Management consulting refers to the industry and practice of providing guidance to management in order to improve the performance of organizations primarily through the analysis of existing organizational problems and the development of plans for improvement. Consulting engagements often provide practical insights and solutions that lead to substantial improvements for client organizations.It involves work on the ground with organizations to develop strong strategic foundations to implement new techniques that businesses to deliver on their promises to customers, stakeholders and their employees. The objective is to enable a 360-degree view of challenges faced by the clients, which helps in achieving sustainable efficiency improvement on operations.
Management consultants help organizations to solve issues, create value, maximize growth and improve business performance. They use their business skills to provide objective advice and expertise and help an organization to develop any specialist skills that it may be lacking. Consultants are primarily concerned with the strategy, structure, management and operations of an organization. They provide a variety of alternatives to cater to clients’ needs, including customized approaches catering to specific performance and technology related business challenges. They identify options for the organization and suggest recommendations for change, as well as advising on additional resources to implement solutions.
The day-today activities of management consultants are often complex and will vary depending on the client and type of project. Typical tasks in a management consultancy include:
- Carrying out research and data collection to understand the organization;
- Conducting analysis;
- Interviewing the client’s employees, management team and other stakeholders;
- Running focus groups and facilitating workshops;
- Preparing business proposals and presentations;
- Identifying issues and forming hypotheses and solutions;
- Presenting findings and recommendations to clients;
- Implementing recommendations/solutions and ensuring the client receives the necessary assistance to carry it out;
- Managing projects and programs;
- Leading and managing those within the team, including analysts;
- Liaising with the client to keep them informed of progress and to make relevant decisions.
Management consulting firms range from larger firms that offer end-to-end solutions, to smaller or niche firms that offer specialist expertise and skills in certain industry areas. Whether specialists or generalists, consultants use four key resources: objectivity, broad experience, analytical skill and full-time attention to each assignment. They offer services across all areas of business- from HR and marketing to IT and finance.Though the categorization of the management consulting industry is imprecise, nearly everyone practicing management consulting could be classified into one of them. The categories are:
- Strategy Consulting: Strategy management consulting firms’ advice senior management across all industries on broad questions related to major strategic questions. The major management consulting firms focused on strategy consulting include McKinsey & Company, Bain & Company, the Boston Consultancy Group, and Booz & Co. Questions a strategy consulting firm might tackle include:
- How do we respond to a new competitive threat?
- Which manufacturing plants should be shut down?
- How can we increase our positive margin?
- How can we increase our market share?
- How do we go about launching new product?
- Accounting Firms: The major audit firms also often provide consulting work to their clients. The major players include PriceWaterhouseCoopers (PWC), KPMG, Ernst & Young, and Deloitte Touche Tohmatsu. The similarities between accounting and consulting can be significant (e.g. both advice senior management, both require familiarity with business mathematics). Questions consultants within accounting firms might address include:
- What financial tracking and reporting processes are inefficient?
- How can we improve our compliance rates?
- How might we improve cash flow by optimizing our billing or payment processes and policies?
- IT Specialists: The complexity of IT consulting combined with the sheer market size of the key players, warrants giving the IT specialists their own category. IT specialists would tackle questions such as:
- How can we automate this antiquated paper system?
- How should we go about fine-tuning and articulating our specific requirements to receive bids from different IT vendors?
- How should we go about implementing a company-wide ERP(Enterprise Resource Planning) software system or CRM (Customer Relationship Management) System?
- What new system should we update our old “green screens” to?
- How can we ensure our important data is encrypted, backed up, accessible, and secure?
- Boutique consulting firms: Generally, these firms tend to have a clear specialization on a given industry or practice area- or both. There are hundreds of different ways boutique firms can specialize in. For example, sales and marketing consultancy, human resources issues, innovation consulting, etc. The questions they tackle and their recruiting processes vary widely. The prestige, selectivity, and name recognition of boutique firms also varies quite a bit.
- Internal Consultants: Many management consultants have one client and one client alone: their employers. It is common for many corporations to have an internal group that operates as a consulting team, tackling valuable potential improvement opportunities within the corporation. Often a company’s “strategy group” could also be called an internal consulting group. Corporations enjoy several benefits in having an internal consulting team present. Internal consultants are already familiar with the business, cost less than external consultants, and can often advance into other key leadership roles in the company. Questions internal consultants might tackle include:
- Why do we have such variation in cost in different parts of our business? What opportunities exist for us to identify best practices and disseminate them worldwide?
- What businesses would make appealing acquisition targets for us?
- What’s the competition doing with regard to this particular issue?
- How would we continue our business if the union organized a strike at a key plant?
The variety of questions they tackle may be very diverse like the list above, or more specialized into a particular area such as purchasing.
- Independent Consultants: These consultants don’t operate under the banner of a major company. These entrepreneurial souls often work by themselves or in a small team of 2-6 people total. Frequently independent consultants have gained a deep expertise from having spent years tacking a particular type of business challenge.
These broad categorizations can provide a useful starting point in exploring management consultancy options. Which one is best? Will depend on the company’s background and goals.