Why Do People Buy Consultancy?

What kind of organisations buy consultancy? Is buying consultancy a sign of good management or an indication of inadequacy and failure? Isn’t it management’s job to manage? Isn’t that what they’re paid for? If so, why use management consultants? And why are so many clients apparently so ready to spend millions or even tens of millions on consultants to help them manage their organisations?

Throughout my time selling major consultancy projects to almost one hundred, mostly well-known organisations in over fifteen countries in the Americas, Europe and Asia, I constantly struggled with whether we were really providing any value to our clients. There were, of course, some successes where I was really proud to be involved. However, many of the organisations that I saw seemed almost addicted to management consultancy. Frequently there would be several major consultancies working for them at the same time and many of them spent millions on consultants year after year in what the late Lord Hanson, described as “corporate cowardice”. Many of these management teams seemed to me to be ensuring their own personal survival by continuing to pour money into the hands of their favourite consultants to do the job that they were ostensibly employed to do.

As I look back over all the more questionable management teams that I have come across, most of whom were regular consumers of millions of dollars and pounds and euros of management and IT systems consulting, there seem to me to be four main types of situation where the top management and their consultants spent huge sums while delivering little to no value.

1. There’s one law for the rich and another for the poor
Many management teams are ruthless in controlling their costs and their expenditures when it concerns their employees – reducing budgets and firing people were often painful annual rituals. Yet, when it concerns the survival, well-being and comfort of top management and their favourite consultants, there appear to be no limits to the organisation’s generosity. Many of our clients threw millions at their executives and consultants while firing thousands of their staff. investigation

2. We’ll take the rewards but not the responsibility
Another common characteristic of the management teams, for which we worked, was the ability to take the credit and the huge financial rewards when business was good, but a tendency to avoid any responsibility when there were problems. I saw this in many clients who were lambasted in the press for their management’s greed, incompetence and avoidance of responsibility while they generously spent money on consultants and awarded their management massive bonuses.

3. Management as a fashion accessory
A third situation which provided vast amounts of work for us and our competitors was when a chief executive or senior management team seemed to be hooked on the latest management fad – Business Process Reengineering (BPR), implementing some new computer system, setting up an Internal Market, jumping into some new growth industry, outsourcing, or whatever. In such cases, there was a tendency for senior management to believe that only they, and of course their consultants, were smart enough to ‘see the light’- only they had a clear picture of the changes their organisation needed to make. Almost everyone else in their organisation was apparently too stupid or too resistant to change to embrace top management’s new bright idea. By cosying up to such executives and encouraging them in their fantasies, we were able to sell truly eye-watering amounts of consulting to convert the whole organisation to the ‘new religion’.


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