Passion, People and Principles

Public and Private

post # 362 — April 24, 2007 — a Careers post

Green Dot Life is a (very) unofficial blog for employees of Deloitte consultants.

Yesterday, this post appeared:

Hi Everyone!

I am considering whether or not to make the leap from Accenture to Big-D (yeah!). Can someone here help me to validate and/or to change this following statements?

1. Since Big-D is not a publically-traded company, it will be more generous than Accenture (a publically-traded company). e.g.

= in salary and the overall compensation packet;

= with expense policies;

= with “office perks” (e.g. beer fridge, snacks)

= with “team / social events”

= Required chargeability targets (e.g. 80% for managers? 90% ?)

= How geenrous the promotion process is – if there are “lots of bright people, ready for next step” (i.e. not just stopped at the “top 15% performers only”)

2. Deloitte probably has more prestige compared to Accenture (i.e. still retaining its “original big-4 image”, structure and corporate name), whereas Accenture has a lot more “airtime” and marketing success due to how much it spent on the Tiger Woods ads.

= But those “marketing success / awaress” does not necessarily lead to more revenues, profits or happier share-holders (for Big-D, happier SH’s are the Partners).

= Nor does the “prestige” of Deloitte brandname translate to more revenue all the time.

Agree? Please feel free to comment on any of the above proposed statements. THANKS! Hope to be joining you folks at Big-D soon!

Happy Senior Consultant

*****

What do the readers of this blog have to say in response? Would you expect the same differences as this person would between a publicly-traded professional firm and a privately-held partnership?

8 Comments

Tim Burrows said:

I’m still recovering from all the spelling and grammatical errors that appear to have originated from a “Big-4″ consultant.

posted on April 24, 2007

peter vajda said:

signed, “Happy Senior Consultant”….

Just me, I’m curious how s/he defines “happy.”

=”beer fridge, snacks”? hmmm

posted on April 24, 2007

Charles H. Green said:

First, I have to echo Tim–those are not typos, those are flat-out spelling errors, and the poster seems unconscious or unaware of the implications of displaying that particular bit of incompetence to the world, particularly in conjunction with his or her title.

That said, (s)he raises a most fascinating subject.

IMHO, an awful lot of people–including seniors at Deloitte–misunderstand the role of branding in professional services firms. Unlike consumer marketing–where strong branding influences every step of the buying process from awareness to decision–great branding in this business gets you on the list and through the first presentation.

It does not, generally, influence the final decision, notwithstanding the “no one every got fired hiring IBM” line. (If there’s any paralel to that in professional services, it’s probably McKinsey and Accenture, to be sure). I just don’t think a lot of CXOs end up choosing Deloitte in the final selection process over anyone else because of brand name–even unconsciously.

The bigger issue Mr/Ms-speller raises is the economics. Three things are guaranteed to happen when you go public: you lose a career path to partner, you give away some returns to capital that formerly remained within the firm, and managing shareholder expectations becomes a qualitatively far larger and more complex exercise. Those three are largely negative.

One potentially good thing comes about: the infusion of capital makes more things possible. Whether that’s ultimately good dpeends on what you do with it.

I don’t have revealed wisdom on this, but it seems to me over the years that the return on infused new capital rarely makes up for the need to pay out returns to non-employee owners. The loss of a career path is felt acutely by the 2-3 year band just ahead of partner–the scarcest employee group in the business. After that bulge has left or gotten over it, the next generation grows up without expectation of partnership, that exotic mix of money and perceived ego-gratification and exclusivity that can work very well to motivate people.

Motives are always tricky: why do most firms go public? Frankly, because the current owners–those sitting in the seats when the music stops–have either never bought into the partnership model and see consulting as no different from widget-making, or they have convinced themselves of the need for more capital. The latter is usually a rationalization for, there I said it, greed. David, maybe you know of some cases where greater capitalization allowed a firm to catapult forward–I just can’t think of one.

