What are Consultants for?
Date: 19-11-2007
Source: Financial Times
Consultants believe their primary mission is to bring about permanent change in their clients' organisations that they could not achieve for themselves.
However, research suggests clients see them more as a "body shop" to fill skills shortages.
A survey by the Management Consultancies Association (MCA) found that the single most important reason why organisations use consultants (70 per cent) is access to specific skills not available internally. A similar report from LogicaCMG came up with the same figure, with facilitating a significant change programme (65 per cent) trailing behind.
"Our research shows that people want to access specialist skills they need for a short period of time," says Fiona Czerniawska, director of the MCA's think tank, "and the management consulting firms have those skills. There are 'economies of knowledge' because the client gets the benefit of using a consultant who has worked for different businesses in different places within a particular field. They can then use the skills of these 'warm bodies' to change their organisation."
Lynda Purser, managing director of the Institute of Business Consulting, a professional body, says an organisation may be at a point of strategic change it cannot bring about on its own because it lacks internal knowledge and skills. What they are doing might not necessarily be leading-edge in the outside world, but is to them. "They may not have invested in the necessary skills and knowledge in the past," she says, "and this is where consultants can help."
Hiring a consultancy just for their skills is fine for a short term where the organisation will have no further use of the skills afterwards. However, longer term needs are met at lower cost by hiring an individual, either onto the payroll or on a finite contract.
Ms Purser points out that the survey figures are likely to include the public sector, which has divested itself of a huge number of people since the Gershon efficiency review. "As they reduced the headcount, they found themselves filling skills gaps with consultants for quite considerable times," she says. "It is entirely wrong and they have begun to address the situation."
The same situation exists in the private sector. Futurologist and business angel Peter Cochrane says that clients are looking for just skills because most are now operating at very high efficiencies. With people working 50 or 60 hours a week instead of 40, they are often working 110 per cent of their available time.
"There are no lightly loaded people and no slack," he says. "Most people no longer have time to think or keep-up with the latest trends and changes. In contrast, consultants can devote as much as 30 or 40 per cent of their time to keeping up to speed." Richard Rawlinson, a partner at Booz Allen Hamilton says that it is often impossible for an organisation to maintain the same range of specialist skills or to provide the broad comparative experience that consultants develop.
David Thomlinson, managing director at Accenture warns of the danger that weak management at clients can cause them to become used to having consultants around. "In these convenient relationships the consultant become an expensive cost and part of the scenery," he says. "If there are elements of the consulting profession that do 'body shopping,' they bring the consulting name somewhat into disrepute. Consultancy is not about providing people with skills, but bringing the knowhow, drive and capability to deliver transformation."
He says the way to avoid incorrect use of consultants is to create a continuing tension in which the client continually questions the value of the work and the consultant constantly justifies the value they are bringing. Alan Russell, head of consulting at LogicaCMG, is surprised by the number of clients that do not formally, and rigorously, assess the value and business benefits achieved.
An individual contractor may be a good solution where just one person is needed for a finite period to supplement internal resources. "In this way, they can meet demand and reduce costs more easily when the business requirements change," says Ian Lever, director at NCC Group. "Contractors and consultants are not one and the same, and consultants should be used only for specialist projects that have a significant impact on the transformation of the organisation."
Mr Russell says that the knowledge base and "horsepower" of a consultancy is more appropriate for large-scale or global projects. They have the ability to mobilise resources quickly and efficiently wherever they are needed and can work with a consistent approach. This is especially valid in Sarbanes Oxley and other regulatory requirement work.
"Hiring consultants to fill missing skills is a misunderstanding of the role of consultants," says Aidan Bocci, chief executive of Commercial Advantage, "and is the best way to prevent them from adding value. Genuine value is added only when consultants unlock the existing capabilities within an organisation."
He argues that consultancy is about working with people to change their mindset and working patterns. Clients should not ask the consultants for answers, but to help them find answers for themselves.
Gerald Dunn, a director at Qedis, says that undoubtedly there is the time and the place for bringing in the expert who has done a task many times before. "However, if you are using consultants," he says, "you are usually looking for smart, pragmatic, organised problem solvers who can adapt to what they find and deliver value."
A critical role of consultants is to use their arm's length relationship to bring objectivity to the client's problems. Even if the client has the skills in-house, it can be blocked by resistance to change, turf wars, outdated bonus schemes, obsolete technology and many other causes.
"Rarely does the chief executive have easy access to all the information they need," says Claire Arnold, managing partner at Maxxim. "One of our jobs is to get that information 'come hell or high water' and to help them understand why people might not want to give it up or 'spin' it. Consultants can help facilitate and even force a decision, because inertia is often the cause of the problem."
David Ketchin, lead practice director at Parson Consulting, points out that skills alone are not enough. Whereas technical skills are required to challenge the status quo, client companies often lack change management expertise. It is the blend of the two that delivers true value to an organisation. "One of the most important and enduring rationales of a consultancy is to bring external insights and experience in different industries from around the world," says Mr Thomlinson. "These insights are both with regard to the 'what' and the 'how' of change."
Another reason to use consultants is because they can speed up the process of change. "Often the requirement is for a burst of effort to get something done by people that do not have other obligations or a day job to attend to," says Mr Dunn. "Consultants can be brought in, set clear deliverables and aggressive timelines and provide the catalyst or momentum to get things done."
Another reason for a broader use of consultants is that projects take place in a constantly changing business environment, so the skills needed may change as a project proceeds. As Mr Russell points out, very few companies stand still for the duration of even a six-month project.
"Consultants often look expensive," concludes Mr Cochrane, "but their flexibility, dynamism, knowledge and creativity come from their low utilisation. Creativity, problem-solving and solution-engineering take time!"