Most companies at any stage of their growth (or even in the event of their decline) can be benefited substantially by retaining the services of the right management consulting firm. Management consulting firms are, generally speaking, in the practice of advising and assisting businesses to improve their performance in any given set of circumstances.
Consultancies operate primarily through an analysis of a client company's situation; the application of experience and expertise in formulating a tactical or strategic plan for improving the status quo; and, by proactively overseeing the implementation of the proposed plan of action until the desired result is obtained. It is in this last aspect of a typical management consulting engagement where even the most notable and established consulting firms tend to fall short.
Consultancies may provide organizational change management assistance, development of coaching skills, process analysis, technology implementation, strategy development, financing, marketing and branding, merger and acquisition or operational improvement services. Management consultants often bring their own proprietary methodologies or frameworks to guide the identification of problems and to serve as the basis for recommendations for more effective or efficient ways of performing work tasks.
In choosing the right management consulting firm, the following factors must be given serious consideration: objectivity, expertise, experience, problem-solving orientation, scalability of solutions, client-centric focus and affordability. In considering all of these factors, you may well find that some of the older, larger management consulting firms may not be the ideal match for your company's needs.
In an ideal client-consultant relationship, the client and the consultant can both gauge the return on the consulting investment (the “Consulting ROI”) by dividing the incremental improvement (produced by the implementation of the consultant's advice and efforts) by the total billings of the engagement. The greater this return, the more successful the engagement.
In making this evaluation, it should be borne in mind that the client's cooperation is an integral component of any successful engagement – and further, that the consultant can only hope to exert limited control over the client's compliance.
Returning to the factors for selection of a management consulting firm as set forth earlier, we should take a closer look at each factor, the reasons for its significance, and how to get a preliminary “reading” on whether or not your prospective selection has the necessary attributes to warrant your serious consideration:
When retaining the services of a management consulting firm, be certain to choose one that will view your company objectively (i.e., a firm which: has no ties to any of management or employees; a firm which is not too narrowly specialized in your vertical or technical industry; and a firm which does not have a conflict of interest where it may be doing work for one of your direct or prospective competitors).
Look for expertise (among the resumes of the management consulting firm's personnel) in the areas where you believe that your company needs to focus. Don't look for narrow technical expertise – look for expertise in the areas of business discipline where your firm may need shoring up, such as marketing, branding, manufacturing, strategic planning, financial restructuring, strategic planning, dispute resolution, team-building, risk management, etc. Business is business, whether it is nanotechnology or fertilizer packaging.
While expertise is quite important, there can be no substitute for experience in the various business disciplines – especially if that experience centers around a particular area of expertise across a broad spectrum of industry sectors. Some of the best small- to medium-sized management consulting firms are comprised of a group of experts (in different business disciplines) who are well-seasoned with the wisdom that only experience can confer.
When requesting the services of a management consulting firm, your company is generally not looking for an academic or operational study – your company, as most, is usually looking for pragmatic, real-world solutions to suspected or known problems. Your company is seeking actionable findings. If your choice of management consulting firm is wrong, you will wind up with a tremendous amount of information, usually beautifully bound and presented. But is the information focused on solving problems? Is the information instructive and directly actionable? Most of all, will the firm that you select assist you directly in the implementation of its suggested course of action? Most firms fall short when it comes to distilling their information into a tightly-focused, streamlined actionable agenda, just as they are prone to fall short when it comes to “hands-on” assistance in the implementation phase.
Scalability Of Solutions:
Solutions to problems encountered by your company must be accommodating of your company's size of operation. If the solutions presented by your selected management consulting firm are based upon a framework and assumptions that are too large or too small for the existing size of your business, they can be more harmful than helpful. Scalability of solutions, i.e., suggestions and plans to fit the present size and immediate needs of your firm, is a critical component of a successful consulting engagement. Oftentimes, a large management consulting firm paired with a young, growing company makes for a poor match where scalability of solutions is concerned. As an added note, scalability is as essential to realistic implementation as realistic implementation is to a successful outcome. When it comes to management consulting firms and to proposed courses of action, one size does not fit all.
If the management consulting firm that you are contemplating engaging spends more time touting its own accomplishments and reputation than examining your needs, consider this to be a negative indicator. While an allowance must be made for a certain amount of salesmanship, a client-centric management consulting firm will inundate you with requests for information and question you extensively.Then, they will make careful note of your information and answers and reiterate or paraphrase them to you, just to be certain that they understand your needs so that they may sculpt them into the scope of your engagement. A firm that does far more talking than listening and observing is probably not client-centric. For those of us who are professionals in management consulting there are three understood rules: 1) know your client; 2) understand exactly what your client would like for you to focus on; and 3) be certain that the scope of your engagement is built around your prospective client company's needs and objectives.
Cheaper is not necessarily better or worse. Your company must be realistic when it comes to its budget for consulting, and be fully candid with any prospective candidate management consulting firm about budgetary constraints, as well as time constraints. While some of the largest consulting firms may be very inflexible in terms of their hourly rates and demands upon your limited budget, some of the more contemporary small- to middle-sized consultancies may be willing to defer a portion of their billings and/or take part of their compensation on a contingent basis geared to the occurrence of some successful event.
If a consulting firm just seems too expensive for your budget, and they cannot work with you in terms of pricing, you may well be speaking to the wrong management consulting firm. In the current economy, management consulting firms need to be creative when it comes to their pricing if they wish to remain in business. After all, management consulting is a business just as manufacturing or retailing. Businesses must be more flexible and creative in a difficult economy or when faced with a client base having special budgetary needs.
As of June 1st, 2015, some of the better-known management consulting firms having a presence in the United States or the United Kingdom (according to Wikipedia) included the following [the author of this article does not necessarily endorse these firms, the list is not exhaustive, and the firms are merely listed in alphabetical order]:
Many of the above-listed management consulting firms are very specialized in the nature of the services that they provide. Many tend to be centered around accounting, IT, research, financial analysis and other vertical areas of expertise. While this may be seen as positive (and may actually be desirable in certain cases), much can be said in favor of multi-specialty firms, especially if your company is a relatively young or rapidly-growing enterprise. By and large, diversification of expertise is generally a positive in management consulting companies which serve a client base of young entrepreneurial enterprises and small- to middle market-sized firms.
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