Consulting Services - Are They Worth a Try?
Most organizations, even the most successful, face ongoing problems that seem to defy solution. Should you consider using management consulting services to help you solve such a problem? How can you be sure to get a good return on investment? In other words, how can you get assurance that the problem you are trying to solve is solved for the long term? Whether you are a user of management consulting services, considering it, or have not considered it, here are some thoughts for you to help improve your chances of success.
Consulting has grown to become a considerable industry, measuring in the hundreds of billions of US dollars in global spend. While the industry took a significant hit in 2020, it more than recovered in 2021 and the forecast is for continued global growth.
Evolution of Management Consulting
Management consulting, as a profession, exists to add value to client organization. The size and growth of the industry is proof that organizations are using management consulting services and find value in these services. If the ROI were not there, the investments would not be made.
We are, however, seeing that the way in which clients seek and engage consulting support is changing. The pace of this change had increased because of the Covid 19 pandemic. There are four main drivers influencing this change:
- Clients are thinking less about big ticket projects and instead pace their changes by creating a series of smaller projects.
- Larger organizations are in-sourcing expertise that might traditionally have been provided by external consultants.
- Access to knowledge is greater than it has ever been, which leads to more client organizations believing they can ‘figure it out’ without consulting support.
- Access to talent is easier than it has ever been, leading to organizations to hire specialized expertise that may not be professional consulting expertise.
The consulting industry is adapting to these changing needs and is in fact leading the way in many cases.
There is, in addition, a very large part of the potential client organization pool that does not even consider engaging management consultants. They don’t consider engaging consultant because they don’t believe they will get a return on their investment.
What Management Consulting Research Shows
There is very interesting research from the Centre for Management Consulting Excellence in the UK, published in early 2021: Consultant Value Add: Maximising Value from your Management Consultant. Jim Foster, lead author of the report said: ‘The report highlights the importance of clients and consultants agreeing, at the start of a consulting project, how value is to be delivered and, during the project, monitoring that value is being delivered.”
The research interestingly showed that while the overall added value of the project deliverables was the transfer of skills and experience, decision-making on the acquisition of management consulting was not based on the consultant’s ability to do that.
Both client organizations and consulting firms have work to do in this area. The report recommends to clients that they do a better job of understanding the long-term the value they want the consultant to deliver. The report recommends to consultants that they do a better job up front of demonstrating how they can deliver value to the client.
There is additional older, but still valid, research that identifies a more fundamental reason why organizations may not engage consultants. This study was carried out in Austria, by the Gallup organization on behalf of the Institute of Management Consultants in that country. This research with small and medium sized businesses, carried out in 2012, found that 78% of respondents felt they had no need for consulting services, and 17% had only a modest need. That leaves only 5% of companies that identified a medium or high need for consulting.
How Consultants Are Employed
In my experience with small and medium sized businesses, they are very good at production, and they are very good at sales. This expertise has been sufficient to get them to a level of success. As they scale, they continue to produce more, improve their quality, and to sell more to a wider market. This has given them great confidence in their ability, and a wariness of engaging someone from outside to come into the organization.
They may engage individuals that have specialized expertise to help them, for example with production improvements or marketing and sales enhancements. But it typically doesn’t go beyond that. They believe in the adage that hiring a consultant is paying someone who will “borrow your watch and use it to tell you the time”.
What they miss is the fact that the expertise that has led to their success will not be enough to get them to the next level of success. Organizations at this stage are ready to scale to the next level, but they may not have the managerial systems they need to get them there.
They have reached the point where the Founder’s vision, energy, charisma, and deep knowledge of the company are no longer enough. As the organization increases the number of employees and market reach, daily operations get more complicated. The Founder can no longer personally influence everyone in the organization and can no longer track results using the current systems.
This is where management consulting comes in.
How Management Consulting Pushes Businesses to the Next Level
Using the methods that got the company to its current level of success will at some point begin to fail.
For example – the growing company is facing issues in project management. Projects are late, over budget, and not producing results.
The Founder goes online to find an expert in project management. That person is engaged for a six month project, comes in, and using best practices in project management develops an amazing system.
A year later, projects are late, over budget, and not producing results.
Why is this? The problem has originally been identified as poor project management because of the presenting symptoms of missed deadlines, budgets, and results. The root cause was likely something else. Perhaps there is no framework for accountability and authority, so the wrong people are delegated the work. Perhaps silos have built up because of unclear cross functional relations. Perhaps managers are not doing their managerial work. Perhaps the organization has grown, and there are people in roles that were fully capable, but that can no longer handle the increased levels of complexity of a larger organization.
These are the situations where management consultants can add tremendous value. They can use their cross-sector experience and diagnostic capability to get to the root cause of issues. They deliver value to clients, not by giving aspirin to treat a fever, but by understanding the underlying ‘disease’ that is causing the disruptions in the workplace. They then work with an internal team to work through the solution, and partner with the internal team to transfer skills and knowledge to the organization so that the remedies can be sustained over time.
Management Consulting as a Profession
So how does a client organization differentiate between a professional management consultant and someone with specialized expertise working on contract?
In most countries around the world, consulting is not a regulated profession. This means that there is a very low barrier to entry. Anyone who is recently retired, between jobs, or starting out can label themselves as a consultant.
To overcome this, the profession of management consultancy has organized itself to be self-regulating. In just under 50 countries of the world there are national institutes of management consulting that offer membership, require members to comply with a Code of Professional Conduct, and offer certification to its members. In every other country of the world these same services are offered through a virtual global institute.
Management consultants can demonstrate that they are worthy of the trust that is being shown to them by their client organization. To do this they should be:
- committed to the profession of management consulting.
- a member of an Institute of Management Consulting.
- signatory to a Code of Professional Conduct and share it with the client.
How does a management consultant show they are committed to the profession? Just as managers can become certified by CIM | Chartered Managers Canada, management consultants can obtain a certification. A professional designation shows that the consultant has been through a rigorous process of proving to their peers in an Institute that they have the knowledge, experience, and competencies to be a professional.
This can give potential clients an assurance that the person they are considering engaging understands the profession of management consulting.
Are Consultancy Services Worth a Try?
They certainly are! There is no question that management consultants are adding value to organizations around the world. Find a professional. Determine with them the value-added proposition that can help you.
Enjoy leveraging your organization to the next level!
About the Author:
Dwight Mihalicz, CMC (Certified Management Consultant), helps organisations improve performance. He works with owners and CEO to ensure that everyone in the organization is focused on the right work.
Dwight has founded and is President of Effective Managers™, a management consulting firm based in Canada and providing services globally. He has developed the Resilient Organization Program to help owners streamline their organizations, get everyone focused on the right work, and free them to focus on their strategic work.
Dwight is currently on the Board of The International Council of Management Consulting Institutes, the global membership body for Institutes of Management Consulting, where he served as Chair for three years.
An author of many papers and publications, Dwight has published two books:
- The Effective CEO: The Balancing Act that Drives Sustainable Performance, a book that explores the key functions that CEOs must execute to be successful.
- Consulting through Uncertainty: A Global Perspective, which explores the changing nature of professional services, and management consulting work in particular.
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