The consulting industry is highly fragmented, so here are 5 things you should keep in mind to ensure you’re getting your money’s worth.
With Baby Boomers retiring in record amounts, businesses are facing a growing shortage of experienced workers and a significant talent gap. As a result, companies are struggling to maintain needed expertise in-house.
To help bridge the gap, many businesses are turning to management consultants for support in addressing both current and future needs. Here we’ll take a look at the current trends in management consulting, as well as five things you should consider before your company hires a consultant.
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Current Trends in Management Consulting
Typically, management consultants provide advisory services to a variety of company types, assisting them with organizational design, corporate strategy, information technology strategy, marketing and sales and logistics.
As the impact of the Great Recession has faded over the past five years and company coffers have grown, budgets for hiring management consultants have increased. According to IBISWorld’s 2015 Industry Report, the management consulting industry has experienced new growth over the last five years and is estimated to grow at an average annual rate of 5.2 percent to $200.6 billion from 2010 to 2015.
IBISWorld predicts the industry revenue will increase again by an annualized 3.6 percent to $239.4 billion from 2015 to 2020.
Two examples of such growth trends in the news recently are IBM’s announcement about the launch of the industry’s first consulting practice dedicated to “cognitive business,” and Accenture’s plan to hire nearly 100,000 new employees in FY16 and to spend $1 billion on acquisitions.
Accenture’s moves are largely geared toward competing with its Indian rivals—highlighting the global nature of the consulting business—and IBM’s new strategy shows what businesses are looking for both within their ranks and in service to their clients: the ability to rapidly respond to changing needs.
According to Bridget van Kralingen, senior vice president, IBM Global Business Services, "Our work with clients across many industries shows that cognitive computing is the path to the next great set of possibilities for business."
"Clients know they are collecting and analyzing more data than ever before, but 80 percent of all the available data—images, voice, literature, chemical formulas, social expressions—remains out of reach for traditional computing systems. We're scaling expertise to close that gap and help our clients become cognitive banks, retailers, automakers, insurers or health care providers.”
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Five Things to Consider
As with most professionals, not all management consultants are created equal, so it’s important to do your homework before you sign on the dotted line. If you’re hiring from one of the bigger firms, you’ll know the consulting team has been vetted.
However, the consulting industry is highly fragmented, with no single company controlling more than five percent of the industry’s revenue. Many industry operators are independent management consultants, and there are certain things you should keep in mind to ensure you’re getting your money’s worth.
Here are five of them:
This goes for experience in consulting as well as niche experience in your industry. If the consultant will be working with their own internal team, it certainly helps to involve those with a variety of perspectives to help with out-of-the-box thinking—but you want to make sure the lead consultant has the necessary experience to keep the project on track and understands your company’s specific needs.
Many consultants have graduate degrees in business or a related field. In addition, some are certified in management consulting, which will provide additional proof that the individual can operate according to industry-specific standards regarding quality and ethics. One organization that offers consulting certifications is the Institute of Management Consultants.
The rules of engagement may prohibit disclosure of client identities or the specifics of past projects. However, an experienced consultant should be able to provide you with some type of work sample to show what they’re capable of. It’s also always a good idea to ask for references from those who can vouch for the quality of a consultant’s past work.
4. Project Scope
Before you pick up the phone, it’s essential that you understand your own needs. Hiring a consultant can be an expensive endeavor. Although the long-term benefit to your company’s bottom line can be well worth the investment, you want to make sure you have a good idea of what and how much you need before you start hearing the progressive cha-ching of those growing billable hours.
5. Work Style
A great consultant needs to be able to do many things well—with communication and flexibility topping the list. Being the leader you are, you should be able to determine if those traits are strong points as you work through the interview and proposal process. If any of your red flags stand to attention, try to imagine how an entire project may play out.
If your company is struggling to keep up with the continual changes in business, then hiring a consultant may be exactly what you need to help bridge the gap. By following these five key strategies you’ll get the help you need—and protect your ROI in the process.