6 Reasons Why Companies Spend Millions To Hire Management Consultants
Friday, April 10th, 2009Consultants can have a negative reputation - charging $2 million for 12 weeks work that results in stacks of PowerPoint slides, all of which are archived into a dusty closet (digital or otherwise) soon after McKBain Group leaves the premises.
Below, Ill paint a more optimistic (and personally held) view on the key reasons why companies need business consultants. Youll have a better understanding of management consulting as a future career.
1) Staff augmentation - the least impactful role that consultants can play. Companies often have temporary staffing shortfalls (in the case of government work, this can extend for many years) due to a variety of factors (eg, recent downsizings, unplanned growth). While its an expensive way to solve a problem, it can be common work for operational consultancies (eg, Accenture) and, to a lesser extent, government consulting firms (eg, Booz Allen Hamilton)
2) External change force aka political cover. It can be hard for companies to do whats needed (eg, sacred cows) - particularly when it comes to employee layoffs, salary reductions, major operational changes. Hiring business consultants can help accomplish needed goals with sufficient political cover in case select parties protest (eg, displeased Board or disgruntled employees) or things go wrong (Despite the significant cost increase, we implemented BCGs recommendations ” theres little that what we could have done better)
3) Best practices across sectors and functions (eg, organization, supply chain) - consultants have the privilege of:
a) Serving multiple clients in the same sector (eg, Consumer Software, Automotive) b) Serving multiple clients facing similar functional problems in different sectors (eg, North African expansion, East Asia outsourcing)
This enables them to identify common characteristics of effective solutions.
4) Analytical manpower
A corollary to staff augmentation, companies often require help to address problems where their knowledge and skillsets are lacking. Consultants can be of great value given their training - a big reason why consulting jobs are hard to find!
5) New perspectives
Companies often need an outside viewpoint - youd be amazed at the amount of value business consultants can add based on the most commonplace observations. Critics contend that this is evidence of consultants selling common sense, but for front-line workers up to senior executives, it can be easy to fall into daily routines without casting a sharp eye towards self-criticism and improvement.
6) Client training
Every consulting project - particularly ones with frequent client interaction - incorporates client training as a key ingredient. The best recommendations are worth nothing if clients cant maintain suggested changes after McKinsey leaves. A big part of what business consultants do is to coach client employees on the necessary skills, knowledge, and mindsets.