What You Need to Know About Management Consultants
The business organization of consulting has many forms. If you ask someone what they do and they reply "I'm a consultant," they might besides tell you they do piece of work for a living. When people ask me what I do and I tell them I'm a Direction Consultant, sometimes I'll simply go a bare stare. This situation forces me to basically give my elevator pitch if I have any hopes of establishing a connexion with someone. I can't blame people though, a "consultant" is such a vague and nondescript job title because there are just so many types of consultants - Way Consultants, Design Consultants, Political Consultants, Healthcare Consultants, Leadership Consultants, and everything in between. For some reason, it seems like everyone identifies every bit a consultant in some way or another present. Salespeople accept even been branded as "consultants," because they are, in effect, consulting you to buy their products. Withal, for the sake of this article, we will focus specifically on the practise of Business Consulting, otherwise known as Management Consulting, which is widely misunderstood despite its popularity in the B2B space. Thus, the purpose of this article is to answer the frequently asked questions about the Management Consulting manufacture.
What is Management Consulting?
Direction Consulting is the practice of advising a business' direction on how to overcome the company'southward strategy, financial, technology, operations, and organizational issues. In short, direction consultants make a business out of solving other business' problems. Consultants operate in many forms, equally well. On a smaller calibration, they tin be either independent consultants or belong to a collaborative of independent consultants. On a larger scale, they can exist an employee of "MBB" Firms (McKinsey, Bain, BCG) or the "Big 4 (Deloitte, PwC, EY, KPMG) among hundreds of thousands of other consultants in offices effectually the earth.
How long has Direction Consulting been a profession? Is it legitimate?
Management Consulting is not a new profession and in fact, information technology has actually been effectually since the tardily 19th century. The first management consultancy was founded past Frederick Winslow Taylor in 1893, who pioneered the concept of industrial efficiency on a manufacturing plant floor of a steel manufacturer. Even though consulting has been effectually for centuries, management consultants are not always viewed in a positive light and some uncertainty their legitimacy. A mutual stereotype about consultants is that a consultant is "someone who charges you an exorbitant corporeality of money to take your watch away to tell you what time it is." All bias bated, this is hardly true. Virtually consultants actually have a vested interest in helping their clients and provide a substantial amount of value in their services.
How big is the Direction Consulting Industry and do consultants actually add value?
If businesses didn't see the value in hiring management consultants, the manufacture would have died off a long fourth dimension ago. But this is not the instance. In fact, many companies are still in business cheers to the piece of work of management consultants. At present, the demand for Management Consulting services is booming. In 2018, Ibis Globe noted that Management Consulting in the United States alone was a $241 billion dollar industry, with over 700,000 consulting businesses in performance, employing over 1.half dozen million people. Furthermore, CNBC released an article showing that Management Consultants, also called Direction Analysts, are among the superlative 10 fastest growing jobs for cocky-employed workers. And then, the truth is, in that location is value beingness offered by management consultants, or businesses wouldn't hire them.
What are the types of Management Consultants?
Management Consultants can be hired for a multitude of reasons simply equally I mentioned before, they are primarily hired to help a person/company solve a certain problem or reach a specific goal. Taking information technology a step further, consultants are sought for either their expertise, specialized skill set, general labor, or a combination thereof in these capacities.
In industry-speak, consultants usually employ either an expert or a facilitative approach. A consultant utilizing an proficient approach leverages the consultant'southward manufacture expertise, evidently and elementary. On the other manus, some consulting firms employ a facilitative approach, whereby they are industry doubter and focus on a specific service offering, such as strategy, operations, technology, project management, marketing, human resources, administration, IT, sustainability, and hosts of others. The value proposition for consultant'south employing a facilitative approach, is their utilization of highly specialized skills to bring fresh, innovative ideas to whatever industry. Of course, some consulting firms employ both a combined skilful and facilitative approach, which brings both experience and innovation to a client. For example, a consulting house may be focused on procedure improvement for the healthcare industry, and another may focus on marketing for the nutrient and drink manufacture. Each house is unique and volition generally spell out their manufacture expertise or functional area clearly on their website. Larger firms have wider industry expertise and more diverse functional area services, while smaller firms tend to be more niche focused.
