Corporate advisors on the spotlight
Management consultants face harsh criticism from clients in Tokyo
More than twenty-years ago, I landed one of the most exciting jobs in Tokyo, management consulting. The job offers a good pay, a thrilling experience with clients, and complex problem-solving. The experience resembles the fight in the classroom of business schools in America. I thought this was it I was looking for.
My joy came to end shortly when clients demanded more than any management consultants could offer within working hours in the contract. The contract with clients stated a lucrative compensation for management consultants but the implicit results must have exceeded the expectations. Sink or swim, an adequate expression at that time haunted me in the entire engagement. I often ran into a burnout phase. It has been argued in Tokyo for a long time if the management consultancies provide service meeting the enormous fees to the clients.
On last October 8th, 2022, the Economist published an interesting story of corporate consigliore, casting the question as to the usefulness of the occupation in the advisory industry. Skeptical scrutiny exists to extend itself, “House of Lies.” October 4th, two writers published a book, “When McKinsey Comes to Town” amid the scandalous behavior. In South Africa, prosecutors charge criminal behavior against McKinsey. The firm denies the charges. Bain & Company and the Boston Consulting faced a similar controversy.
Yet the industry grew three times since 2010 to $30b and employed 70,000 professionals, earning (a third of) revenue per employee of over $400,000. The pay package drives them at the top without any doubt. Why is it booming? The paper explains with two reasons: an outside opinion and an indispensable knowledge to provide a business solution.
It is true that management consultants offer valuable advice to corporate executives but they also consistently face harsh criticism in their service for years. Part of this irony is that the work involves three negative roots in the Asian industry. First, clients in Tokyo rarely understand the high-quality work for pay by the hours. Employees at clients’ site don’t work by the hour, stay in the office days and nights even in the covid-19 pandemic. Therefore, young elites wake up 5:30 in the morning to impress sleepy customers in the zoom meeting.
The second reason for criticism lies in the nature of work. Clients are not happy with advice-only from bunch of spreadsheets and fancy charts from the packed documents. Documents make sense in delivering the research results with rigorous analysis, which is fine with most intelligence such as lawyers and bankers, but business in Tokyo looks for a result, a rise in profits and subsequent rise in pay for the workers. It has been hard to come by with advice. The third force in negative attack describes the uncertainties of business environment in Tokyo. For years, uncertainties never go away in fields of new opportunities such as cloud computing to climate change to global supply chain, which has often been made challenged by the proposals from the consultants. They can’t promise corporate profits, therefore never be able to escape from the scrutiny.
For more than twenty years, the industry has not changed its nature a lot. But the clients in Tokyo continue to seek for advice from management consultants for a help to survive in the uncertain world. Pay is still good for young Tokyoites, probably exceeding the expectation for the first pay of twenty-two year-old graduates. Allegedly, the compensation goes around $100,000 on average. That is not so bad. In fact, it is a very good pay for young elites. But be careful about the demanding customers at corporate office in Tokyo. They will not be satisfied with advice on the paper.