Switching Sides

A year after being named to the Office of Management and Budget's top management post, G. Edward DeSeve still had not been confirmed--so he quit. Or at least that's how it looked to observers. Despite DeSeve's recess appointment to be OMB's deputy director for management, the Senate stubbornly refused its blessing. Today, that refusal looks like a blessing in disguise. Not being confirmed eased DeSeve's decision to make what appears likely to be a highly profitable move to management consulting. "It gave me the opportunity to consider my options," DeSeve says. "I probably would have been confirmed later this year."

DeSeve stepped out of the budget office into KPMG Peat Marwick's management consulting arm as a full partner and national industry director for federal government. Not only that, but since he was approved as partner, word has leaked out that KPMG plans to offer for sale as much as 30 percent of its consulting arm. As a partner, DeSeve now owns a piece of whatever action may ensue.

More money. The chance to run a business. Variety. Keeping a hand in government. A way to continue a pet project. A chance to stay in the Washington area. The reasons government executives move to management consulting firms are as different as the jobs they leave. But consulting firms are unanimous about what they're buying when they hire former federal officials: government savvy.

Former federal executives "are viewed as thought leaders and mentors in government," says Ian Littman, a partner with PricewaterhouseCoopers' government consulting practice. (In the interest of full disclosure, it should be noted that the author has received a research grant from the PricewaterhouseCoopers Endowment for the Business of Government.) "They are recognizable, they contributed to their agencies and they've been involved in the National Academy of Public Administration and American Society for Public Administra-tion and other associations. I can't think of any ex-feds in consulting who were not really experienced. They have 15 to 20 years of service and are in their 40s and 50s. Most have had pretty impressive federal careers," Littman says. "Those gray hairs are just great if you are going to be credible in front of a government group. They're not going to accept some freshly minted MBA."

Net Worth

While money isn't the only attraction of management consulting, it's certainly a lure. Federal agencies already spend billions on management consulting each year, and the market is growing. For example, sales on the General Services Administration's Management, Organiza-tional and Business Improvement Ser-vices schedule grew from $6.7 million in fiscal 1994 to $246 million in fiscal 1998, reached $400 million in July and are expected to double for 2000. In addition, 1999 schedule sales of information technology services--including a good deal of management consulting--hit the $3 billion mark in July. KPMG partners average more than $500,000 in annual salary, for example. What's more, making partner means owning equity in the company, something to which no government executive can ever aspire.

"You can't create net worth in government," says Paul Wohleben, who left the General Services Administration in November after 25 years of federal service to become director of information technology consulting with Grant Thornton. Wohleben was slated to become a partner Aug. 1. "I wanted to get in a position where I could get ownership in the company. I wanted to reap the benefits of my success," he says.

In addition to their financial interests, both DeSeve and Wohleben were motivated by entrepreneurial energy: They wanted to run businesses. Most of Wohleben's family is in small business. "It was something I needed to prove--that I can be an entrepreneur in a commercial setting," he says. DeSeve already had founded and sold two financial accounting firms during his career, so running a management consultancy seemed a natural move. "At KPMG, I could leverage the understanding I had of management," he says.

New Angle on Service

While former federal executives find they can get out of their government jobs, many can't shake their yen for public service. For these folks, management consulting offers an opportunity to keep a hand in, often in their former agencies. "I wanted to try something new and this was a way to stay involved with Defense Department electronic commerce from a different angle," says Rosanne Beckerle. She left the Defense Finance and Accounting Service after 13 years of federal service to help business and technology consulting firm American Management Services open a financial management practice tailored to DoD clients. Beckerle will be senior principal for the practice.

Roger Scearce, the former DFAS deputy director who is vice president of the new practice, says it was AMS' concern for Defense that made him choose it over other firms. "At a couple of places I interviewed, it was numbers, numbers, numbers. You had to develop a certain level of revenue--how you did it did not enter in. Here, it was leadership, management skills, experience and relationships--the ability to make DoD a better place.

"I got off the elevator for my first interview at AMS and I saw a sign that said: 'Don't forget the children's Christmas party.' That was meaningful. It identified with my value set of taking care of the troops," Scearce recalls. "Here was a family. A close-knit group of people making clients' lives better."

