Outrage as Government departments spend €2M EACH on consultant fees
- The Mirror, 22 April, 2008.
NHS will spend £172m on private consultants
- Daily Telegraph, 12 September, 2006.
Major British Bank Spends Millions on Consultants as Jobs Cut in Other Areas
- Daily Mail, 4 August, 2000.
Let's face it; management consultants get a bad press. One of the most highly-paid professions, its members always seem to be around when things are going wrong. They wear expensive suits, drive flashy cars, and submit astronomical expense claims, while their clients are closing factories and laying off staff. When their job is done they ride off into the sunset, free of responsibility, leaving the remaining staff to either pick up the pieces or switch off the lights. But if there's one thing you can be sure of, it's that the consultants will be back when the next reorganisation comes around.
So who are these guys, and what do they do to earn all that money?
Know Your Consultant
The title of consultant is used by people performing any of a number of roles in a wide variety of industry sectors. In fact it's become a favourite among over-inflated job-titles (roofing consultant, for example). Leaving these aside, it's important to know which consultant is which, so that you don't tar them all with the same brush.
You may have spotted that the word looks Latin, and indeed it is. That's not to say there were hordes of smart-toga'd consultants turning up in their convertible chariots to oversee the Fall of Rome: the word ultimately derives from the Latin word consulere, meaning 'to take counsel', ie to take legal advice. The Consuls were the elected ruling magistrates of the Roman Republic from around 500 BC, and this title was retained during the Roman Empire and other civilisations since, notably Napoleon's France. Today, we still have consuls who perform a diplomatic role in foreign towns.
The earliest 'consultants' were those doing the consulting, particularly of an oracle. The term gradually shifted to the consulted, however, and one of the first professions involved was one which still uses the term today, that of the physician. These days, a consultant doctor is one who has risen to become a fully-trained specialist in a particular branch of medicine. You don't often get to see these unless you have a particularly serious complaint, and you will find they're a lot less available than other doctors, spending around 50% of their time on the golf course. They examine you in the same way, but their consulting rooms are much more comfy, and they use a lot of specialist language, like 'splendid'.
By the end of the 19th Century, the term had widened to include other professions. Sir Arthur Conan Doyle used it in his Sherlock Holmes stories to mean a private detective. It was about this time that the seeds were being sown for the consulting industry as we know it today, and this was happening in the United States of America. Pioneers such as Arthur D Little and Harrington Emerson offered services which they called 'business research', including budgeting and forecasting methods and organisational planning. The Second World War saw the industry grow rapidly, and by the 1960s the large accounting firms were offering consulting practices. There were around 18,000 management consultants in 1980, but helped by the dotcom boom this figure rose almost tenfold in the next 20 years. In 2006, the industry was estimated to turnover around $70 billion.
In the modern business sense, there are two very different types of consultant. Technical consultants, as the name implies, have specialist expertise in a particular field, in the same way as consultant doctors do. We have consultant engineers and consultant computer programmers. These are people who know about things, and who actually do them, using that knowledge. You contract them, tell them what you need, and they will deliver it. The trouble is, there's another type:
It may seem perverse, but the most highly paid consultants have no specialised knowledge whatsoever. You can't tell them to do things, and indeed they won't tell you what to do. Management, or Process Consultants are the slippery sort. You call them in not when you have a task you want done, but when you have a problem you want solved. They will talk to the management, analyse the problem using their proprietary techniques, then make 'recommendations'. At all times, the client is supposedly in control, despite what the workforce may think when they see these groups of pinstriped androids crawling around the office, then holding cabals with the senior management behind closed doors.
If there's one thing management consultants do know about, it's all the new-fangled ways to get people to talk. They can knock up some pretty natty presentations, and they know all the buzzwords to keep you at arm's length from what's really going on. They can also humiliate you by inviting you to office workshops and getting you to take part in some seemingly pointless group exercises.
Roles and Practices
If it wasn't enough just to have consultants, we also have people who study them. Management guru Edgar Schein analysed Management Consultants and identified three distinct roles. The Expert Consultant provides the benefit of their expertise and experience to management, who will then retain ownership of their problem, and formulate and drive their own solutions to it, using this 'hands-off' advice. At the other end of the scale is the Process Consultant, who is more of a facilitator to management, helping them through the process of defining the problem and creating the solutions. In the middle is what Schein calls the 'doctor-patient' role, in which the consultant essentially forms a personal relationship with the client's board of management, working with them to both analyse and make recommendations.
Consulting practices can be categorised by how strategic the work is that they take on. Danielle Nees and Larry Greiner identified five types:
Mental Adventurers are frankly 'off with the fairies'. They are futurologists, only interested in problems in the areas of long-range planning and strategy. There's no good asking one of these firms to tell you, say, how to improve your profit margin in the next financial year. These are statistical think tanks, and you should be asking them things such as 'how will global warming affect the widgets market in fifty years' time?' Don't expect a report or presentation at the end, though; you might be lucky to get just reams of figures. An example of a Mental Adventurer would be a consultancy such as the Henley Centre.
Strategic Navigators are also concerned with the future, but in the foreseeable period. They will help companies with issues of how to grow the business and make acquisitions to retain and increase their market share. They too will use a lot of statistics, but they will be analysing the market, in particular the competition. You should get something tangible at the end, though, even if it is a PowerPoint presentation. Boston Consulting is an example of a consultancy working in this space.
Management Physicians are more in the 'doctor-patient' mould. They are experts in management, and you shouldn't really think of applying to work for such consultancies without a high-grade MBA qualification and ideally lots of experience. They will get under the skin of the client's organisation and the office politics, and in many cases uncover underlying problems which were not immediately apparent when they were hired. McKinsey & Company is one of the biggest names in this area.
System Architects are experts in the systems and processes which are used to run businesses, usually, but not exclusively, involving IT implementations. Accenture (formerly Andersen Consulting) is one of the best known of these.
Friendly Co-pilots are much smaller practices, sometimes one consultant only, who generally work on a one-to-one basis with the chief executive of a client organisation. These consultants are invariably grey-haired former business executives, who bring with them a considerable amount of wisdom, and who can be treated as a confidential 'sounding board' for the CEO's ideas. They can also get involved in tasks such as executive recruitment. They are often locally based, and although they don't come with all the new-fangled techniques (which they deeply distrust), they are by far the cheapest consultants to contract with.
How to be a Consultant
If you think you can cope with the stigma of working in this industry, if your measure of worth is the flashy car and latest mobile technology gadget, if you are happy to burn the midnight oil and mingle with the executive set, then this could be the career for you. Technical Consultants will generally learn their trade in the industry of their choice before switching to a consultant role later in life. Management Consultants need a good grounding in business skills, as well as those soft skills which they will need to facilitate, negotiate and present. Consider a degree in Business Studies, then follow it up with an MBA, preferably Oxbridge or Ivy League, and you'll be well tooled up to wreak havoc. Remember that however the assignment goes, you'll be able to walk away at the end with no accountability whatsoever for any problems or difficulties that subsequently occur. Just don't read the newspapers too soon afterwards.