Management consulting is a US$ 284.5 billion industry (Statista, 2019), which in 2017 contributed 0.33% to global GDP. There are circa 100 large consulting firms in the world, with names such a McKinsey & Company, Boston Consulting Group, Bain & Company, Accenture, Deloitte, PwC, Ernest & Young, etc., dominating the industry in terms of prestige, brand value and fees earned. However, there are thousands of smaller firms and freelance consultants who offer their services on an individual basis, or as part of a network. But what exactly does a management consultant do? What value do they bring to the table? What methodologies do they use? This article aims to answer these questions.
What is Management Consulting?
According to a Harvard Business Review article, management consulting is more than just giving advice (Turner, 1982). The ISO Guidelines for Management Consulting Services, describes it as “a set of multidisciplinary activities of intellectual work, within the field of management, which aims to create value or promote change, by providing advice and proposing solutions”. Wikipedia defines management consulting as “the practice of helping organizations to improve their performance”. Alan Weiss (2010), consultant, founder of the Summit Consulting Group, bestselling author and considered by many as the “rock star of consulting”, defines a management consultant as “an expert in one or more identified areas who partners with a client’s organisation to improve its condition”. ISO (2017) in turn describes a management consultant(s) as follows: “Management consultants use their know-how to support clients in any sector locally, regionally and globally to deal with important issues such as handling complexity, achieving sustainable organisational growth, innovating, achieving change and enhancing productivity”.
A management consultant’s role is, therefore, working with organisations in all sectors to improve their performance by solving problems and finding new and better ways of doing things. A good management consultant helps the organisation to decide what the outcomes are that they aim to achieve together, how they want to achieve them and then supporting their client to achieve the agreed results. Management consultants mostly have advanced qualifications, with excellent interpersonal skills. They are trained to solve complex problems and to devise strategies aimed at improving the financial and operational health of their clients’ organisations.
The purposes of Management Consulting
The Harvard Business Review (Turner, 1982) arranged eight fundamental goals of management consulting in the following hierarchy.
Why do organisations use Management Consultants?
Organisations draw upon the services of management consultants for many reasons, including gaining external, objective advice and access to the consultants’ specialised expertise. As a result of their exposure to, and relationships with numerous organisations, management consultants are typically aware of industry best practices. Management consultants can function as bridges for information and knowledge, and external consultants can provide these bridging services more economically than client firms themselves. Marvin Bower, a long-term director at McKinsey & Company, always highlighted the benefits of a consultant’s externality and their varied experience outside the client company (Wikipedia).
What services are generally provided by Management Consulting firms?
Management consulting includes a broad range of activities, and many firms define them somewhat differently. Services typically provided by management consulting firms are:
- Business processes management
- Coaching (executive and business coaching interventions)
- Change management
- Corporate finance (fundraising, capital restructuring, valuations, M&A’s, etc.)
- Corporate governance
- Cost transformation
- Environmental management
- HR consulting (talent management, executive recruitment, performance management)
- Organisational design
- Organisational transformation
- Performance improvement
- Post-M&A integrations
- Risk management
- Strategy development and mapping
- Technology implementation
Some of these services (or activities) may be offered as part of a more comprehensive assignment, i.e. organisational transformation, performance improvement, post-M&A integrations, etc. Some firms specialise in specific practice areas, e.g. strategy, finance, HR, IT or operations, while others offer a broader portfolio of services.
What methodologies do Management Consulting firms use?
Consultancies often provide their proprietary methodologies to guide the identification of problems and formulating solutions. Most often, methodologies are based on academic frameworks, e.g. Porter’s Five Forces, Kotter’s Eight-Step Model for Organisational Change, Chan & Mauborgne’s Blue Ocean Strategy Model, and others. These serve as the basis for recommendations for more effective or efficient ways of performing work tasks.
According to Christensen et al. (2013) in a Harvard Business Review article, there are three management consulting business models:
- Structured to diagnose and solve problems whose scope is undefined
- Delivers value primarily through the consultant’s judgement rather than through a repeatable process
- Customers pay a fee for the service
Value-added process business
- Structured to address problems of defined scope with standard processes
- Processes are usually repeatable and controllable
- Customers pay for the output only
- Structured to enable the exchange of services between clients, firms and networks
- Customers pay fees to the network, which in turn pays the service provider
A management consultant is an expert in one or more identified areas who partners with a client’s organisation to improve its condition. They are trained to solve complex problems and to devise strategies aimed at improving the financial and operational health of their clients’ organisations. Organisations draw upon the services of management consultants for a number of reasons, including gaining external, objective advice and access to the consultants’ specialised expertise.
Christensen, C.M., Wang, D. & Van Bever, D. (2013) Consulting on the cusp of disruption. Harvard Business Review: October 2013.
ISO 20700:2017. Guidelines for management consultancy services. Available at: www.iso.org [Accessed on 9 January 2020]
Statista. Size of Global Consulting Market from 2014 to 20125. Available at: https://www.statista.com/statistics/466460/global-management-consulting-market-size-by-sector/ [Accessed on 10 January 2020]
Turner, A. N. (1982) Consulting is more than giving advice. Harvard Business Review: September 1982.
Weiss, A. (2010) Million Dollar Consulting. McGraw-Hill: New York.
Wikipedia: The Free Encyclopedia, Wikimedia Foundation (n.d.) Management Consulting. Available at: https://en.wikipedia.org/wiki/Management_consulting [Accessed on 8 January 2020]