Morgan Kinghorn, former chief financial officer of the IRS, went to work with Coopers & Lybrand, now PricewaterhouseCoopers, when he left government four years ago. He picked the firm because of its strong public sector presence. At KPMG, DeSeve hopes to carry on his campaign to reform federal management. "I wanted to take the work I did [at OMB] and transfer it," he says. Deseve is helping KPMG consultants work with PeopleSoft on a federal version of its Enterprise Performance Manage-ment software system. "I'm helping to shape a product to give government the ability to do things it never has been able to do before." The software collects, crunches and delivers to managers' desktops cost and performance information for strategic decision-making. "They needed a government perspective," DeSeve says.

'It's All Billable'

Consulting may allow former bureaucrats to keep a hand in government, but it forces changes in the way they work and what they do. First to go is position in the pecking order: Consulting firms pride themselves on being flat and lean. "There's a change in prestige perception," says DeSeve. "You used to be the deputy CIO. People knew who you were and how you got there. Now you're a senior manager at KPMG. What do you do? I get that all the time. I have a position in a hierarchy that's very flat--analysts, consultants, managers and partners--essentially four layers."

Consulting also shines a much brighter spotlight on results, according to those who have switched sides. "The accountability is more direct," adds DeSeve. "Every period you know what your numbers are, what the variances are, what has come in and what hasn't. In government, the time perspective is in legislative cycles, budget cycles, fiscal years. Now the continuous real-time accountability is much stronger."

Many former federal executives learn to love the new environment, says Littman. "It's all billable, and a lot of them really appreciate that. 'I know what I did with my time,' they'll say. Living by the charge number is the reality, and it's not that unnerving or unsatisfying."

To gain flatter hierarchy and clearer accountability, management consulting firms have shed the trappings of power still present at the pinnacles of government. "There are no more executive officers, no more secretaries. You do your own typing," says Scearce. "I don't have an office, I have a laptop," Beckerle adds.

"How you manage people is different: It's based on output vs. are you there in the office," Wohleben says. The stripped-down environment calls for a good deal of initiative from former bureaucrats. Their days are their own; motivation must come from within. "For people not used to having a great deal of flexibility and freedom, it would be a culture shock," Kinghorn says. "It takes a lot of independence."

The peeling away of perks and enforced self-sufficiency are too much for some. "They had expectations this would be cushier and easier," Littman says. "Some have late 20th- early 21st-century syndrome: They grew up in a different world. Now we work in cubicles and everything is virtual. We just live with our laptops. There's nothing soft about our environment. Getting a corporate job or being a lobbyist is very different. All the ones who didn't succeed that I know of went to corporate jobs."

Marketing Anxiety

One of the least cushy aspects of consulting is the need to market oneself and one's firm. It's not natural for most federal managers and remains an unpleasant chore for some, even after they've been at it for years. "People say that when we testify before Congress, we are marketing, but you're not really trying to persuade people you have skills worth spending money on," says Allan Burman, president of Washington change-management consulting firm Jefferson Solutions. "You learn quickly that as interesting as a project might be, there are two factors you must keep in mind: Is there the money to do it? And are you talking with people who could make the decision to spend the money to do it? That's not a natural thing for somebody in government."

"I've never been comfortable with hardcore marketing," Kinghorn says. "A guy I know went out on his own as a consultant and every time he came in [to the IRS], you could see the whites of his eyes. I thought, 'God, I never want to be like him.' I don't think feds like marketing. When I was a fed, I listened to a lot of [vendors], but I didn't like it." But not everyone shies from sales. Wohleben, for one, revels in it. "Some people don't like to meet with industry, [but when I was in government] I thought it was very, very positive," he says. "Now, I call on customers; I love it. I knew I would. When you're in government, you've got to sell your ideas; this is no different."

Fortunately, marketing is more than just sales. Government-executives-turned-consultants spend much of their time building their firms' reputations in more subtle ways, such as writing, speaking and working with nonprofit associations. DeSeve calls this work "thought leadership." I'm trying to get the firm positioned in a particular quadrant of respectability," he says. Wohleben's approach is similar. "I am working with the Information Technology Association of America on a survey of federal CIOs. I speak at conferences, I'm in associations," he says. "I'm actively engaged in trying to position Grant Thornton in the marketplace."

Rolodex for Hire

A common rap on consulting firms is that they hire federal executives for their Rolodexes. There's an element of truth in that, but the firms and former feds acknowledge that the real attractions are executives' reputations and their wide-ranging experience. After all, their personal contacts have a relatively short life span. "They do have a period when they're absolutely wonderful at knowing everybody, but it only lasts for a little while," Littman says. DeSeve points out that for former political appointees, connections fade even faster.

