Consulting Rankings and how to use them as Consulting Buyers?

Key Takeaways

To get the greatest results, the consulting firm’s area of expertise must match the client’s consulting requirements.

It’s not easy to find a consulting firm that meets all your criteria, but it well worth the efforts.

It doesn’t necessarily mean that the most prestigious firms are best suited for your consulting needs. And as I always say, the best consulting firms for one thing are not always the right ones for your project.

Transcript

Hello and welcome back to Smart Consulting Sourcing, the only podcast about consulting procurement.

I’m Helene, and today I’ll be talking about consulting rankings and how to use them as a consulting buyer

But before we get into that, let me give you a recap about our previous episode which was about Building an effective organizational set-up to source the right consultants?

We went over the different options to set your organization to source consultants from do-it-yourself to outsource consulting procurement completely. And I also discussed why it was so important. You need the right foundation, your organization, to support your consulting sourcing capability.

But there is an ugly truth here: there’s no such thing as then right organization for consulting sourcing. Some organizational structures work really well for some companies, while for others, it might not work at all.  There are several ways to do it right, and it will depend on your resources, of course your culture, your existing organization and what you want to achieve.

But actually, the right solution for you might be a mix of these different options. Who knows? Did that make curious? If you want to learn more, just listen to our previous episode available on all the major streaming platforms.

However, today, I want to talk about consulting rankings and how consulting buyers can use them.

When you are sourcing consultants, it is sometimes hard to find new players. The industry is scattered and extremely diverse/ But you still have to build you list of preferred suppliers for the consulting category, right?

So, you might be tempted to look at consulting firm rankings to find the best ones in your industry. Is it a good or a bad idea? That’s what I wanted to discuss today.

What management consulting firms are the best? The problem is that there is no established criterion to determine if a consulting business is “excellent” so the answer to this question is not simple.

When you say, “Top consulting firms”, nearly everyone immediately thinks of the “Big Three”, the consulting firms with the highest prestige: McKinsey, BCG, and Bain.

But top or best are ambiguous terms, and there are numerous great consultants that provides their clients with outstanding services in the MBB businesses’ shadows.

But before we dive into the rankings, let’s take a step back. There are many consulting firms out there, from the large one-stop-shops covering multiple sectors and capabilities that include MBB but also Deloitte, EY, PWC and consorts. To the very niche consulting firms that focus on one capability in one industry

Top Consulting Firms in the world 2022.

You might think that working with the top-rated generalists Consulting firms would definitely solve your business problems, because they can fulfill all your technical needs. And you know the saying: “No one ever got fired for hiring McKinsey” … Hmm, really? I think that the recent scandals about McKinsey would tell you otherwise. Unless getting your company in bankruptcy does not count as being fired. And don’t get me wrong. I say McKinsey, because they were the ones front and center, but I have no doubt that the other large consulting firms have more or less the same behaviors.

What you need to understand is what firm is best suited for your consulting needs. As I often say, the best consulting firm for one project is not always the right one for your next project.

If you look at the consulting market, you can segment the consulting firms based on their size, reputation, and areas of specialty. Consulting buyers usually classify them into 3 tiers.

Now most of you all know the consulting firms in tier 1. They are like we the LV, Chanel, Rolex etc. Of Consulting.

MBB — McKinsey, Bain & Company and Boston Consulting Group are the top three consulting companies in the world. These companies are renown for providing top-notch consulting work covering all capabilities, with a strong connection with strategy. After all, that’s where they started. Each of these companies charges premium prices for their services, with the costs of each project often reaching millions of dollars. They have clients in almost all sectors and all countries, from public to private. As we say in France, “Ils sont là du sol au plafond” – they are here from floor to ceiling.

That’s also where you will find what we call the Big 4s which are the consulting departments of Deloitte, PwC, EY, and KPMG, the Big 4 Accounting Firms (sometimes with different brand names). In terms of revenue, these divisions are the biggest consulting businesses in the world. However, because these companies have hybrid profile (they are not pure consulting players), they tend to charge less then MBB for similar projects. But they still offer services in all capabilities, sectors and regions of the world

Then we have Tier 2 firms. It may come as a surprise, but you will find there huge, international consulting businesses that serve powerful customers. The prestige and project costs differ between them and MBB companies; Tier 2 projects often cost less, even though they are catching up in particular the ones with a strategy focus. You will find there notable names including Accenture, Roland Berger, Oliver Wyman, and LEK.

And last but not the least Tier 3, where you will find what we call the boutique firms> these small, specialized, localized businesses that frequently enjoy an exclusive position in their target market.

In comparison to their large generalist relatives, these consulting firms often have fewer than 500 people and take on smaller projects in a more limited range of capabilities, sectors and regions.

