Understanding the Structure of Consulting Firms

Consulting firms come in all shapes and sizes, from small single-level structures to large hierarchical pyramids. The chain of command in these organizations shows the order of decision-making and responsibility, with those at the top having the most power. In recent years, some companies have experimented with offering financial incentives to employees who are not at the highest levels, such as senior consultants. These four options are the main types of business structures that will apply to you, although trust structures and non-profit organizations are also available.

Consultants from other units can be trained to perform the responsibilities of new business units and move laterally within the organizational structure. If a company can find ways to provide its services with the same quality with a higher proportion of young people than older adults, it will be able to achieve lower service delivery costs. The consultant can be considered the modern incarnation of medieval craftsmanship, with its apprentices, officers and master craftsmen. The key point to consider here is that, given a growth rate and an organizational structure, the company's target turnover rate can be specified.

In most cases, consulting firms are revenue-generating companies and financial objectives play a crucial role in the overall structure of the organization. Every consulting project (and therefore every consulting firm) has its own right mix of three types of people. Young professionals view a short period of time at these companies as a form of “graduate degree” and are often going to fill top-level positions they couldn't have achieved (so quickly) otherwise. Rapid growth is often listed as a primary objective of the company, and advances in upper-line growth are used as a primary internal and external measure of success.

There is greater emphasis on building company systems to incorporate value into the company, not just the people who make up the company, and this often leads to greater coding. Let's consider a numerical example (figure) to see how the forces at work in a consulting firm are interrelated. Understanding how consulting firms are structured is essential for anyone looking to enter this field.

Dylan Nemecek
Dylan Nemecek

Typical social media ninja. Professional pop culture nerd. Unapologetic bacon advocate. Proud pop culture guru. Incurable social media nerd.

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