"The entrée from being a political appointee lasts about 18 months. It has a half-life that gets shorter as an administration ends," he says.

Post-employment ethics rules also limit Rolodex power. For example, former federal officials are forever barred from representing anyone before an agency on any matter in which they were personally and substantially involved. For two years after leaving government, they are barred from representing anyone on matters that were under their official responsibility during the last year of their federal service. In addition, certain high-level officials are subject to a one-year cooling off period during which they can't represent anyone other than the government before their former agencies.

It's the less tangible knowledge of how to grease the wheels of government and avoid hidden trap doors that makes former federal executives worth the mid- to high-six figures to consulting firms. "It's not who you know, but where to go [that counts]," Burman says. "A lot of companies have no clue how to get the information they need and who is responsible. That level of savvy makes you attractive. You're not getting your client in trouble because you didn't know something."

Says Kinghorn: "I bring an understanding of what, realistically, can get done. I understand why it sometimes looks like feds are doing dumb things and why they really are smart."

That knowledge is invaluable to consulting firms whose young, technically sharp consultants could easily botch federal engagements without the guidance of older, wiser heads. "It helps to marry the government employee with the commercial best-practices consultant," says Stephen Rohleder, managing partner for An- dersen Consulting's federal practice. "You can do it without the ex-government people, but the cultural assimilation is speeded up with them."

The presence of former bureaucrats can be comforting to federal clients. "Morgan Kinghorn happens to know how to implement things in this environment," Littman says. "He makes people comfortable that all those other people aren't going to go astray." Debra Del Mar, AMS vice president and director of the DoD financial enterprise solutions practice, says Scearce "gives our effort the stamp of approval."

Management consulting firms also try to demonstrate their commitment to government work by having ex-government executives in high positions. "We have senior people who have spent a lot of time in lots of places in government and know the politics and can handle issues in a highly charged environment," Burman says. "That's how we distinguish ourselves from firms with a lot of bright young people without a lot of experience."

Outside the Box

Ex-federal executives who have moved into the consulting world contend that the combination of their government experience and their companies' bright ideas can bail out Uncle Sam's beleaguered managers. "Many feds know how to manage, but most are in a similar environment for most of their careers and it's hard for them to think outside the box," Kinghorn says. "We analyze it differently and bring in outside knowledge. Most agencies are proud and think they can get out of the mess themselves. I did." Scearce agrees: "We [thought] we could do it ourselves, but you find you can't. So much on the commercial side is going so well that we ought to drink out of the same well."

Consultants also can provide cover for ideas federal managers can't advance. "Often, bringing in a firm with a prestigious name brings credibility," Kinghorn says. Adds Burman, "Government folks may feel it is the answer they wanted, but it wouldn't have been believed unless it came from somebody else."

What's more, hiring a consultant can simply ensure something gets done. "Lots of agencies pull their best and brightest in to solve a problem and what they were doing doesn't get done or the process takes months," Kinghorn says. "We can get the product in three months where it might take [an agency] 10 to 12 months." And some jobs just don't merit the time and expense of full-time staff. "We do a lot of cleanup of old problems--for example, financial records or Defense Department property inventory," DeSeve says.

Former feds have a variety of advice for colleagues who'd like to get into the consulting game. First and foremost is: Get around. The more agencies you've worked in, and the more people you know, the better. "I knew that being insular in [one agency] and just doing your job and not knowing people at the General Accounting Office and Capitol Hill staff hurts you," says Wohleben, who plotted his move to the private sector for 10 years before making it. "Be prepared to realize that the bottom line is financial and customer service," adds Kinghorn. "They are related and to do both, you've got to have a good Rolodex. It's hard to develop contacts once you've moved into consulting."

Scearce advises choosing a firm that will invest in you before it starts expecting big results. "Find one willing to let you assimilate and to train you," he says. "Some firms I talked with assumed you knew it all and wanted you to get out and start hustling business." Kinghorn recommends adopting a flexible management approach. "You have to bring a variety of people together for each job. At one point, I had 12 engagements and 12 different teams. If you're not used to that, it can be a real challenge."

Government executives also should be prepared for some losses when they move to management consulting, Kinghorn warns. For example, he laments the days of constructing an organization over a decade, so that he could look around and watch managers he had mentored try their wings. What's more, consulting can be lonely. "I don't have much social life now, because I'm sensitive to not socializing with potential clients [and] as a federal employee for 25 years, most of my friends are feds."

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