Before we fill you in on the topic at hand, the first thing that we want to stress is that a career in consulting can be awesome. Making it to Partner is a real accomplishment. Likewise, life as a Partner can be extremely compelling: a steep compensation trajectory; the ability to work with senior leaders from Fortune 500 companies and/or private equity firms; a continuously changing landscape with no two days ever alike; a peer group that is arguably unparalleled in business; and much more. Yet, as all consultants know, while a career in consulting can be a dream come true for some, it is not a good long-term fit for everyone.
Over the past decade, the Charles Aris strategy team has placed more than 350 strategy candidates in corporate America, private equity and professional services firms. We speak with individuals from the top consulting firms every day, and over the course of thousands of conversations we’ve been asked a lot of questions. The most popular question we are asked? “How much money am I going to make when I leave consulting?” (For more information on that, please see our Annual Strategy Consulting Compensation Study and our Mid-Year Offer Report).
But the second most popular question is: “If I know I am going to leave consulting, when is the right time to do so?”
And it’s a good question. Fact is, there is no perfect time to leave consulting. There are arguments which can be made across all timetables. However, after placing and tracking the careers of more than 350 former consultants, we can share our opinion: You should leave consulting and make the transition to industry as soon as two things are true: (1) You’ve learned the core elements of the consulting toolkit and (2) you are confident that you don’t want to become a consulting Partner.
Let’s explore each of these factors a little further:
1. You’ve learned the core elements of the consulting toolkit.
The first two to three years of consulting are effectively a boot camp for how to think analytically, and in a structured and logical manner. That experience is difficult to replicate in the corporate world. Most consultants learn the fundamentals of the consulting toolkit within the first two to three years at the firm. That’s not to say that you don’t continue to learn new skills in years three, four, five and beyond; the difference is that what you’re learning in the latter years can also be learned in corporate America at a similar rate.
Think about the skills you focus on developing in years three, four and five in consulting. The big ones are team management, client management, storyboarding and cracking the case. In corporate America, you’ll do largely the same things. You’ll manage cross-functional teams; you’ll work on the most pressing strategic issues in the company, typically assigned by its most senior executives; and you’ll be expected to present to teams of senior executives. In fact, the exposure to senior executives in corporate America is typically more pronounced than in consulting, as you are likely working with the executives on a day-to-day basis.
In short, the learning curve in consulting (as with any career) eventually starts to flatten out and takes on a rate similar to what you’ll experience in corporate America.
2. You’ve made the formal decision that you do not want to become a Partner.
If you think there is even a 25 percent chance that you’ll want to push for the Partner promotion, we encourage you to stay in consulting. But if you’re confident that you don’t want to become a Partner, then our advice and guidance is to exit the firm sooner rather than later. There are three reasons as to why:
1. The P&L Fallacy: By far the biggest fallacy we’ve encountered is the belief that the longer you stay in consulting, the easier it is to get to manage a true P&L. In fact, if anything, the opposite is true. Here’s why: While corporations like the thought of former consultants serving in P&L roles, they won’t put you into that role immediately. Quite simply, you need to learn their business and they need to learn you. Therefore you’ll need to serve in a functional capacity, typically the corporation’s strategy group, for two to three years prior to rolling out into a P&L role. As you might imagine, most corporations won’t test your mettle by giving you the largest P&L to manage. Instead, they’ll want to start you with a smaller P&L to make sure that you’re comfortable taking the reins before they give you the big one. Here’s the challenge: Every P&L role comes with a compensation budget (i.e., what they can pay the person running the P&L) and the smaller the P&L, the smaller the compensation budget. If you join a corporate strategy team at a senior level, odds are that you already earn more than what the entry-level P&L roles will pay. We’ve seen countless individuals find themselves stuck in a strategy group with no place to go, simply because they earn too much money for the entry-level P&L positions.
2. Golden Handcuffs: You all know what we’re referring to … compensation in consulting is at such a steep trajectory that eventually you will truly price yourself out of many corporate opportunities (not to mention future P&L opportunities – as discussed above). Will you eventually find a role that suits your compensation needs? Yes, but it will likely take more than six months, and you’ll be surprised by how few organizations can afford to bring you on board at your current rate of pay. You’ll either spend a long time looking or you’ll be forced to take what can amount to a significant pay cut. (Important note: The corporate compensation curve will eventually re-intersect with that of consulting, and even surpass it (thanks to equity grants), but you’ll likely take a short-term cash compensation hit when you leave consulting.)
3. The Pyramid Effect: The vast majority of companies are shaped like a pyramid, meaning that there are fewer Vice Presidents than Directors and fewer Directors than Managers, etc. Additionally, most companies strive to promote from within, and for obvious reasons. Clearly, there is less risk in hiring a Vice President from the inside who already knows the business and has been accepted as a leader, as opposed to someone from the outside who will start from scratch. Our experience is a good example of this phenomenon: Charles Aris Inc. has completed more searches for Managers than Directors, and more searches for Directors than Vice Presidents. The obvious result is fewer opportunities at senior levels, meaning that the longer you stay in consulting, the smaller the pool of relevant opportunities.
Life as a consultant can be terrific, and the decision to leave consulting is never easy. But if you make the decision to leave when the two reasons above are true, it will help ensure that your postconsulting career reaches its full potential.
Thanks for reading!
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