to concrete situations.
Management consultants typically don't have specialized expertise. They are generalists with good pedigrees, which makes them trustworthy in the eyes of their clients.
Management consultants often get called in to vet risky projects management is considering. The idea is that if a trusted outsider OKed the project, and it fails, then management at least didn't act irresponsibly in undertaking it. There's a surprising amount of ass-covering in this world.
The other scenario is when a decision needs to be made that will inevitably hurt someone in the company, so it's hard to find an impartial insider. This is why management consultants get pulled in for re-orgs, for example.
It's not true that management consultants don't have specialized expertise. You start out that way when you join, but develop specialized expertise as you go through your career. I actually joined consulting from industry, so I was brought in specifically because of my knowledge of technology and development.
You might be thinking of strategy consultants, which are a rapidly-disappearing subset of management consultants. They often deal with very high-level problems such as "our company's market position is disappearing; what adjacent markets can we move into?" You then get an answer that may not be the one you were looking for, such as "you should look to sell the company while your value is high". But this is often backed up with a dizzying amount of thorough analysis, so it's not just some random guy telling you something.
Basically, yes. But management consultants are often brought in to look at a group or a process, break it down with a defendable methodology / framework, and recommend improvements based on the client's goals. Most management consultants also bring in systems integrators to implement the recommended changes. The margins on systems integration projects aren't nearly as high, but the volume of work is usually higher (a management consulting project is usually under $2 million, while systems integration contracts can go into the hundreds of millions of dollars).
Much of what I've been doing recently has been helping development organizations at large companies convert to "modern" management practices. Things like bringing your ops folks into the dev team as DevOps, how to structure teams to manage automated testing, planning how dev environments (i.e. CI environments) should be structured and used so that continuous delivery is an option down the road, etc.
I happen to focus on software development and technical operations because that's my background, but there are people doing this for manufacturing, shipping, call centers, etc. There is sort of an "ideal way" (aka "best practices") for most companies to do most things. HN might cry "No there's not!" but this is actually true because most of our clients are too big to really be innovative. It can be hard for an insider to see what's working and what isn't. Also, because I move from client to client relatively often, I get to see how a lot of different companies do things, so I can bring perspective that someone who only works at one company all the time can't.
And usually, it doesn't matter if the manager trusts my opinion or not. Either myself or someone else from my firm has developed a trust relationship with someone higher up in the company (usually a VP who has a discretionary project budget) who has brought us in to help. The core of the business is trust: that's why you have to be a likable person capable of building lasting human relationships. It's in both parties' interests to maintain these relationships; the consultant uses them to sell work, and the client uses them to solve problems. It's a win-win.
Your investment banker scenario is pretty interesting. Given what a single large deal can mean to the firm, hiring the kid of a CEO at a big company you hope to work with one can could almost be seen as a form of lead-generation or a business development cost. The high salaries paid to a junior iBanker are nothing compared to the revenue from a successful deal, plus that new hire is hopefully competent and contributing to the firm's success (and one day sourcing their own deals).
> Given what a single large deal can mean to the firm, hiring the kid of a CEO at a big company you hope to work with one can could almost be seen as a form of lead-generation or a business development cost.
It's actually seen as bribery and is illegal. From [1]:
> U.S. authorities are examining whether JPMorgan violated anti-bribery laws by hiring the children and other relatives of well-connected politicians and clients in China in exchange for having business steered to the firm,
That doesn't actually make any sense. If 100 people can do the job, why pick the people you like the most instead of the ones who are willing to work for the least? Why filter it down to 10 people based on pointless criteria and then pay them all a bunch of money? You're essentially assuming that professional services firms are irrational.
The reason these firms don't screen for knowledge is that they don't care what you know, they care what you can be taught. These are fields where you can't learn the job without actually doing the job, and where relative skill often matters more than absolute skill.
1) Signalling. Look at my fantastic management consultancy. All my people have Ivy League degrees.