How much does consulting cost?
At that place is no simple answer to this question. Consulting firms range in size and accept a broad range of overhead costs they need to embrace in club to exist profitable. Ceteris paribus, hiring an contained consultant operating out of his/her dwelling house is going to be significantly less expensive than hiring an MBB house with massive offices in major cities around the earth, employing an army of MBA'southward commanding at least $120k base salaries. Fifty-fifty with all other things beingness equal, that's still non an apples to apples comparison. You lot probable wouldn't hire an contained consultant to single-handedly manage a cross-edge, post-M&A integration project betwixt ii Fortune 100 companies, and you lot probably wouldn't hire an MBB or Big four firm to oversee a information migration to a "freemium" cloud-based software for a local small business. The erstwhile project would likely cost millions of millions of dollars, and the latter could cost anywhere from thousands of dollars to tens of thousands of dollars. Of course, that's a major generalization, and sometimes independent consultants work with much larger clients on pure advisory roles and vice versa, only that all depends on the nature of the project and the consultant'south services to be provided.
How do consultants brand money?
There are four ways consultants brand money. They either charge past the hr, they accuse a retainer, they charge a fixed price, or they charged based on the value of their work. Each pricing model has its own pro'southward and con'due south, depending on the nature of the project.
Hourly billing is great for brusque-term projects where there is a set time frame, consequence, or deliverable, and in that location isn't a whole lot of risk of modify or uncontrollable variables. For example, if a client needs a consultant to acquit new market-entry research and build a deck summarizing your recommendation, then an hourly model would suffice. All the same, when projects get complicated, risky, or take a longer-term outlook, an hourly rate is less attractive to a business concern owner because it tends to accident upwards budgets when consultants demand to work overtime to address unforeseen circumstances or meet deadlines. Besides, in hourly billing, consultants are not incentivized to produce work in a timely manner, because they earn less money that manner.
Retainers are a skilful choice when in that location's a set line of piece of work without any specific deliverables, and a client requires ongoing support or advisory over medium to longer terms. For example, a client that has an ongoing project and wants to check in and go a consultant'south advice or enquire for piece of work periodically with a set up amount of hours per month, such as with a project management appointment, then a retainer is the better option. A retainer billing model may not always be a good option for brusque-term projects with preset deliverables, though it can be washed.
Fixed price engagements can be bonny for both parties, but mainly in the sense that the customer'due south projection costs are capped, and travel sometimes is included in that cost. Fixed price engagements are benign for a wide multifariousness of projects, even so, the adventure is if a consultant under-prices a fixed cost project and it runs into delays or obstacles. There have been instances where consultants take either tried to renegotiate or cancel contracts altogether in these situations. This is specially true if consultants offset losing substantial amounts of money on a project, there is no incentive to keep working if they're losing money, regardless of what they've delivered to that indicate.
Lastly, values-based pricing is an increasingly popular option, whereby consultants bill a fixed-toll based on the perceived value or ROI to the client. There is a lot to explain on this model here with limited infinite, only in summary, it is ofttimes more bonny to clients because they become the results and intended ROI without going a penny over budget, and consultants can generally charge a premium for this guarantee. Regardless of the length of the project, its complexity, or information technology's risk level, value-based pricing is, generally speaking, a win-win for both clients and consultants akin.
Why hire a consultant?
A bones summary is that people hire consultants to do the piece of work they can't, don't or won't do. Sometimes companies rent direction consultants to complete tasks that their electric current staff doesn't have the time to do outside of their regular job responsibilities, such as project direction, implementation management, or staff augmentation. This is the work companies "tin can't" do.