It’s obvious that MBB are the most prestigious firms out there, but this prestige didn’t just come overnight or with some xyz partnership. They consistently delivered top quality work throughout their active years. Hence, spreading the brand awareness and gaining more good will.

Now back to our rankings. There are many of them flourishing on the internet. And they claim to determine which are the “real” best consulting firms. But are they, really? What do they assess in practicality? What can you learn from them? And how do you use them when sourcing consultants?

Here is the short answer: Most consulting rankings of the firms are based on prestige and brand awareness an.

How are the firms evaluated?

So, as I said there are many various publications that rank the consulting firms, but since I can’t examine all of them, I decided to focus on the main two: Vault and Statista/Forbes.

Let’s start with Vault. According to Vault Career Intelligence, the rankings were launched in 2007. This year’s Vault Consulting 50 poll, which was published on February 15th, had responses from 17,000 consultants in total.

The respondents —North American consultants working at more than 130 firms—rate their employers on 20 different criteria and must rank their company on a scale of 1 to 10, with 10 being the best score possible. Although, respondents are prohibited from rating their own businesses in the Prestige and Practice categories.

Prestige contributes 30% of the ranking weight in Vault’s algorithm. 15% of a business’s overall score is determined by firm culture and satisfaction, with compensation, work-life balance, and level of challenge coming in at 10% apiece.

Scores for Business Outlook and Promotion Policy were split evenly at 5%. These weights are the same as they were the year before.

It is not a surprise that you will mainly find the tier 1 and tier 2 companies qt the top of the Vault Consulting 50. First the study is only looking at 130 companies operating in the US, when there are more than 5,000 consulting firms worldwide. Beside this ranking is aimed at promoting these consulting firms as employers, not suppliers.

So, you get a list of popular companies amongst young consultants, this is not a very useful list for a consulting buyer, right?

Now let’s have a look at the Statista/Forbes rankings.

So, I say Statista and Forbes, but actually Statista has a different partner in every country. In the UJ that will be the Financial Times, in France, Capital etc.

Statista is a market research firm, they started the rankings around 2016.

Statista has launched the assessment in the United States, Germany, France, the United Kingdom, Switzerland, and Japan. It includes two surveys: one peer survey and one client survey.

The Peer survey is based on the feedback of consulting partners and executives from more than 1,700 firms and 5,000 partners just in the UK. The list of consulting firms was built with list from associations such as the MCA, consulting directories and company databases, such as Orbis.

Even though the methodology seems quite thorough, it remains biased and focused on Tier 1 and Tier 2 consulting firms. Statista is indeed stating the market is comprised of “Mainstream Management consulting firms.”

The second survey, and it is a new addition compared to the previous years, is a client review. The clients were asked to evaluate the quality of consulting firm on a five-point scale. Three stars are given for “recommended,” four stars for “often suggested,” and five stars are given for “very frequently recommended” for the 230 businesses that got the most recommendations.

They were given a list of recommended consulting firms and could add new names.

That’s how we saw some smaller consulting firms hitting the top places in sub-categories. Indeed, the rating is broken down into 14 functional categories, such as strategy, sustainability, and digital transformation, as well as 13 industries, ranging from financial institutions to aerospace and military.

The consulting firms were then ranked regionally based on the frequency of positive recommendations. Then Statista generated a top ranking of the World’s Best Management Consulting Firms by analyzing the results of several national top lists.

This consulting ranking has three main biases:

– First, has mentioned before, because it is based on the overall number of positive recommendations, it gives a tremendous advantage to large consulting firms, that have worked with many more clients than smaller ones, independently of the quality of the work done. Therefore, the results are more based on brand awareness, marketing budget and footprint.

– Second, the survey is giving a lot of room for consultants’ advice on competitors. Indeed, more consultants are surveyed than clients. Would you give a good score to your direct competitor? Yeah, I might. Or not…

– Third, the evaluation asked is a recommendation. It is close to the NPS indicator. But NPS is mostly a measure of customer loyalty, which is loosely related to the quality of the work. Besides the quality of consulting work is heavily linked to the skills and personality of the partner in charge of a given project, and such a survey is erasing the potential variability within a given company under an umbrella feedback. So, are these results or rankings accurate or even, correct? The results give only a partial view of the market, are definitely not a guarantee of quality whatsoever. And it is too broad a brush to really say: They are the best in the world!

In addition, some excellent consulting firms are not even in the list even though they are the best at what they do. Just because they are too small or too niche or too confidential.

So, what’s the real ranking then? Well, it depends. These rankings are real and accurate. But they do not show any sort of performance measure. The quality of a consulting firm is based on several factors, such as the expertise, the impact delivered, the project management skills, the interpersonal skills, etc.

So how to determine if a consulting firm is right for you or not?

