The consulting industry is incredibly diverse in its nature of work, with many niches and specialized sectors. Consulting is an advisory service and in the business world can cover every aspect of business operations, from tax to logistics.
It can be confusing to understand the differences between what kind of work is done by the various types of consulting firms. Management and strategy consulting, in particular, are often confused. However, there are some key differences in the projects they take on, their working hours, and salaries.
At the highest level, strategy consulting is the "What" and management consulting is the "How". Strategy consultants focus on the big questions and strategic vision of a company whilst management consultants focus on the execution on an operational level. Nevertheless, they are interconnected and often rely on each other.
Overall, organizations hire consultants to deliver unique projects that they cannot deliver with their in-house skills or capacity. These projects are usually centered around changes in the organization such as technology implementation, organizational restructuring, digital transformation etc. Working with consultants helps them to gain access to specialized knowledge and efficient, flexible resources to achieve their goals.
This article by our expert Agrim introduces you into both management and strategy consulting and discusses the differences between the two.
Companies hire consulting firms for a variety of reasons, including expertise, objectivity, efficiency, flexibility and cost savings.
🧠 Expertise: Consultants bring specialized knowledge and skills that may not exist within the company. They can provide expert advice on a range of topics, from business strategy to technical solutions.
🔎 Objectivity: Consultants are often able to offer an unbiased perspective on a company's challenges and opportunities. They can provide an outside perspective that may be difficult for internal staff to achieve. Consultants have the advantage of being able to look at the entire client organization in a cross-sectional view. This allows them to see areas of growth and improvement that would otherwise be invisible to internal management through the various layers of hierarchy.
📈 Efficiency: Consultants can often complete projects or tasks more efficiently than internal staff. They are typically highly focused and able to work quickly and effectively.
🤸♀️ Flexibility: Consultants can be brought in for specific projects or periods of time, allowing companies to quickly scale up or down as needed without the burden of hiring full-time staff.
💸 Cost savings: Hiring consultants can often be more cost-effective than hiring full-time staff with similar expertise. Additionally, consultants can help identify cost savings opportunities within a company.
Consulting firms are generally categorized in MBB, Big Four, Tier 2 and boutique consultancies. MBB – McKinsey, Boston Consulting Group (BCG), and Bain & Company – are known as the ‘Big Three’ of the consulting industry. They are the most competitive and well-established consulting firms in the world. These top consultancies are accompanied by numerous other firms that compete for the same kind of projects. Roland Berger, Strategy& and Oliver Wyman are some of them. Additionally, there are the Big 4 – Deloitte, PwC, KPMG and EY – that are mainly audit firms however with a consulting practice included.
👉 Get into more details about top consulting firms worldwide!
To put it in the simplest manner possible: Strategy consulting is the business of advising other businesses on strategic topics.
There are four parts to that sentence.
Let us take a deeper look at this:
At the start of each consulting project will be the strategy phase. This is working with C-suite executives to research and prioritize the highest value strategic project to maximize value for shareholders and business growth (usually profit margin or revenues).
The most common point when companies hire strategy consultants is when a new CEO is appointed. The CEO will want to set a strategic vision for their tenure, usually a 5-year timeline, in order to meet a business target such as growing revenues by 20% in the next 5 years. Strategy consultants will then work with the executive to decide the best way to achieve those goals based on competitors, market conditions, etc. Once the strategic direction has been set then it will fall to the business and potentially management consultants to implement the strategy.
Strategy consulting projects are much shorter than the implementation phase and typically last 4-8 weeks. This means they are often fast-paced and heavily research-based.
Strategy consulting requires a strong aptitude for problem-solving and arithmetics as well as out-of-the-box thinking and high adaptability. Excellent people skills, time management, and organization are also skills required from top strategy consultants so they can quickly engage with multiple stakeholders within a business to extract the information they need to make robust decisions.
The ultimate goal of strategy consulting is to give clients a clear path to more market share and a competitive edge in their industry.
Some examples of projects a strategy consultant might be engaged in are:
I will give a short list of sample projects from my own experience - perhaps that can give you a good understanding:
Management consultants analyze a company's structure, operations and strategies to pinpoint areas for improvement or are hired to solve specific and urgent problems. Their goal is not just to identify problems but also to recommend and sometimes implement solutions in further projects. By addressing weaknesses and leveraging their business acumen, consultants aim to drive positive change and optimize business outcomes.
At the heart of management consulting is the word 'management'. Consultants tackle high-level business issues that concern CEOs, chairpersons and boards of directors. Their role involves taking charge of management in particular areas to help organizations overcome challenges, enhance value and foster growth. They bring fresh outside perspectives, tested strategies and innovative ideas to improve overall business performance.
Management consulting includes various specialties tailored to address specific needs within organizations. For instance, if a company faces financial challenges, it might seek assistance from a financial management consultant. Rather than a one-size-fits-all approach, these consultants focus on specific areas of expertise within a business.
Management consultants focus on implementing change in an organization and that can be improving existing operations or implementing strategic change (usually preceded by a strategy).