2) These people are (In Thiel's words) indefinite optimists. They don't know what they want. They could do anything. There's plenty of other boring jobs they could do. You have to pay up. By contrast, iOS dev guy needs an app company.
3) A lot of these firms run pseudo-monopolies. It costs a LOT of money to get a bank license. There's only 4 big 4 firms left, and you can't have Mickey Mouse as your auditor. The magic circle is not getting bigger. Monopoly profits means you can pay over the odds. You can have a hiring strategy that is basically just a burnout factory. More hamsters will come.
Because they hire for likability for a reason. If the client likes your people, and your people are good at talking to people, the client will be more likely to hire them.
Professional services margins are already so huge (think 200-500%) that what you pay your employees is almost irrelevant to the bottom line. Thus, these careers are highly lucrative and usually pay 10-20% more than the exact same job in industry.
Why does it make any sense that these jobs with ridiculous numbers of qualified candidates would "get to be" the 1%, as opposed to those others you mention (iOS developer)?
Not asking you specifically, lordnacho. Just a question to the universe that's probably as useful as asking "why me?" whenever anything at all happens. Still though.
iOS dev guy does not tie his self image to his net worth. You can buy his services with an interesting job. He also is not a hard bargainer, and just giving him enough to be comfortable will work.
Finance guy has been told his whole life to work hard. He goes into finance because he can't think of anything better to do (why don't interesting companies go to recruitment fairs? WTF?), but he does have this one trump card which is he went to Harvard. Having no particular interest, he goes for the highest paying job.
"One candidate in Ms Rivera’s sample passed the interview by adopting the persona of a successful consultant that he knew at that firm. Even if you do not go that far, you must at all costs avoid appearing nerdy or eccentric: there are plenty of jobs with tech companies for those types. The old-fashioned belief still prevails that playing team sports, especially posh ones like rowing, makes for a rounded character....
This overwhelming emphasis on style rather than substance may seem an odd way to select members of the 1%. But those at the top of the consulting, investment-banking and legal professions know that the most prized possession in uncertain times is not brainpower, but self-confidence. For all the talk of the world becoming dominated by a 'cognitive elite', in reality it appears it is nothing more than a 'confidence elite'."
It would seem that someone with a past in one of these firms who actually had a good 'fit' there would make a poor fit for most tech startups. [1]
So then I back look at this sentence, "The top ranks of governments and central banks are sprinkled with Goldman Sachs veterans. Technology firms, though they are catching up fast, have nothing like the same grip on the global elite."
Our tide is rising, and they can wait in their confident complacence. They'll never see it coming.
Yes, the hacker ethos will easily create more wealth than this posturing dreck. But only if all that productivity is directed towards the right problems. And often those problems are not profitable-looking ones---which means you probably won't be working on them as an employee. As an academic, or independent, perhaps, but hopping onto craigslist doesn't net a whole lot of world-changing opportunities. And it's in those very opportunities that there's enough froth to upset the established order.
Our tide is rising even within these firms. If you look at their strategies it's now all about diversity and the power of combining different viewpoints. They are not looking for diverse stakeholder managers, they understand that the new economy is driven by people who in the past they would only meet by chance in a lab as they were inspecting a factory. And they want some of these people (potentially the least capable? I cannot judge, I am one), because it's all about client relationships, and you have to fit with the clients, not your peers. Compare that to a few years ago, when even dress code was more or less a uniform. I don't want to disappoint you, but they are not complacent and they have seen it coming since the last 10 years. These organisations are built to their core to manage shifts like that. Whether they will succeed this time is to be seen. But they have weathered such changes in the past, usually boosting their performance out of the broader change.
Is it a uniquely American thing, this weird school with a caste system based on football?
I went to international school, and I noticed the kids who were playing the popularity game tended to be Americans. The ones who liked to say who was in and who was out. The ones who wanted to be cool, the ones who watched all the right shows and wore all the right clothes. It was a really strong influence on the other kids, and it was particularly Americans who'd recently arrived.
Since it was an international school, not everyone bought in.
I grew up in the U.S. but moved around a lot, and most schools I went to were like PG described.
