Whether the economy goes up or down, the Management Consultancy Industry has usually kept on growing at about 20% a year

June 19, 2005 10:06 AM

Do we need management consultancies?A new book written by "David Craig" - a nom-de-plume for an insider with 20 years of consultancy experience.
"What distressed me and many other consultants was how the greed of directors and partners put me into situations where we cheated,lied to and defrauded clients while our bosses became enormously rich through various tax avoidance schemes."
Of course John Birt (BBC) and other consultants tend to disagree. The UK goverment spend on consultants is now £1.9 Billion per annum (about $10 Million/day.)
posted by Lanark (17 comments total)

Pepsi of the Blue variety.
posted by mischief at 10:25 AM on June 19, 2005

Short answer: no we don't!

Long answer: only managers need management consultants to make unpleasant or difficult decisions so that they don't have to take the blame.

But the real waste of money are all these books that take 300-400 big-print sides to say what we knew all along.
posted by axon at 10:39 AM on June 19, 2005

Many companies need consultants, because nobody has the backbone to stand up and say what's wrong.

Aften consultants are professional scapegoats for incompetent managers to hide behind.
posted by homodigitalis at 10:55 AM on June 19, 2005

How do you leave university with a 2:2 in Economics and go straight into a management consultancy company, when you haven't got the faintest idea about anything???
posted by dickdotcom at 10:58 AM on June 19, 2005

Too bad you can't genetically engineer a virus that only kills soulless, greedy fucks.

Yet.
posted by Floach at 11:10 AM on June 19, 2005

Well my experience with consultants is that there's good and bad, hiring the right person for a few days or weeks can be a huge benefit. On the other hand I've heard too many stories of consultants hired for months or years, purely for political reasons - e.g. we can't hire anyone for XX,000 /Year to do this job and we can't offer a higher salary without risking a revolt amongst other staff, so just bring in a consultant for XX,000/Month.

PS Someone is buying a lot of these books - it's ranked in the Amazon top 50
posted by Lanark at 11:42 AM on June 19, 2005

I work for the United States Department of Defense. Five years on a project with the consulting firm formerly known as Anderson Consulting has taught me that the taxpayers are getting royally screwed in this case. Why do we need them? Short answer is that we don't. Their function in the case of my project has been to set the schedule and enforce the deadline, something that we might be unable or unwilling to do on our own. One of my coworkers has said that this is the greatest training opportunity that this firm has ever had. They take green kids fresh out of B-school who can't find their own asses with both hands and teach them to use SAP on my nickel. Then they ship them off to other projects and say 'look at all this great experience they have!'
posted by fixedgear at 12:12 PM on June 19, 2005

homodigitalis: Many companies need consultants, because nobody has the backbone to stand up and say what's wrong.
Aften consultants are professional scapegoats for incompetent managers to hide behind.


Usually it works like this: Company is bleeding red ink and needs to restructure (i.e. lay off workers), but that's difficult since there are strong unions or the like. Company also needs a new loan to pay the bills. So the bank says "OK, we'll give you the money, but first you let these consultant folks have a look at your operation and follow their recommendation." Consultant comes in and tells them the best thing to do is to lay off 2000 people. Of course, everybody knew this all along...
posted by sour cream at 12:12 PM on June 19, 2005

Of course, everybody knew this all along...

Communication is often the problem - I've seen a few sites where everyone on the front line knew what needed to happen but the Management needed to hear it from an 'expert'
posted by Lanark at 1:37 PM on June 19, 2005

Yeah, I have a friend who made a good living as a consultant and he said companies basically needed to pay somebody to tell them to do what they were going to do anyway because they didn't trust the decision otherwise. Nice work if you can get it.
posted by languagehat at 1:42 PM on June 19, 2005

There's a lot of cases where consultancies' clients are getting screwed by them.

There's also a lot of cases that I deal with every day (as a business/software consultant) where someone with an outside perspective needs to come in and fix things, and the buisness ends up making gobs of money after a very low up-front investment in the advice of an experienced, perceptive, intelligent consultant.
posted by SpecialK at 3:15 PM on June 19, 2005

You can read the first chapter of the book online (PDF). It's a great read, especially the Seven Deadly Scams section.
posted by simonw at 3:53 PM on June 19, 2005

Seen as a subsidy for the overeducated who can't figure out what else to do with themselves, it's not as bad an idea.
posted by Zurishaddai at 4:32 PM on June 19, 2005

It's less a subsudy for the overeducated than it is a subsidy for the pretty-well-educated who are underspecialized.

A typical BCG, Bain, or McKinsey management consultant went to one of about ten top business schools, has a 95th percentile brain, and no specific skillset. They don't have FASB statements memorized, they can't nuke an odd lot, eyeball the duration of a bond portfolio, or spot the weak link in a supply chain. What they can do is apply basic business sense from an outsider's perspective. That can be valuable, or it can be a total waste of time and money.
posted by Kwantsar at 6:18 PM on June 19, 2005

As a management consultant, my position on the industry sways widely from week to week, and from client to client. But the fact is that many clients simply don't have the in-house expertise to do some of the stuff we do, and to permanantly hire the right people would be prohibitively expensive and probably unnecessary. So instead, they hire us for a fixed-term project, we work our nuts off and then go away hoping that the client will implement our work. That's the main reason for entering into a consulting engagement (lack of capability); "unbiased opinion" is in a far second place. Clients have political priorities, consulting firms want deeper relationships, individual consultants have career aspirations, etc. etc. If you think anyone's opinion is truly unbiased, think again.

Like Kwantsar said, The top firms like BCG, Monitor, Bain, and McKinsey are filled with very smart people, usually insecure overachievers. We work a ridiculous amount of hours (worst for me was 100 hours in six days) and generally don't see a commensurate financial payoff for 3-4 years after joining -- and that's if you have a job after 3-4 years, which you may not because of most top firms' up-or-out policies.

So before you jump all over management consulting as the root of all evil, realise that like with anything, there are good firms and bad, good consultants and bad, worthwhile engagements and not. If a company really knows how to maximise the value of a consulting engagement (wow, that sounds consultant-y) they can really take advantage of excellent thinking and strategy, and use it to their huge benefit. It's gonna cost them (plus 20% for expenses), but if they know what to do with it (and we've helped them understand what it is and how do use it), consulting advice can be really valuable.
posted by lazywhinerkid at 1:14 AM on June 20, 2005

All that said, this is a great site!
posted by lazywhinerkid at 1:38 AM on June 20, 2005

Ahem.

As an insecure overachiever (probably more smartass than smart) who's due to go fresh out of university and into one of the M's of strategic consulting (why do most start with a B or M? Nobody knows..), I think there will always be a place for consultants of all types.

From my own personal experiences in deciding which firm to go for and why, I reckon that there will always be a great deal of waste in the industry too for the reasons others have outlined above - some actively pursue the above picture it seems (not naming any names.. I hear government consulting is cushy..).

I also saw that there is a wide variation in the approach of these consultancies - some apply basic business principles and have a somewhat "fluffy" approach to things, trying to get new insights/overall views, others really crunch out the numbers and create super advanced models beyond the capability of their clients.

At the end of the day, the value of a consultancy can be judged by whether the client gets more in return to his expenditure. For the top consultancies and specialist niche ones, this is certainly the case (although the larger ones have the occasional horrendous case, of course).

Having said that, I want to work for huh corp. They're going places.

Anyone have any interesting strategy consulting links?
posted by Mossy at 7:26 PM on June 20, 2005