What is Management Consulting?

There are a lot of phrases thrown around in the business world. Of course, most of them are important, but many people don’t know exactly what some common words or phrases mean unless they work in the field. Take management consulting, for example. The professionals who work in this industry provide an incredibly valuable service, helping companies of all sizes, and in many different industries, improve performance and hone in on best practices. After all, there’s always room for improvement, but if businesses don’t know this type of assistance exists, they’re letting valuable opportunities slip right past them.

What is Management Consulting?

Management consulting is a professional service that enlists the assistance of a third-party firm or independent contractor whose subject-matter expertise or knowledge is leveraged for identifying, executing, optimizing, or validating a business decision. At least that’s how we define it.

Management consulting tends to be an overarching category of many types of consulting services. There are different views of the high-level categories management consultants tackle, but this field can accurately be broken into the following three categories:

  • Management – True management consulting constitutes anything included in the day-to-day functioning of a company and involves working to improve those tactical functions via operations or cost improvements. Typically, these functions reside within a single department of the organization with influence from other groups.
  • IT / Tech – IT / Technology consulting specifically relates to a company’s technology, including hardware, software, data services, networks, and systems. It’s worth noting IT consulting could really be in its own category, as annual revenues from this practice area in the U.S. exceeded $400 billion as of August 2017(1), according to IBIS World, a leading research firm.
  • Strategy – Strategic consulting includes corporate and organizational strategy and focuses on initiatives which affect the entire company, such as growth or diversification strategies. This brand of consulting is as much art as it is science.

There are other categories of consultants for specific industries, such as not-for-profit or government, and that industry focus is often what sets one firm apart from another, especially in strategy consulting.

Why Use Consultants?

Every organization and need are different, and management consultants play varying roles, depending on the project. No matter what the industry or company goals, however, there are two elements that are key to the success of any engagement: proper diligence and preparation. We’ve detailed the pros & cons of using consultants, but we’ll summarize the important benefits below:

Benefit #1: Expertise

Clients may not have a specific subject-matter expert in-house. Consultants often bring applicable knowledge from other clients, which builds on the foundation of best practices clients may not otherwise have been privy to.

Benefit #2: Flexibility

By using consultants, clients can scale up temporarily in times of need without racking up long-term costs associated with benefits and on-boarding

Benefit #3: Outside (Objective) Perspective

Management consultants uncover a lot of opportunities and problems, some seemingly obvious, because they’re not living and breathing the client’s company every day. Consultants bring an outside perspective, and they have limited preconceived notions of the client organization.

How Do Management Consultants Work?

Consultants work with their clients on engagements, otherwise known as projects or gigs. Separate engagements may overlap, but when projects are being scoped each which will have its own goals, scopes, and project teams.

One note of caution: consulting firms often boast of proprietary and self-built “methodologies” that claim to increase engagement or enhance process management. Our experience has shown these tactics are often just uniquely named variations of already proven best practices.

We’ve provided more details on a typical consulting process, but we’ll cover the basics here.

Identifying the Problems, Opportunities, and Solutions

If a client is hiring a management consultant, they already know there are opportunities to be better. The client leaders may not always know what the problem or opportunity is yet, and consultants are often solicited to uncover those.

Once the project is defined, and the client and consultant decide to partner, they agree on the following terms:

  • Timeline
  • Scope
  • Personnel
  • Objectives
  • Pricing

During projects, there are on-boarding, data-collection, and analysis periods, both qualitative and quantitative, before the teams begin to see improvement through solutions and execution. Teams can usually expect these beginning phases to last for a few weeks to a few months, depending on the project.

Implementing Solutions

All consulting firms do not offer to assist in the implementation of solutions. After all, the ongoing management of the business is the client’s responsibility… However, having a partner who can implement (or an implementation-specific partner involved in scoping) will increase the odds that solutions are logical and attainable. There are also firms who specialize in implementation, but most firms will find a way to assist in implementation because: 1) they want to help their partners as much as possible and 2) there will be consulting fees.

Meetings & Milestones

Regular meetings are important, as they allow the stakeholders to review findings and output, track progress, and identify and address potential risks to the project. Most milestone (or “check-in”) meetings occur once a week. Depending on the type of engagement and the specific needs, meetings may be more or less frequent. IT-related projects, for example, often have daily meetings. Between these formal touch-points, however, the consultants will be working with the client’s internal team throughout the project, whether on-site or remotely.

Management Consulting: Who, When, & Where

Naturally, organizations want to have the right people on the team, at the right time, and in the right place.

Who

Consultants are typically hard-working, business-minded professionals who are skilled in pragmatic and critical thinking. Again, everything is variable in the consulting world, but in our experience, a representative team might be comprised of two to four full-time resources, including one engagement manager and one to three analysts. Clients can also expect senior-level oversight from a principal and/or partner of two to ten hours a week. Large scale projects can have up to a few hundred employees for enterprise-wide implementations.

When

The length of time warranted for a project will also vary dramatically, from a couple of weeks for needs assessments to multi-year for large implementations. On average, however, management consulting engagements typically last from three to six months, with options for expanding and adjusting scope on a regular basis. Remember, each engagement will have its own scope and objectives.

Where

Work-spaces have evolved a lot over the years. Traditionally, consultants have been on-site Monday through Thursday every week, with Fridays being worked from the home office. However, with costly travel and enhanced connectivity, remote work has become more common. Consensus conducted a survey of almost 500 management consulting buyers, and we found having on-site partners was rated among the least important project success factors. However, our experience shows that face-to-face sessions are highly beneficial for communication efficiency.

In the end, the most important item stakeholders really need to know about management consultants is that they’re in business to see their clients succeed. When the client succeeds, the consultant or firm succeeds (in the form of additional fees and rewarding work). They are partners throughout the process, working with the client’s entire team so everyone understands the process, expected outcomes, and bottlenecks that could be holding clients back from achieving optimal success.

 

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Consensus is a directory and review database of management consulting firms and their services. At Consensus, we believe there is lack of information pertaining to the quality of work executed by consultants in the eyes of the client stakeholders. We are working to build the largest database of genuine, accurate, and helpful testimonials from  consulting clients.

 

Sources

  1. IBISWorld (August 2017). IT Consulting in the US. IBISWorld Industry Report 54151.