All except for my high school, which was predominantly immigrant (majority Russian/ex-Soviet bloc, minority Asian; parents were mostly geeks as well), which culturally felt a lot like Silicon Valley: nerdy, eccentric, and optimistic about the future. Unsurprisingly, there's non-trivial overlap because many of my friends from high school moved out here for work or to start companies.
I'm not sure if it's uniquely American. I think the secondary school social system is based in the individualistic culture of American society at large, and may appear in other countries with a similar individual emphasis.
In many cases, American children (at least in my region of the country, growing up in the late 1990's & 2000's) are told that they are exceptional at a young age by their parents/mentor figures. This article sums up the environment nicely.
I think a desire to fulfill this expectation of individualized achievement can lead adolescents to pursue peer approval as an activity unto itself, the so called "trying to be cool," you may have observed.
MANAGEMENT consultants, investment banks and big law firms are the Holy Trinity of white-collar careers. They recruit up to a third of the graduates of the world’s best universities.
I believe the ratio is far higher in English speaking, white countries as they can freely join Wall Street and the supporting infrastructure.
The ratio is lower in non-English speaking countries like Asia.
Thus we have the strange shift of R&D and manufacturing (especially manufacturing) to Asia where brightest graduates end up in industries other than management consultancy, investment banking, and law firms.
Soon the new manufacturing centers will wonder why they have to hire Wall Street when that can be done elsewhere? Especially like in China.
I know I will get flak for this but the 3 career paths are not good for the nation, while it may be good for the few who are in the top 1%.
While SpaceX and Tesla and Apple are great, it's not enough.
I've been hired as an investment banker, and hired as an investment banker, and I can tell you this is nonsense.
The IB interview process does a very good job of screening candidates for mastery of basic skills -- if you don't have a very strong grasp of accounting, valuation, free cashflow, and so on, you will not get an offer.
After passing those competence hurdles, yes, personality and fit questions do matter.
I'm guessing this problem is similar to the one I vaguely recall reading about regarding Google: Almost everyone who applies has the intellect required to perform well at Google. That's why intelligence isn't a good criteria for recruiters at Google to use as a differentiator.
I would guess the same thing applies here (please correct me if I'm wrong, given your experience) -- almost all the folks who apply will have a fairly solid grasp on accounting, valuation, etc. (the technical/knowledge parts), especially if they're coming from Harvard/Stanford/et al.
Therefore, since "knowledge" isn't a very good differentiator (everyone who gets a resumé on your desk is competent), folks in these prestigious positions have to filter for something else -- and it seems they've chosen "fit".
Most applicants can't get past the competence checks.
Candidates who could get past the competence checks could get dinged for fit questions, but there weren't so many of them that we could be terribly choosy. Maybe Goldman can be. There just aren't that many people who are that smart, that skilled, and that willing to work that hard.
Now that's entry-level. Who is promoted and succeeds, that's a different question. Fit questions matter a lot more there. But even then I think the key skill was the ability to see problems from a client's perspective, and from a senior banker's. The folks who can execute with those perspectives in mind, those are the ones who do very well.
Investment banks, at least at the entry levels, are meritocracies. If you can understand what it means to deliver, and deliver, you'll do well. But that understanding is trickier than it looks.
Now there is a networking effect to this process. But it's more about getting information about what skills the banks will be looking for, and where to get that information, and the standards that they're looking for. This stuff isn't written down in manuals, you have to extract it from other people. If you don't know that stuff, you don't know what targets you have to hit.
It's just not true that almost everyone who applies to Google has intellect required to perform well. Easily 50% of people who gets to onsite loop are not able to do Fizzbuzz. Phone screens are just sad.
If you think that everyone who applies to IBs has solid grasp on accounting, valuation, etc - you are way overestimating average Ivy League student.