The typical management consulting project involves the following steps:
Steps 1-6 can be done by both strategy and management consultants. However, management consultant expertise typically tends to lie in implementation, as outlined in step 7.
Some examples of projects a management consultant might be engaged in are:
Management consultants can be specialized in various business areas and so have a deep understanding of their respective fields of work. For example, consultants at IBM specialize in cloud solutions, and consultants such as Accenture and the ‘Big Four’ offer consulting services across risk, tax, people, and technology with each practice area only delivering projects in their respective area. Across the board, quantitative and problem-solving skills are required as they are for strategy consulting. However, for management consultants excellent communication and interpersonal skills are even more important as they typically work side by side with employees from the client on difficult topics such as process change.
Some of the biggest management consulting firms are IBM, Accenture, and the ‘Big Four’ (Deloitte, EY, PwC, and KPMG), however keep in mind that MBB for instance also carries out management consulting projects. The strategy and management consulting divisions of Big 4 are same as MBB. These companies hire competitively and deliver high-quality services, implementing innovative and sustainable solutions to their clients across a broad variety of industries.
👉 Click here for more information on what a consultant does at Deloitte, PwC, KPMG and EY.
Jobs in every consulting sector are very coveted and sought after. This has several reasons:
Salary
Consulting offers some of the highest salary packages for a given age and experience in the market. With post-MBA base packages ranging around $150k, it is surely an attractive option for people. Bonus amounts range from 20% to 60% of base pay depending on the firm, your level, and your performance.
Perks
Besides the attractive pay, you get to enjoy some creature comforts and perks such as hotel stays, free flights, free cabs, free food, all the miles and points that come with it, network opportunities in exciting industries.
People
Strategy and management consulting attract the smartest people from the crowd. You get to work with such similar minded people, and everyone helps in pushing each other to their limits. Your professional and intellectual growth in consulting will be much faster and better than in other jobs.
Progress
Consulting firms place immense focus on learning and development. Most of them conduct bi-annual appraisal and review cycles where they identify your areas of development, and then you get to work on those going forward. Consulting firms even train you for the next level if your promotion is coming up soon.
Pressure
Consulting involves dealing with CXOs, Ministers, and vastly senior decision-making authorities. When advising such people, pressure is imminent. You also get tremendous exposure and learning when you speak to such people. Understanding how the senior folks think is one of the best learnings I have gotten from my experience with BCG.
Progression
Strategy and management consulting also have one of the fastest promotion cycles in the market. Typically you get promoted to the next level every 2-3 years. Consulting firms such as MBB also employ an “up or out” policy. If you cannot secure a promotion within the specified window - you are better off working elsewhere. However, tier-1 consultancies have dedicated departments that help secure your next job. The thought process is NOT that you are not good, but instead, it is considered that you are better suited for a different job.
Strategy consulting and management consulting are both types of consulting services, but they focus on different areas of a company's operations. While there is some overlap between the two types of consulting, strategy consulting is more focused on long-term planning and big-picture thinking, while management consulting is more focused on successful realization of the strategic vision that strategy consulting lays out.
Strategy consultants help create a strategic vision from a blank canvas, including a company’s goals, direction, and approach to competition. They typically work with senior executives to help them develop and refine their strategic vision, identify growth opportunities, and make decisions on major investments, partnerships, or acquisitions.
Management consultants, on the other hand, focus on helping companies maintain and achieve the strategic visions - often tweaking it along the way. They work with a wide range of teams and departments within a company to help them optimize their processes, reduce costs, and improve performance. This can include everything from improving supply chain management to streamlining HR processes to optimizing IT infrastructure.
Strategy consulting is often a one-way road - with consultants offering a strategic blueprint. Management consulting is about constantly working to iterate it and make it a reality with the management of the client.
As strategy and management consulting are interrelated, there is often a 'handing over' point in the project from strategy to management. This can create difficulties and implementation challenges. To overcome this, firms such as PwC for example have acquired strategy firms to be able to offer an end-to-end consulting solution from strategy through to execution. Another example is McKinsey: They founded their own implementation unit called McKinsey Implementation.
Often we use the terms strategy consultant and management consultant interchangeably in the industry. MBB consultants are often called by both names. In fact - they are referred more frequently as "management consultants" - but they do more of strategic work.
The hours in consulting, as with most corporate career paths, are infamous for being long. They can range per day, depending on the nature of the ongoing project.
Strategy consultants aim to provide the expertise and resources needed to solve business problems such as those mentioned above. The nature of these projects can often be short due to strict deadlines, but of high intensity, so can result in longer working hours for the duration of the project.
In contrast, management consultants are often employed for longer-term projects involving the implementation of new strategies for a client organization and can last for 6 months to more than a year as consultants work closely with their clients to ensure a smooth transition period during the solution implementation.
However, it is important to note that the working hours of both strategy and management consulting are variable and can change depending on the nature and complexity of the client’s project. Whilst these times can give an average estimation, they are not an exact answer. Additionally, many other factors can affect working hours in consulting such as location, client demands, travel requirements, and firm expectations.