Businesses may also hire consultants to do specialized work that is outside the feel of their current employees, or work they "don't" do. For case, consultants may do more specialized work such as strategy, fiscal analysis, applied science, market place research, process improvement, engineering, or other highly technical tasks.
Lastly, consultants may be hired to do highly sensitive work or make tough decisions, such as organizational restructuring that may entail conducting mass layoffs. This is the work that companies "won't" do themselves. No executive wants to have his/her proper noun linked to negative headlines because they were forced to brand a hard decision that would make them wait bad. Consultants are often hired to forbid these situations, simply if a difficult decision has to be made, any criticism can be placed on the consultants, rather than the executive. In summary, people hire consultants for a diversity of reasons, but mostly considering they fulfill a client's demand in one of these iii ways.
What makes management consultants so specialized?
Many consultants who use an expert arroyo may spend years or decades in their respective industry gaining experience, and later become consultants in that particular industry. This makes consultants specialized in their industry expertise, which is incredibly valuable to clients looking to learn near what others in their industry are doing or take washed. Another manner of putting it would be that a consultant with an expert approach can aid you avoid mistakes that others in the manufacture accept fabricated.
For the consultants who employ a facilitative arroyo, they typically go through highly specialized grooming in their respective field. That specialization will unremarkably corporeality to some combination of piece of work experience, professional certification, or postgraduate study. The all-time consultants using a facilitative approach will unremarkably hold an MBA or even a DBA, with at to the lowest degree v years of feel specializing in a field like strategy, operations, finance, marketing, Hr, or engineering. They volition besides concord some course of professional certification similar PMP, Six Sigma, or other credential. If a consultant you lot are considering hiring has these qualifications, they most likely have a basic competency to aid you with your full general consulting needs.
A discussion of caution must be mentioned hither, there is no set guidelines or registration to become a management consultant. Unfortunately, any person can claim themselves to be an adept in any field, and then create a business card and website identifying themselves every bit a consultant. So, if you lot somewhen make up one's mind to hire a consultant, make sure to exercise your due diligence. Check and ostend their professional person and educational background, look at their portfolio or by work, conduct groundwork checks, research references, and don't assume that all management consultants or their firms are created equal. Similarly, don't' assume a big name consulting house is going to magically solve all your problems. I have personally worked with clients that had shelled out a lot of money to rent the biggest firms, and didn't have much to show for information technology other than beingness thousands of dollars out of pocket with their original problem still persisting. So practise your homework, and store effectually.
Should I become with a large firm or small firm for my consulting needs?
Short reply: it depends on the scope of the project, your timeline, and your budget. Big consulting firms, like MBB or Large 4 commonly hire their thousands of employees from top programs from top schools around the world, and their preparation is second to none. They have decades, sometimes a century of experience, armies of incredibly intelligent employees, outstanding technological capabilities, and accept offices effectually the earth, so nowhere is out of attain. Every bit a issue of these house's capabilities, there is likely no projection that is also large or too difficult for them to handle. The downside is that yous will have to pay a lot for these services. Consulting firms are a business too and accept to proceed the lights on, and in addition to the accumulated prestige attached to their names, they accuse clients accordingly. Hence, major multinational firms usually employ consulting firms of this scale considering they're capable of handling much larger, headline-worthy projects.
Smaller consulting companies such equally boutique firms with hundreds or a few thousand employees or less, usually hire from not bad schools equally well or even recruit their talent from MBB/Big iv firms. Bazaar consultancies accept some form of preparation, but they aren't every bit old every bit the larger players, don't take as many employees or technological capabilities, and are more than limited in geography. What they lack in these areas though, they make upwardly elsewhere. For instance, because they are smaller, they unremarkably focus on niche practices in certain industries and they do it exceedingly meliorate than larger firms which have much more diversified service offerings. Despite smaller firms being much more capable in their given niche, they are usually less expensive than larger firms due to less overhead and they are eager to win the deal from bigger players, so they'll generally come in at a lower overall price. Similar pocket-size to medium-sized businesses ordinarily hire boutique consulting firms if the project is on a much larger scale but they don't want to incur the cost of hiring larger firms.
