Management Consulting is the business of analyzing and offering solutions to complex problems within an organization. This is a valuable service because consultants can offer an outside, unbiased perspective to the problem and devote their full attention to solving it.
In today’s competitive business environment, many companies are looking for unique ways to grow and increase their market share. A company may seek to expand its operations, explore new markets, or even launch a new product.
Management consulting is an industry that offers assistance with this kind of high-level decision-making and problem-solving.Management Consultants help businesses make strategic decisions that directly impact the entire company. They evaluate issues that the client is facing and help them develop action plans for improvement. This is a unique profession where we get to work hand-in-hand with different types of businesses to solve their current challenges.
What is Management Consulting
A lot of people ask me, “What is management consulting exactly?”It’s not easy to come up with a simple definition of what we do. At its most basic, management consulting is the business of providing strategic advice to businesses. Rather than addressing the operational angle of how to do it, we address the bigger question of what to do.
Let’s say a company is looking to relocate to a new market. They may hire a consultant to advise on ideas for gaining market share. Consultants work across multiple departments in order to coordinate efforts of the entire business towards a common goal. By answering the “what do we do” question, consultants help their clients improve performance and achieve growth.
The Problem-Solving Approach
A big part of management consulting involves taking a strategic approach to problem-solving.By exploring all angles to a particular challenge, consultants are able to provide more useful and practicable solutions to their clients. Most consultants follow five main steps when approaching a business problem.
- Defining the Problem
Anyone experienced in management consulting will tell you how important it is to clearly define a problem. The issues being faced needs to be identified specifically so that you can decide on the best approach to take.
As a client explains the challenges they’re facing, they may present mixed information or a biased perception. Let’s use the example of a business that’s seeking to relocate. Your client may present the issue in a biased manner. They may mix separate issues or expect that their previous strategies will work in a new market.
Your role as a management consultant will be to filter information from the client so you can identify the specific challenges being faced. In this case, you may determine that gaining market share will be your client’s biggest challenge. With the scope of the problem clearly defined, you can begin framing your approach.
2.Deciding on the Approach to Take
Most consultants have specific approaches they take towards solving client problems. This is typically the second step in the problem-solving process. During this step, I try to find out more about the problem being faced by my client. This may involve traveling to the client’s site to collect data, interview employees, and examine daily operations.
With a deeper understanding of the client’s business and the problems they face, you’ll be in a better position to propose effective solutions.
- Collecting and Analyzing Data
Management Consulting is known for its ability to implement data-driven solutions. What does this mean? Rather than providing general answers to problems being faced, consultants collect data, analyze it, and base their proposed solutions off this data.
A data-driven approach is the best way of approaching a problem in an objective and effective manner. It’s also the best way to propose solutions that are easy for your client to understand.
- Presenting Recommendations
As a consultant, I spend a lot of time working on deliverables. These deliverables are used to propose solutions to the client’s problem. Perhaps the most important step in management consulting is presenting recommendations in a manner that’s easy to understand.
If your proposed solutions don’t make sense to your client, then they’re essentially useless. So,take the time to break down your recommendations into easily digestible portions. Make sure that these solutions are tailored to the needs of the clients.
- Follow Up: Were the Recommendations Successful?
After proposing recommendations to your client, you need to determine whether your solutions are working. I always develop specific criteria to measure the success of my recommendations.
It could be evaluated by tracking sales, calculating savings on operational costs, or counting new customer acquisitions. Regardless of the criteria you choose, you should be able to quantify the success of your proposed solutions.
Types of Management Consulting Firms
Management consulting is a diverse field that involves many different parts of a business. The wide range of roles that consultants play can be categorized into six main groups. Almost everyone in management consulting falls under one of these classifications.
Perhaps the most lucrative role that management consulting offers is strategy consulting. Most businesses approach consultants with specific questions about which strategy they can use to overcome a high-level problem. So, strategy consulting involves analyzing client operations and challenges to provide appropriate recommendations.
