There are 6 reasons why executives hire consultants
In America, and other Western countries, senior executives often hire management consultants for strategic advice.
Given that consulting advice can sometimes sound like a statement of the obvious, albeit very well power-pointed, and tends to come with a shockingly high price tag, you would be forgiven for asking “why!?”
As it happens, senior executives are not necessarily stark raving mad. There are 6 good reasons why executives might want to hire a management consulting firm:
1. Stamp of Approval: Executives often need to make unpopular decisions, and bringing in a consulting firm to support the proposed course of action can give the executive the credibility needed to convince the board and command authority with employees. Unpopular decisions might include anything from introducing a new product, entering a new market, changing the organisational structure, freezing salaries, or firing employees.
2. Scapegoats: Getting a stamp of approval comes with the added benefit that executives can distance themselves from decisions that go wrong. An executive who can say to the board “we acted on McKinsey’s advice!” may be able to save her skin. This is a service worth paying for.
3. Independent Third Party: If consultants are merely a stamp of approval and scapegoats for scared executives, then their real value to an organisation may be open to question. Fortunately, they serve other purposes as well. For one thing, consultants can act as an independent third party. Since they are not full-time employees, consultants do not have vested interests within a client’s organisation which can make it easier for them to identify problems and make recommendations without fear of political reprisal.
4. Open Communication: Large companies can become very bureaucratic (think Microsoft), and factional turf wars can result in limited communication between departments. It such cases, it may be easier for consultants to arrange interviews with people in different parts of the business. Even in companies that aren’t stifled by bureaucracy, executives are often isolated at the top and don’t have access to all the information that they need. Consultants have the ability to talk with customers and with people at all levels within the organisation, synthesizing and reporting back to the executive team.
5. Dedicated Focus: Organisations often face a tension between short and long term objectives. And so, urgent problems and day-to-day business often take priority over important long term considerations. Consultants can help by focusing on specific problems that would otherwise not receive the attention they deserve.
6. Pattern Recognition: Nobody knows a client’s business or industry better than the client. However, senior consultants can take on the role of a doctor, diagnosing symptoms and recognising familiar patterns of where things are likely to be going wrong.
Well, there you have it. Six reasons why executives hire consultants.
We acknowledge that this post is slightly one sided. We have mentioned nothing of the potential pitfalls of engaging consultants.
What do you think?
Would you hire a consultant?