Single man contained consultants, collaboratives, or family unit-owned Management Consulting firms tin can vary widely in their capabilities. They are usually run by consultants that previously worked at MBB, Big 4, or boutique firms, who struck out on their ain and hired a squad, growing from in that location. Depending on how large their team really is, family firms are unremarkably able to handle moderately sized projects due to their past feel, and like bazaar firms, are more often than not even more specialized than boutique firms in their exercise and manufacture. Equally such, like boutiques, they are generally are a lilliputian more frugal with their spending and overhead, and these toll savings are unremarkably passed on to their clients. Furthermore, they are unremarkably much more than cost effective because they're hungry for work. Though most "mom and popular" businesses lack the capital to hire management consultants, businesses with at to the lowest degree five-10 million in acquirement practise, and this is often the target market for independent consultants, collaboratives, or family unit-owned consulting firms.
Why do Consultants need to travel and so much?
In that location'southward no secret about it, consultants expect any travel to and from a client site to be fully compensated or reimbursed by the client. When factoring in airfare (some crave business organisation or first class), hotels, meals, transportation, and incidentals, travel costs can easily add up to $3,000-$5,000 per person, per week, for domestic travel. Of course, you'll accept to add another couple thousand for international travel, and when travel continues on a weekly ground for months, it is non difficult to run across how a budget can exist obliterated incredibly fast.
The skillful news is, with the growing acceptance of working remotely, many consultants are doing just that, saving clients thousands of dollars on travel that doesn't need to be spent. The truth is, as bonny every bit all-expenses-paid travel sounds, for the consultant it gets to be a nuisance, when considering flight delays, living out of a suitcase and lost productivity time in transit. It would be condom to say most consultants would rather piece of work in the comfort of their own home or office, being more productive, and saving the client money for use on future projects.
And then when sourcing a management consultant, insist that travel is kept to a minimum except for initial phases of a projection and upon project delivery. If they consent to a minimized travel arrangement, just make sure you're able to keep them accountable for their work, responsiveness, hours (if billed hourly) and results. Request weekly check-ins or status updates if they don't offer them, to make sure you're getting the value your paying for.
How does MPCG differ from other consulting firms?
Surprisingly, a lot of our prospective clients ask this question, so I thought I'd respond and throw in a shameless plug for some self-promotion while I'm at it. So, who is Monarch Point Consulting Grouping (MPCG) and what makes the states unlike? MPCG is a consulting business firm that serves small to medium-sized businesses, however, members of our team accept worked on all sizes of projects over the course of our careers, from launching startups to working at the larger Management Consulting firms on headline-worthy projects for multinational clients. In terms of our consulting mode, nosotros employ a hybrid proficient/facilitative arroyo, utilizing our expertise where relevant and our specialized proprietary trouble-solving methodologies to bring innovative solutions to any sort of problem businesses face. Nosotros pride ourselves in our dynamic ability to serve our clients in a manner unique to their specific needs. That means we are not only flexible with projection arrangements, only commonly, work remotely, and travel merely when necessary, in lodge to go on costs depression for our clients. Lastly, because we aim to provide results in the shortest fourth dimension frame possible, we can employ any pricing model to conform our client preference. We mostly utilize a retainer or value-based pricing to keep all engagements focused on results and non on racking up billable hours. These are simply a few of the factors that fix MPCG apart, and there are many more we would exist happy to discuss in person.
I hope this was both helpful and informative in answering some of the frequently asked questions around the Direction Consulting manufacture. If you take any specific questions about the industry or Monarch Point Consulting Group in general, we would be happy to help you answer them. Y'all tin get in bear on with us through our website, or through LinkedIn messenger.
Source: https://www.linkedin.com/pulse/everything-you-need-know-management-consulting-industry-brian-dapelo