Some people ask, “Why don’t these companies do that themselves?” A simple answer would be that some questions are important enough to bring in outside talent. Where employees may only be able to dedicate an hour or two here and there to solving this problem, consultants can devote 60+ hours a week to focusing on this particular issue.
Consultants also have extensive knowledge in particular industries or topics. Let’s say your company is closing down a manufacturing plant. That’s not something that happens every day, or even every year for you. But, a strategy consultant may work with other clients in the same situation frequently and can offer their experience to help things run smoothly.
It’s helpful to have an outside perspective that can see through the politics and focus on the most relevant information. And, in many ways, corporate underperformance is the reason that a strategy consultant has been called in the first place. Ideally, corporations would run perfectly and have clear data to work with. In the real world, things don’t go as planned and can get messy.
There’s an article in Bloomberg Business Week that outlines how the strategy consulting industry began. It actually follows the career of Mitt Romney, who worked at BCG, Bain and Bain Capital, but it gives an insider’s view of these firms as they were just starting. A lot of the industry secrets and techniques still apply to the industry today. It’ll give you context and help you fully appreciate the business.
Information Technology Consulting
As technology continues to take center stage, Information Technology (IT) consultants are becoming increasingly popular. They primarily focus on assisting clients to develop and apply IT solutions within the organization. In IT consulting, your role is to facilitate the transition of projects into the ICT (Information and Communications Technology) scene so that they can become more effective.
When getting into this field, IT firms often prefer candidates who have practical skills, such as coding knowledge, over other qualifiers, like grade point average or class rank. Top management consulting firms focused on IT consulting include IBM, CGI Group, and Accenture.
Accounting (Financial Advisory Consultants)
Large accounting firms also offer consultation services to their clients. This group mainly targets financial advisory roles within a business. On top of evaluating financial capabilities, financial consultants tackle questions regarding financial reporting procedures, techniques for improving cash flow, tax-related questions, and risk management.
In most cases, financial consulting falls under larger management consulting firms such as Deloitte, PWC, and KPMG. These firms often need to separate their auditing and consulting services in order to prevent a conflict of interest. If you’re looking to get into financial consulting, you will find that most audit firms recruit recent graduates across multiple academic fields.
These consultants are a part of an internal team that is tasked with providing management consulting services to the company. They are essentially employees of the organization, and their primary role is to track the operations of the business and propose new strategies for growth.
Internal consulting teams are beneficial to businesses because they are already aware of company operations and can provide in-depth solutions to complex problems. Internal consultants are also fully vested in the success of the company, because their financial well-being is dependent on the company’s success. These consultants often have the opportunity to rise through the ranks and take on key leadership roles.
The company itself often does recruitment for internal consultants. They recruit a combination of undergraduate and graduate candidates to join their team and to grow in their specific roles.
Independent consultants don’t work under any company and may be individuals or teams of two-six professionals. Most independent consultants are industry veterans who have spent years solving specific business challenges.
Their expertise and experience allow them to work independently with their client base. As an independent consultant, you have more flexibility in the projects you choose to work on as well as the solutions you decide to implement.
Human Resource Consulting
Having the right talent within the organization is a key focus of many businesses. Human Resource (HR) consulting helps clients manage their employees and improve the performance of every team member. As an HR consultant, you will often tackle problems regarding organizational management, terms of employment, talent management, and retirement plans. You may also be involved in transforming company culture and other core systems/processes that relate to the HR team.
HR consulting is a more niche market than other areas of consulting, which creates a higher demand for the position. Within this group, you will also find small consulting firms that focus on specific industries and problem areas.
Why Companies Hire Management Consulting Firms
On the surface, the role of management consultants may appear redundant. Many people wonder why you need outside decision makers to help when you already have internal operations in place.