That’s not to say a partnership model is inherently better–I’m just describing motives as I have understood them to play out over many going-publics over the years. (There ought to be a small footenote in the charter of consulting firms to the effect that, once you’ve gone public, you shouldn’t be allowed to use the exhortation “act like you’re an owner”–or at least former partners who’ve cashed out shouldn’t be allowed to use it).

posted on April 24, 2007

David (Maister) said:

As a notoriously bad speller and even worse typist, I’m glad I put someone else’s posting up here first!

Like Charlie, I’m skeptical about the benefits to non-owners (non-partners) of being in the corporate, publicly-held firm compared to the privately-held partnership.

While I certainly understand the desire of partner / owners to “cash out” by selling eithr to public markets or conglomerates, I think ‘going public’ is largely negative for the non-owner staff, although Goldman Sachs has done a superb (and generous) job of keeping alive broad profit-sharing and upward mobility opportunities that are traditionally associated with partnership models.

However, you could make the case that, realistically, in the era we are now in, few firms are REALLY run on the partnership model, i.e. dedicated to stewardship, apprenticeship, loyal to junior staff, committed to their development. In other words, increasingly the privately held partnerships are run for the current owner/partners and there’s not a lot of difference in their policies compared to the ccorporate model.

And, as Peter Vajda hinted, there’s something curious about the questionner’s interests: not career developemnt, fulfilling wwork, but “beer and snacks.”? As Peter says, Hmmm. We should always beware of overgeneralizing froom one instance, but, yes, Peter, that’s why I copied over this post – I wondered if it told us anything about what certain parts of the employee population are really looking for!

David

In which case, our original questioner

posted on April 24, 2007

Tamara Paton said:

I left McKinsey, a privately-held organization, a year ago and had a different take on things vs. the post author.

Based on my experience, privately-held partnerships are less generous with the perks and comp, not more. When folks there spend money, it’s largely their own money that’s being spent. So if there are perks like office snacks and fancy trips, it’s because those perks actually boost the bottom line. For example, office snacks made it easier for me to focus on client work.

Further, McK often pays less than publicly-held consulting organizations. Part of that is driven by the intangible value of its top notch brand, but new consultants are often lured along by the promise of partnership down the road. When you suspect that you’ll hit bigger numbers in 5-6 years time, then accepting a lower salary is tolerable.

posted on April 24, 2007

Howard Krais said:

From a different angle here (as if we needed it) is the power of the blogosphere – enabling not just the original poster but many others to consider the differences between two major global firms in the same marketplace.

Historically you could only really ask someone you knew for this type of information – to get behind the corporate spin. Now anyone can post / ask a question and thousands of people – graduates, current Deloitte/Accenture (and other) consultants can watch the conversations unfold. Almost nothing will be sacred again

posted on April 26, 2007

Jake said:

Hi, Disclosure: I’m a consultant for Deloitte. I think the question of ‘does a private vs. public firm pay better’ is missing the point. Both companies probably pay comparably, which is to say, not very well relative to your skills and marketability. The Firm knows that it’s name carries some weight, and isn’t concerned with offering top dollar. The real reward is at the top – consulting in general is somewhat of a pyramid scheme, and the only way to recover the opportunity cost of being overworked/underpaid as a junior employee is to elbow your way into the partnership. At Deloitte, this incentive is still there. Word from people who’ve jumped over from ACN is that once they went public, that incentive is greatly diminished. Why bust my hump to be a VP, beholden to the short-term whims of the market? Not to mention market demands have driven ACN much more toward an outsourcing business model (more stable, long term revenues) which ain’t the most exciting line of work around. Another thing I found amusing about this post on GDL is that coming out of undergrad, ACN was universally regarded as the more prestigious firm to work for. I’m somewhat surprised to see this ‘happy’ ACN SrCon say that Deloitte offers more ‘presige’. Something to keep in mind if ever I too jump ship

posted on May 4, 2007

evden eve nakliyat said:

very nice informations.

thank you very much…

posted on May 4, 2007