Consulting For The Big Dogs


We see these stories fairly often. A CEO of a huge but struggling company gets let go. The company doesn’t want the negative publicity from giving the guy a huge severance package, so they retain him as a “consultant” for a year. For you recent MBA graduates out there, here’s the takeaway — it makes more sense to shoot for the top at Sears rather than grind away trying to reach the pinnacle of Microsoft or Facebook.

News reports recently derided McDonalds for canning its CEO and then bringing the guy back on as a consultant. Reporters pointed out that a McDonalds fry-cook earning $8.70 would have to work 6,631 hours to make what the ex-CEO/consultant will be paid in a single week. But these news reporters don’t get it. The consulting this guy does will actually be worth every single dollar of the three million he receives.

Because here’s how that consulting works:

The current CEO and the board of directors sit down with the ex-CEO/consultant. They go around the table and brainstorm ideas for a turnaround. When it comes to the consultant’s turn, he says:

“We should open more stores in Ireland and then introduce a new product called McFamine potatoes.”

The current CEO nods like he’s considering it.

A bit later the consultant’s turn arrives again. He looks at the others and says “We spend so much on packaging and garbage disposal. We should just put the burger on the counter. If customers want a plate, they can bring their own, just like shoppers do in those places with plastic bag bans.”

Simply put, this guy is getting paid the big bucks to help the current CEO learn what not to do. When your tenure has led to labor strife and negative publicity, you are a very valuable commodity because you’re a wellspring of bad ideas. And making sure the next CEO doesn’t do things the way you did is good for the company’s bottom line.

I know what I’m talking about. I graduated with a minor in Business and a major in History. At graduation my dad mentioned my areas of study and then said I should open an antique store. Fortunately, I avoided that bad idea. And places like McDonalds need to do the exact same thing, hence the high-paid “consultant.”

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3 thoughts on “Consulting For The Big Dogs”

  1. Up to this point, I’ve never understood why a company that fired someone for being ineffective at best or incompetent at worst, would pay him gazillions of dollars. I get it now.

    1. I think it’s also like in murder mysteries where the killer gets a lesser charge for showing cops where all the bodies are. The former CEO knows where all the damage in the company is because he caused it.

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