Behold the growth of management consulting: industry revenues worldwide grew from $3 billion in 1980 to $22 billion in 1990.1 Expenditures on such services by U.S. companies grew from about $7 billion five years ago to almost $14 billion in 1991.2 It is the rare Fortune “500” company that does not use management consultants. In some companies, annual fees to the leading consulting firm are $10 million per year or more — in a few, significantly more.
Yet the following complaints are common:
Consultants are always hawking the latest fad, but when they leave we never seem to be much closer to achieving our goals.
Consultants tell whoever hired them what they want to hear, effectively becoming a rubber stamp for management decisions.
Consultants spend a huge amount of time gathering internal information and then tell us what we already know.
Consultants send senior people to negotiate but the work is actually done by a flock of junior people with little business experience.
Consultants never want to leave and constantly try to expand the length and scope of their work.
Consultants make recommendations that none of us understands well enough to execute with the required commitment and judgment.
Consultants make recommendations that only they can implement, leaving the rest of us disenfranchised and ultimately unprepared to manage without them.
These problems are not inherent in the client-consultant relationship; consultants can be powerful catalysts for productive change. But clients and consultants must make new choices throughout the process to ensure that the core tasks of managing stay with management —and are not subcontracted to outsiders.
We have identified four decisions that clients and consultants make, whether consciously or unconsciously, that are critical to how effective the work will be:
- Focus versus Fad Surfing. In a bull market for panaceas, it’s easy for managers to seek preprogrammed answers and for consultants to profit from selling them. But the company that relies on fads will lose focus on higher-impact actions.
- Accepting Responsibility versus Sidestepping Responsibility. Change requires decisions that are personally unpleasant for the client and therefore risky for the consultant. The consulting effort or new program therefore can too easily become a way to postpone or avoid making these tough decisions.
- 80/20 versus All-or-Nothing. Managers feel safer with a complete analysis before they make any changes, and consultants certainly benefit from comprehensive approaches. But an all-or-nothing effort often doesn’t move fast enough to make a difference.