What makes Big-4 consulting firms different from McKinsey, BCG and Bain?

What are the Big-4 consulting firms?

‘The Big 4’ refers to four global professional services firms:

• EY (Ernst & Young)
• PwC
• Deloitte
• KPMG

The Big 4 are all large and incredibly complex organizations, each with between a quarter and half a million employees globally. Having begun as accounting firms, they have all expanded to provide a vast range of other specialized services, including tax, audit, compliance and consulting.

The Big 4’s consulting services span across a vast range of disciplines, covered by a number of teams with remits that often overlap. While the boundaries between these teams can be blurry, most of their work can be categorized into the following core areas:

Implementation and transformation

Implementation and transformation consultants deliver projects in response to “help me do it” requests from clients, rather than “what should I do?” questions. These consultants are not generalists; they are specialized in a particular sector from the outset.

Projects can last more than a year and often involve implementing new processes, complying with a new regulation or reorganizing a company from top to bottom. Some of this work, such as implementing a new Enterprise Resource Planning (ERP) platform, inevitably involves technology considerations.

Technology

A growing area for all four firms, technology consulting involves harnessing technological solutions and innovations to help businesses transform their business models, become more efficient, improve their services and capture new opportunities.

Data science and analytics are an increasingly important part of the Big 4’s technology consulting portfolio. These disciplines are often covered by a dedicated team.

Transaction services and deals

In this area, each firm blends its accounting and consulting expertise to provide specialized advice to the C-Suite and financial investors on merger and acquisition (M&A) opportunities. This is where the Big-4 firms do some of their most notable work; it’s also where they charge their highest fees.

Historically, transaction services teams focused on financial due diligence projects and employed a high number of accountants. However, these teams now routinely deliver operational and commercial due diligence projects. As a result, they are sometimes merged with the firms’ strategy teams.

Strategy

The Big 4’s strategy consulting services are those that are most closely aligned with the services of McKinsey, BCG and Bain. Focused on helping business leaders solve their most complex and critical problems, the strategy teams of the Big 4 are small, elite units. They each employ only a few thousand consultants globally.

The majority of the Big 4’s strategy units originated through the acquisition of boutique consulting firms in the 2010s, and are now established consulting brands in their own right. They are:

• EY Parthenon: the result of EY’s acquisition of The Parthenon Group
• Monitor Deloitte: the result of Deloitte’s acquisition of Monitor
• Strategy&: the result of PwC’s acquisition of Booz & Company
• KPMG’s Global Strategy Group (GSG)

Consultants in both sets of firms work in similar ways

There are a number of similarities between the work that consultants do in the strategy teams of the Big 4 and the work that management consultants do at McKinsey, BCG and Bain. In both sets of firms, consultants contribute to client projects that span multiple sectors, industries and locations, working closely with C-suite executives and other senior stakeholders.

The projects tend to be quite short, lasting anything from two weeks to six months. This means that consultants move from project to project throughout the year, gaining a great deal of experience along the way.

In the strategy units of the Big 4, and at McKinsey, BCG and Bain, all consultants typically begin as generalists, working across a variety of industries and sectors and only specializing later in their careers. As a result, the work that they do is naturally varied.

However, because of the Big 4’s expertise in transaction services, their strategy teams in some locations do more due diligence work than MBB.

Strategy projects help the Big 4 source other types of work

The Big 4 entered the field of strategy consulting largely because the firms saw it as a way to source other types of work from clients early in the decision-making process. Once the firms have helped to craft a strategy, they can then help to implement it through the vast range of services they provide, such as technology consulting, implementation and transformation consulting, and transaction services.

Consequently, there is pressure for Partners of the strategy units of the Big 4 to cross-sell the firms’ other services to clients and identify additional business that their strategy projects could generate. At McKinsey, BCG and Bain, where the focus is purely on strategy work, there is no requirement for Partners to do this.

The Big 4 are less nimble than McKinsey, BCG and Bain

The Big 4 have very deep relationships among the top echelons of the world’s largest organizations, with each practice area often represented by multiple Partners.

This means that the Big 4’s strategy teams generally enjoy the same access to the C-Suite as McKinsey, BCG and Bain. It also means that strategy projects sometimes originate naturally from another project led elsewhere in the firm (e.g. a due diligence project led by the transaction services team).