When you have identified a potential supplier for a project or for your list of preferred suppliers, you need to determine if they have the right skills and if they are good at what they do. And the only way to do it right is to contact them and get to talk to some former clients.

Draw the profile of your candidate

So, you have found a consulting firm that has, at least on paper, the right capabilities, and industry experience. But don’t stop just now. Let’s have a closer look at their profile to make sure they fit the bill.

Numerous consulting organizations assert that they are proficient in every capability across all industries, yet their track records contradict this.

Most of them, which are frequently small boutiques, are experts in just one skill or industry where they get the majority of their business. Therefore, thoroughly review any case studies or prior projects that are mentioned on the company website.

Consider the prior customers of the business as well. Who are they and what do they do?

Another useful indicator of a consultancy’s core business, particularly for small ones, is the history of its founders. Have a look at the management team. Who are they? What did they do before?

Most consulting firms will outline their approach or methodologies in their brochures or websites. You’ll discover more about them and how they work. Do they prioritize high-level Strategy above consulting for implementation? Do they concentrate more on the hard or the soft aspects? Do they have previous company experience or are they long-term consultants?

These factors will help you comprehend the nature of these consulting firms and how they would work with your company.  But that doesn’t say much yet on how well they perform. To get to that point, you need to talk to former clients. Or to former colleagues that have used them in the past. This is why I always recommend a systematic measurement of the performance at the end of a project.

Make sure the reference is relevant!

Don’t be fooled by the list of logos in the presentations or the anonymous case studies on the website and the proposal. These could be old projects and even projects that didn’t go that well. You’ll never know unless you ask some references for the project you want to launch.

Take the time to call the references and ask the right questions. You can start listing the elements that matter to you, for this specific project, such as the ability to transfer knowledge, the way they interact with teams, the impact in the business, for instance.

You can add a few customized questions that will help you remove grey areas you have identified in a proposal for instance.

Let me give you a few rules when you check references:

First, it has to be a real reference. Don’t “duh” too fast, we have seen consulting firms sending as references the names of their former colleagues. Check the name, the position and the background of the reference to make sure they are real persons and have held relevant positions.

Second, it must be related to a project that is comparable to your project. It may be a project with a comparable setting, strategy, setting, or sector. You want to be certain that the consulting company will be able to complete your assignment.

Finally, the reference needs to be current. Better still, the more recent. Set a limit for yourself (no more than five years is reasonable). In all fields and jobs, the rate of change has quickened. A fifteen-year-old project that was properly managed says little about what may occur now.

Ask only for the best

At the end of the day, you want excellent references where the consultants have had a positive impact on the company. It will also give you some information on their performance on the different dimensions that will be important in your ranking process.

If you have identified cultural fit as a key element of choice for your project, ask questions about how the consultants interacted with their teams, how they adapted to the potential cultural differences.

Don’t compromise with the references.

If the consulting provider is using confidentiality as an excuse to retain references, call a third-party player, such as Consulting Quest, to check the references for you.

In Conclusion,        

To conclude the topic, there are many consulting firms out there, and each of them offers great services to their clients.

But to evaluate their performance and the impact can they bring to your consulting project, you need to have a look at many factors such as consider the firm’s ownership structure, partner profiles, size and geographic footprint, and delivery strategy, for example.

But people can and will still rank the consulting firms based on prestige, Brand awareness, thought leadership etc. and surely MBB would top the chart. But let me ask you something. Do you really need the most prestigious consulting firm for your project?

Of course, if you are looking for political value, you know to ease or justify a decision to your board of directors, then you might have many alternatives. But if you are working on a more operational project, is it still the right choice?

Not so sure. The real “best consulting firm” here will be the one that does the job, brings you the right impact, and at a reasonable cost, right? So let’s use these rankings carefully, as one of the sources to identify new players, but that’s the beginning of the journey to qualify them. Because this qualification process has to be tailored to your company’s needs and ways of working, and one step further, to the project that you want to launch.

Performance rankings are a key topic for the consulting industry but are not where they should be in term of reliability. It is quite unbelievable to find rankings and customer feedbacks for pretty much everything but not categories as large as management consulting. This is a topic we have decided to tackle with my team and I will get back to you soon with some exciting news.

And that marks the end of our podcast. So, keep an eye out for me next week when I return with another fascinating topic.

Till then, stay safe and happy sourcing!

If you have other questions about, remember you can always contact me directly on LinkedIn or by email because I am always game for a chat!

Bye and see you next week! Au revoir!

See you at the next episode. Till then, stay safe and stay connected with us through our community on LinkedIn

and follow our Twitter handle @ConsQuest. Don’t forget to like and subscribe to our channels

Podbean

YouTube

Happy Sourcing!

consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings consulting rankings

Useful Links :