In general, strategy consulting firms tend to offer higher entry-level salaries than management consulting firms. This is because strategy consulting requires more specialized knowledge and expertise, and the work tends to be more high-level and strategic. Moreover, strategy consultants charge higher prices for their work and this is reflected in salaries. However keep in mind that from a company perspective - let’s say MBB - salaries are the same internally, as there is no differentiation between strategy and management consultants in the same consulting firm.
An analysis of 60 of the top consulting firms in the world suggests that on average, strategy consultants can expect to earn 23% more than management consultants. This is due to a combination of longer working hours and also the complexity of work attracting higher prices.
According to industry data, entry-level consultants at top-tier strategy consulting firms can expect to earn starting salaries in the range of $80,000 to $110,000 per year, while entry-level consultants at management consulting firms may earn starting salaries in the range of $60,000 to $80,000 per year.
The difference in salaries is apparent even between firms that have both strategy and management consulting practices within their service offering. Salaries are aligned to market rates and therefore consulting graduates in the same firm will likely experience differences in starting salaries.
It's important to note that these are general ranges and that salaries can vary widely depending on the firm, location, and other factors. Additionally, consulting firms often offer other benefits and perks, such as signing bonuses, performance bonuses, and opportunities for advancement, that can impact the overall compensation package.
👉 Learn more about consulting salaries in our blog article.
Have a look at our articles on consulting salaries in specific markets to find out what you are able to make in your specific area.
👉 Consulting Salaries in Germany, Austria and Switzerland
👉 Consulting Salaries in the US
👉 Consulting Salaries in the UK
👉 Consulting Salaries in France
👉 Consulting Salaries in Singapur
👉 Consulting Salaries in Canada
Entry-level salaries for management and strategy consulting can vary depending on a variety of factors, including the consulting firm, location, and the candidate's qualifications and experience.
Being a management or strategy consultant comes with many advantages, however not without challenges. Let’s have a look at some of them:
Struggle To Find a Work-Life-Balance
It is a well-known fact that work-life balance is a prominent challenge in consulting. Long working hours, unpredictable schedules, last-minute rush, weekend work - the lot. However, things are not that bad - there is always a bias to public opinion. It is a ship that could be navigated with minimum damage if managed well. A consulting job with zero personal compromises is tough to find. See it as an active process that you have influence on to some extent. Consulting is a marathon profession, not a sprint profession. Good managers and partners always ensure that the team’s voice is heard. If you stick to your principles, you will slowly gravitate toward people with similar practices, and hence you will be able to carve out your own niche in the organization.
Handling High Pressure
High and time-related pressure is also a challenge for consultants. You’ll be expected to achieve certain results in a specified time frame, which requires a certain level of performance on your side. As this will be communicated very clearly, you should adjust to the expectations. Nevertheless, keep up with your mental health and physical health. There are ways to tackle both. And I am more than happy to share tips with anyone keen on it. The idea is to not take too much to heart and always voice your life’s priorities.
Handling Criticism
More often than not, consultants are subject to allegations of a wide nature from multiple parties. The two main critics are the following:
For consultants deciding to exit the industry and use their experience in other fields, it can be confusing to determine the next step. As almost everything is within their reach, it can be difficult to calibrate what is the best opportunity to take. The options in front of you are endless. I will list down some of the exit paths taken by people in my network thus far, and you will see why:
People have started their own companies – ranging from a podcast agency, a yoga Youtube channel, a B2B e-commerce marketplace, a merchandising firm, a health-tracking app, a fantasy league company… and whatnot.
You could join any budding startup position. Consultants are perceived to have a high horsepower compared to candidates from other walks of life and are thus ideally suited for startups. I will not even list examples here, as the list can be anything you imagine.
Product Management roles for example in technology corporations are scooped up by many consultants looking for their next step out. Departments such as Corporate Strategy, Business Development, and Financial Planning and Analysis make for a good target.
Private Equity, Venture Capital, and family offices are also attractive choices – albeit the openings in the sector are generally limited.
Again, the sky is the limit regarding your choices on this. Some people do independent consulting, while some even go for a completely different line, such as coaching here on PrepLounge.
Besides strategy and management consulting, there are lots of other possibilities to work in consulting. Here are some popular examples for your reference:
…and many other forms of advisory.
Determining which career is right for you, whether it's strategy or management consulting, depends on a variety of factors, including your skills, interests, values, and career goals. 🚀
Strategy consulting tends to be more focused on long-term planning and big-picture thinking, while management consulting is more focused on executing specific projects and initiatives. If you enjoy analyzing data and developing high-level recommendations, strategy consulting may be a better fit for you. On the other hand, if you enjoy working with teams to implement change and solve specific problems, management consulting may be just the right career option for you.
In addition to considering the nature of the work, it's important to consider the lifestyle and culture of each type of consulting. Both types of consulting can involve long hours and frequent travel, but strategy consulting often involves more travel and longer hours. Management consulting can also be more focused on operational details and require more hands-on work.
No matter what area of consulting you will end up choosing, it is imminent to take enough time and effort into your preparation for the case interviews. On PrepLounge, you are equipped with helpful materials like the case library, coachings from experts and opportunities to connect with fellow candidates on the meeting board.
