Consulting firms usually lack the many layers of organizational hierarchy you might find in a large corporation. Most firms have very flat organizational structures, with only a handful of roles for consulting staff. Support staff, such as employees in finance and human resources, might have a separate and more traditional hierarchical structure. Because a consulting firm has to balance the development of specific knowledge areas with the focus on selling to and delivering services to clients in a specific area or industry, most firms choose a matrix organizational structure that combines the two.
The hierarchy in a consulting firm is usually very flat. For example, a firm might have roles for analyst, consultant, senior consultant, engagement manager, partner and managing partner. Everybody in the firm has one of these six roles, except for staff in support functions such as HR or finance. Many consulting firms have an "up or out" policy where if you're not promoted to the next role after a certain number of years, it's likely that you'll never be promoted. Your manager might suggest you find a job in another firm or might even help you find a job in private industry with a client.
Consulting firms provide advice to clients in specific practice areas. For example, an HR consulting firm might have one practice area for rewards and talent management and another for employee benefits. Each practice typically has a global or national practice leader and might have regional or local practice leaders, depending on the size of the firm. Consultants report up through the practice to the practice leader. It's not unusual for a consultant to report to another consultant at the same level, or even for a junior partner in a management role to have more senior partners reporting to him.
Client or Geographic Focus
Clients are the lifeblood of consulting, and most firms organize around their clients. For example, each office in a large firm might have responsibility for selling to and servicing clients in a particular geographic area. Other firms might organize around groups of clients, such as industry groups. The client side of the organization typically has responsibility for sales, development and client satisfaction. For example, each office might have an office leader who is responsible for all client relationships in a particular city. Billing and revenue collection happen through the geography, and the top geographic leader is often the president or CEO of the firm.
Because of the two different ways of organizing a consulting business, most consulting firms combine both into a matrix structure. The consulting leaders and the geographic leaders work together to balance their respective priorities and needs, to create budgets, analyze financial statements and determine the strategic direction of the firm. An individual consultant might report to two different people -- a practice leader and a geography leader. The management team for a consulting firm with a matrix structure usually consists of the practice leaders and the geography leaders.
- Forbes: The Matrix Doesn't Have to be Your Enemy
- David Maister: The Anatomy of a Consulting Firm
- Certified Information Systems Auditor Study: Identifying Roles in a Consulting Firm Organizaitonal Structure
- University of Kansas: Choosing a Consultant
- Financial Times: "Up or Out" is Part of Industry Culture
Steve McDonnell's experience running businesses and launching companies complements his technical expertise in information, technology and human resources. He earned a degree in computer science from Dartmouth College, served on the WorldatWork editorial board, blogged for the Spotfire Business Intelligence blog and has published books and book chapters for International Human Resource Information Management and Westlaw.