Actually, no don't do it. I am interviewing for vacationers lately and many people seem to be doing that. It may work with some interviewers, but for me it looks very acted, kind of creepy and in any case irrelevant. If you want a tip for management consulting interviews, act like if you are ready to work, discuss your thought process, ask questions where you don't know something, say something that demonstrates imagination, knowledge or creativity and maybe even act a little by getting on the whiteboard as you would in a meeting. If you got the interview you are halfway there, I am assuming HR has already filtered for the best. The interviewer past me will assume even more.
This is more or less what happened when I was hired for my current (tech job): I was asked about a real life problem by the interviewer (my soon-to-be colleague/manager) and I explained how I would have dealt with it (my thought process etc..).
I asked question when I didn't know something, and I also wrote an email few hours/one day later confirming my interest for the company and adding a couple of things that could have not been clear during the interview about my skills.
And when I went there for the second interview, as I had studied a bit more on their real problem, I had the opportunity to add few more thoughts on it.
> Whether in consulting, investment banking or the law, firms use revenue-generating staff rather than human-resources people to decide who has the right stuff.
This is one of the positive aspects of professional services recruiting that I think other companies should emulate. It's crazy that engineers have to get through non-engineer filters to get hired.
The takeaway is not that HR is involved, but that engineers are not seen as "revenue generating."
To rather too much corporate management, engineering is a blue collar job. It happens to require computers instead of metal and power tools, but it's still not "revenue generating" in the strategic, legal, or financial-industries sense.
Obviously not all management is like this. But there's still a whiff of working-with-your-hands contempt for engineers from many people who work primarily with money and power. And the cultural differences, and differences in motivation, shouldn't be underestimated.
If you send your resume to GS or any IB and expect revenue generating stuff to review it, you are up for surprise. HR people are there as a filters because they are cheaper than engineers and are actually OK with reviewing hundreds of resumes per day. I attended several "pick this pile of resumes and find good candidates" events and I will sooner commit suicide than do it every day.
I was always under the impression that the HR people were there to get you to want to join if you got an offer, not to determine whether you would get hired or not.
I'm half convinced that telling everyone you only hire the elite is actually to convince everyone working for you that they are elite and in turn will perform better. IMHO it's the same reason that Google has those crazy interviews and claim they only hire the best. It's motivational bullshit.
Although, I have my suspicions that this article is designed as click-bait, I will add my 5c:
"Those at the top of the consulting, investment-banking and legal professions know that the most prized possession in uncertain times is not brainpower, but self-confidence."
"The most important quality recruiters are looking for is “fit”: they would sooner choose an easy-going person with a second-class mind than a Mark Zuckerberg-type genius who rubs people up the wrong way."
This is exactly why these industries are ripe for disruption. Unfortunately, medicine/healthcare operates like this also to a large degree. The world will be in infinitely better place when this changes and second rate poseurs are replaced by legitimately competent and valuable alternatives.
either that or get into politics. between the power that writing laws and regulations, to enforcing them, you can gain a lot of support. then to top it off with a generous retirement that many public servants get you could have just a great time.
I do tire of the idea of that only people who excel in business comprise the one percent, far too often those who write the laws do nearly as well economically
So who do you pick? You have all these well-educated, similar people. So of course you go for the ones you like. You ask them stupid brainteasers and stock questions (what's your greatest weakness? Where do you see yourself in 5 years?) and just see who will say something you like. They are just as capable as the ones you don't like. This is also the reason you need to have gone to a top uni: why bother looking for a skill that everyone has? Nobody ever got fired for hiring IBM.
Oh, one exception: the children of the powerful. A buddy of mine worked in investment banking and there were a number of kids whose parents were CEOs of known firms, or other important people. Those kids are going to be able to do the job at hand as well as the future job of getting business. It does tighten the pyramid for the other capable kids, but they know the game.
Contrast that with a job where the skill is roughly as available as the demand. Where it is possible that the random guy off the street cannot do it (eg iOS developer). What do you do then? Well, now you can't just show up to the interview unprepared. You need to spend time asking real, discriminating questions (How do optionals work in Swift?). You also might need to balance your opinion about the person's character with your need to have that skill in house.