Why do companies really need all these highly paid external consultants working for them? You may wonder. If you posed the same question to the management of these companies, they usually say "Oh, to help us think outside the box," or "to temporarily plug a skills gap," or "to help us solve a specific problem using industry best practices," or maybe plain and simple "to help us sort out this mess that we've created."
Now though these reasons are plainly valid, the fact is that a consultant is actually hired for a few less than apparent reasons. Often the top management at a company has just changed, and the new manager wants to make an impact and build personal credibility. In this effort, he/she usually feels more secure in asking outsiders for help. The presence of the oursider also gives these managers the excuse to learn about the company, figure out who their friends and enemies are, and if they are lucky charter a few positive changes into the company's list of priorities. Another reason a consultant is brought in is to undertake an especially risky initiative. The idea being that if the initiative eventually fails the company's managers can point blame at the consultant while washing their hands off the carnage. This is a double-edged sword though because when middle managers fail because of the apparent dysfunctions of their internal resources, top management typically gives them a second chance because its not easy to replace them. But when this happens at the highest levels of a company, heads roll no matter who the consultant was or what they did. Finally, a consultant is hired because they have inside knowledge on recently successful strategies and practices at competing firms, and this company is trying to obtain those 'best practices' by hook or by crook.
Considering the above motives behind hiring a consultant, is it any wonder that our insecure organizations are held hostage by exploitative consultants? And does it come as any surprise that consultants benefit from putting their clients through countless business transformations and endless churn?
As I reflect upon my own years as a former big 5 consultant, here are some of my less than savory observations that tie into the above narrative. Many partners/VPs with long time client relationships would often use their deep relationships at those accounts to actively disrupt and influence the internal politics of their clients. More churn at the client, both in terms of roles and business priorities, would inevitably lead to more work for our consulting firm. Another observation relates to how and why we sold high-value services. The multinational consulting firms that I worked for were burdened by innumerable senior partners and VPs earning fat paychecks. This resulted in not only excessive internal politics, but also labor charge-out rates that were too high. And to compensate for our over-management and high costs, our firms kept coming up with service offerings of higher perceived value at a pace which left a lot to be desired in the depth of these offerings. So every now and then, such risky fringe offers would tumble down like a house of cards, and we would be thrown out by an especially embattled top-tier client. But then we would go back to doing just the same thing elsewhere because competition in the consulting space would seem to necessitate such action. And finally, unlike some of the top tier management consulting firms which have a purportedly more ethical approach to services, our consultants would routinely recycle competitive intelligence and proprietary best practices between clients in the same industry vertical. One could split hairs over where ethical lines were drawn, but the fact of the matter was that competing clients, many of whom retained us simultaneously, could with a little effort peek through the 'chinese walls' that we were supposed to maintain between such accounts.
I hope this piece serves as food for thought for top managers out there. Make sure you hire consultants for the right reasons, and from a position of strength. Hire them for their advanced methodologies, research and industry best practices. Do not hire them to challenge the domain knowledge that should be within your firm, and do not let them grandstand the benefits of altering your plans for change without very good reasons. The bottom line is, make sure you interview and evaluate the track-record of the specific staff that the consulting firm wants to assign to you, and tie their fees and individual rewards directly to the project metrics that tell you your work with them is succeeding. Remember that long after the consultant is gone, you and your comrades will be picking up the pieces if you were too short-sighted or impetuous in how you utilized the consultant. And in a world that is getting smaller and smaller, mistakes you make with a consultant will follow you to the most unexpected places at a latter job.
-Vikram
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