By Atta Tarki
For those who pay attention to such things, the Wall Street Journal can sometimes read like an alumni newsletter for McKinsey, Boston Consulting Group, Bain & Co. and other elite consulting firms. A high percentage of the CEOs of the major companies featured in its pages are graduates of strategy consulting firms. Sundar Pichai of Google, Art Peck of Gap Inc. and James Quincey of The Coca-Cola Company are only three of many consultants at the helm of multinational companies. A USA Today study placed the odds of a McKinsey consultant becoming a chief executive officer of a multibillion-dollar company at 1 in 690, by far the highest out of any background.
When A Consultant’s Skills May Be Right For Your Company
I have found that the elite talent who self-select into consulting are, on average, better suited for CEO roles than those going into investment banking, for example. Sure, McKinsey gets its first pick of many of the brightest graduates, but so does Goldman Sachs. Yet investment bankers don’t occupy nearly as many CEO roles. My theory is that candidates who choose banking are attracted to the specialized track that most banking careers offer early on, whereas consultants prefer to be exposed to a wide variety of topics throughout their career.
Academics who examined the track records of chief executives groomed at companies that produce a high number of CEOs such as General Electric, IBM and Procter & Gamble found that certain firms “are efficient in developing leadership skills” because “they are able to expose their executive talent to a broad variety of industries and help them develop skills that can be transferred to different business environments.”
In other words, the research found that a diverse management background is crucial preparation for a CEO. This could be especially important if your company is in an industry that is facing rapid change. The rise of Uber, Tesla, WeWork, Netflix and a multitude of other disruptive competitors illustrates how quickly the rules of business can be rewritten in today’s economy. In such an environment, leaders who are particularly good at problem-solving in uncharted territory may have an edge over leaders who have sharpened their skills in only one way of running a business.
Management consulting firms pride themselves on having a strong emphasis on training and development. This, combined with the fact that consulting firms see one of their strengths as taking a structured approach to problem-solving regardless of the nature of the challenge, makes consulting a good training ground for individuals early on in their career. An analysis of 12,000 LinkedIn profiles found that “consultant” was the most common first job for CEOs.
In a proprietary study, Spencer Stuart reviewed 541 CEO transitions and concluded that CEO who had five-plus years of prior management consulting experience “tended to improve the condition of the company over the course of their tenure more often than other leaders — 71% of the time versus 42% for those without management consulting backgrounds.”
When Consultants Aren’t The Right Pick
Former consultants tend to be generalists, but this doesn’t mean they are right for every corporate challenge. Indeed, they tend to share weaknesses. While great at strategy, they often struggle to translate their ideas and operationalize their recommendations. They can be too analytical and can sometimes lack the necessary emotional intelligence to lead a cultural change. These challenges tend to be particularly prominent among candidates who are transitioning directly out of consulting and have not led teams in line management roles.
Perhaps the biggest risk comes when a management consultant leads a company in an industry they are not passionate about. Boards can avoid these pitfalls by being clear about the main problem they are trying to solve under the next CEO and avoiding mercenaries who aren’t passionate about serving the company’s customers.
Whether or not you go with a consultant when planning a CEO succession, my advice is to look for candidates with adaptable management tool kits, individuals who are good at translating ideas to bottom-line results and those who get excited by your company’s offering as well as your unique set of challenges.
This article is originally published on Forbes.
Atta Tarki is the founder and CEO of ECA and the author of Evidence-Based Recruiting (McGraw Hill, February 2020).