Improving ROI on Consulting Spend
According to Plunkett Research, global consulting industry revenues will be about $431 billion in 2014 (including HR, IT, strategy, operations, management and business advisory services). If companies spend so much on consulting why is the industry so surprisingly unregulated and why do consultants get such a bad press? Well here are some thoughts:
- The barriers to entry are low, practically anyone can, and many do, call themselves ‘Management Consultants’.
- Qualifications are often not sought or expected, narrow work experience is not challenged and limited experience is too often rewarded with a high daily rate
- Clients sometimes just hire the wrong consultant for the task at hand, because we are all the same, right?
- Clients often ‘body shop’ from consulting firms in the same way as they would with contractors and ignore the value that partnering with a reputable consulting firm can bring.
During my years in consulting, almost every time we’ve worked with clients we have had to fight for our reputation and prove to them that we can help transform their business functions, save them money, increase productivity and bring value to their organisation. This usually happens when clients have had previous poor experience with consultants. We go into organisations that have now learned an expensive and bitter lesson and we begin the long and slow processes of ‘healing’ the organisation, proving that we can get the job done, and rebuilding trust and credibility in the consulting sector. Frankly this doesn’t do anyone any good and in my view is completely unnecessary.
So how can we stop this from happening? How can we stop this recurring cycle that costs our clients money and often costs the consulting sector their image and reputation?
The answer lies in three different parties taking responsibility for this cycle – the clients who buy the services, the industry bodies that regulate them, and the consulting companies themselves.
You are the reason we exist and so how you buy consulting services is probably the single biggest factor in getting this right. How do you buy in a smarter way and ensure that you a) get the result you seek from the body of work you have commissioned and b) get a return on your consulting spend? Here are my top recommendations on how to be an intelligent customer of consulting services:
1. Demand experience and expertise: Wikipedia says ‘Organisations may draw upon the services of management consultants for a number of reasons, including gaining external (and presumably objective) advice and access to the consultants’ specialised expertise.’
The key words here are ‘specialised expertise’. This means:
- Graduates with no experience – don’t make the cut.
- Those who have left a corporate entity after 20 years of narrow experience – don’t make the cut.
- Those who bring with them no specialised functional or sector skill – don’t make the cut.
2. Be clear on your objectives: Consultants should take these objectives and develop a scope of work that clearly underpins your aims. This will enable the end deliverable to be in line with your expectations.
3. Make sure that consultants ‘lead from the back’: Your people should be fronting most significant change programmes within your organisation. This gives you the best chance that changes will be adopted within the organisation.
4. Promote your consulting partner: Be proud that you have partnered with the firm you have chosen. Endorse them and engage with them. They are there to make you successful.
5. Make sure that a programme has a beginning, middle and an end: The end is important. A good consulting partner knows that their credibility is dependent on successful delivery so they can be asked or recommended to go and do this in other parts of the organisation. A poor consulting partner will never want the project to end.
Consulting industry bodies:
We call for stricter regulation of our sector. We call for the Management Consulting Association, the Institute of Consulting, The Association of Management Consulting Firms, the Institute of Management Consultants USA and others to work with Universities and Business Schools to bring agreed graduate and post graduate qualifications to the market, without which it would be illegal to call yourself a ‘Chartered Management Consultant’ or some other protected term. This is not to ring-fence the market and drive prices up – it is to raise standards and give the market confidence.
There are a lot of good consulting firms out there, please be one of them and simply deliver what you said you would to your clients, on time and to budget.
Watch this space. The next blog will be connected to this one and we will tell you how to transform and rescue programmes in your organisation, as fast does not always mean quality.