However, a drawback of the depths of these relationships is that decisions and initiatives often have to be vetted by multiple Partners, who are all protective of their practice areas and the relationships they have with each client.

As a result, the strategy units of the Big 4 can be less nimble and entrepreneurial than McKinsey, BCG and Bain, where the input of fewer internal stakeholders is required when proposing new initiatives.

The ‘talent quality gap’ between consultants at the Big 4 and MBB is narrowing

As newer entrants to the strategy consulting market, the Big 4 have historically been open to applications from candidates from a broader range of academic and professional backgrounds. This has led to a perception that there is a ‘talent quality gap’ between consultants from each set of firms.

However, our research into the top routes into McKinsey, BCG and Bain reveals an emerging trend of consultants moving from the strategy teams of the Big 4 into the top 3. There is also movement in the other direction, with some MBB consultants choosing to move to the strategy teams of the Big 4. At EY-Parthenon there are over 160 Partners with McKinsey, BCG or Bain experience.

This indicates that the gap that was once perceived to exist between the quality of talent within the two sets of firms is narrowing.

The compensation is less generous at the Big 4 than it is at McKinsey, BCG and Bain

As the top-3 management consulting firms in the world, McKinsey, BCG and Bain charge clients around twice as much per day as the strategy units of the Big 4. This is reflected in the compensation that consultants at the two sets of firms can expect to receive. Salaries at the Big 4 are naturally lower than salaries at McKinsey, BCG and Bain; a Partner at a Big-4 firm is likely to make 30-40% less than a Partner at a top-3 firm.

In some Big-4 strategy teams, a healthy work-life balance is more achievable than it is at MBB

It’s well known that achieving a healthy work-life balance can be challenging for consultants at McKinsey, BCG and Bain. In no small part this is due to the long hours they’re required to work.

In the strategy units of the Big 4, work-life balance for consultants differs between firms and locations. Consultants in some offices are able to work fewer hours than MBB consultants and therefore enjoy a better work-life balance. However, this is not true of all Big-4 strategy teams. In fact, the offices that are most exposed to due diligence projects tend to work the same long hours as MBB consultants.

As at McKinsey, BCG and Bain, weekend work is both rare and frowned upon in all of the Big-4 strategy units.

Consultants are under less pressure to perform in the strategy units of the Big 4

MBB consultants are under a huge amount of pressure to meet or exceed performance expectations at all times. This is cemented in the firms’ use of an ‘up or out’ policy, under which consultants who are deemed not to have met their firm’s expectations at the end of a performance review are asked to leave.

By contrast, the strategy teams of the Big 4 only very rarely have an up or out policy in place. This naturally reduces the pressure that their consultants are under on a day-to-day basis.

In addition, there is less competition to join the strategy units of the Big 4 than there is to join McKinsey, BCG or Bain. This generally makes it easier for consultants in the Big-4 strategy teams to meet their firms’ performance expectations.

Consultants can expect less rapid career progression at the Big 4 than at McKinsey, BCG or Bain

Big-4 firms have less of an imperative than MBB to offer their consultants rapid career progression. Because the top-3 firms compete with other highly attractive employers to hire the most talented and driven individuals, they need to make swift career progression part of their value proposition from the outset.

In the strategy team of a Big-4 firm, it can take a new consultant 15 years or more to make Partner. At McKinsey, BCG or Bain, a new consultant could expect to progress to this level in around nine years.

MBB consultants have greater access to attractive exit opportunities

Because they do similar work and have a similar set of skills, consultants from both sets of firms are able to pursue a range of exit opportunities from consulting.

However, consultants from the top-3 firms tend to be employers’ first choice. MBB consultants have all made it through a famously rigorous selection process and have earned a prestigious organization’s seal of approval. This is a strong signal of talent to future employers.

In addition, the top-3 consulting firms tend to have greater exposure to attractive exit opportunities. McKinsey, BCG and Bain all have internal career centers and job boards where alumni can publicize job opportunities to existing consultants. The Big 4, on the other hand, don’t provide this kind of support.

The Big 4 approach recruitment in a similar way to MBB

The strategy teams of the Big 4 and McKinsey, BCG and Bain all base their approach to recruitment on case interviews. While there are some subtle differences to be expected among individual firms – some Big-4 strategy teams may be more likely to give you a written case to take home, for example – their approach to recruitment is largely very similar.