The answer to this question lies in the history of management consulting. In the past, companies such as General Motors and DuPont realized that a different decision-making strategy would provide valuable insights for the company. Think of it as an outsider looking into the client’s business, only that this outsider is an experienced professional within that industry.
Another thing to remember is that management consultants don’t take over the day-to-day decision-making in a business. Instead, they provide additional input to the decision-making process. They help businesses address specific challenges that they may be facing at a particular time. And because executives tend to be tied up in daily operations, management consultants can take a more in-depth approach to solving current issues.
Management consultants are gurus at making sense of complex business data. Because they can collect data from your daily operations and uncover what the numbers tell, the role of consultants becomes very valuable to their clients. Most companies perform at a sub optimal level, knowing that there is room to grow but not knowing how to begin.Management consultants reveal these shortcomings and propose solutions for improvement. This is a big reason why clients value the services of management consultants.
The Value of Management Consulting
Management consulting is a valuable field that provides numerous opportunities for personal and professional development. By solving complex problems, gaining experience in multiple industries, and networking with a wide variety of clients, you will be able to grow steadily in your field.
If you’re just getting started, many firms hire undergraduate and graduate students directly from a university. Recruitment can depend on your specific area of consulting as well as your experience.
Each category of management consulting has its own unique benefits and skill sets. Strategic consulting tends to provide the best path towards top leadership roles within a company, while IT consulting is the field with the most vibrant growth. If you’re an aspiring consultant, determine your specific goals and areas of expertise to help you decide on a particular path.
Top Management Consulting Firms (and Types of Firms)
The management consulting field has been spearheaded by a number of prestigious firms over the years. These top firms command the most attention from clients and offer the most rewarding deals for new employees.
If you’re looking to enter the management consulting field, you should be aware of some of these top firms, how they got started, and their current operations.
Now almost 100 years old, McKinsey & Company is largely regarded as the godfather of management consulting. McKinsey, headquartered in New York, works with private, public, and social sector institutions to improve performance and help them realize their goals. Over the years, McKinsey has expanded to over 120 cities around the world and has an expansive team of over 14,000 consultants.
Many management consulting firms refer to McKinsey as the gold standard of the industry. They offer some of the most competitive compensation plans for employees. Their experience also means that their approach to problem-solving is time-tested and proven for effectiveness.
Boston Consulting Group
The Boston Consulting Group (BCG) is another top consulting firm. With a prestige level only slightly below McKinsey, the company has over 70 offices and 4500 employees. What makes BCG stand out is its unique approach to management consulting. They emphasize a thought leadership approach, which is an effective academic approach for solving complex problems.
Many companies and industries have used the BCG approach. With over 50 years of experience, the company has been constantly growing and redefining its goals.
Bain & Company is also headquartered in Boston, with offices spanning across many parts of the world. Bain is widely known for inspiring bold thinking, passion for results, and high ambition. The company prides itself on developing specific solutions to complex problems and using a data-driven approach to measure results.
By working with Bain, most clients are able to outperform the S&P by 4:1. This high performance has led Bain to expand into 36 countries since it was founded in 1973.
As one of the largest professional service providers in the world, Deloitte has continued to develop its management consulting services. Deloitte Consulting helps a wide variety of businesses to solve complex problems. Regardless of industry, Deloitte has worked with numerous clients to address challenges and achieve sustainable results.
Headquartered in New York, their consulting operations have over 50 offices worldwide. Deloitte Consulting ranks closely behind the three top forms (McKinsey, BCG, and Bain).
Accenture is another management consulting firm that has grown significantly in recent years. They have worked in over 40 industries, with clients spanning across 120 countries. Accenture’s management consulting services have helped clients achieve growth, innovation, and performance.
Their emphasis on digital transformation has proved very beneficial to multiple clients. With that innovation, Accenture has been able to grow and demand a respectable market share in the strategy consulting world.
Now that you know what management consulting firms are and what they do. Which field of management consulting are you interested in? Which firm sounds the most interesting to you? Comment, below with your thoughts and insights.