What Do Management Consulting Firms Do?

The complex nature of business operations, rising technologies and increasing competition across all industries, have made it harder, even for the established businesses, to retain their market share. This is where, business leaders often find themselves in need of professional advice or services for their overall business management strategies to remain competent. Management consulting firms, come into play here. Though each management consulting firm specializes in specific fields or industry, they in general, provide management consultants who are expert and trained to devise smart business strategies, solve complex problems and help businesses improve the operational and financial condition. Hiring reliable management consulting firms is the norm being adopted by an increasing number of businesses nowadays. If you are thinking to take management consulting firms on board for your business, this article gives you valuable insights regarding what you can expect from a professional and reliable management consulting firm.

What Exactly Management Consulting is?

Management consulting, often called business consulting, is fundamentally an advisory/implementation services to the top management of the business with the goal to improve their business strategy, operational processes and overall organizational performance.

The Market Scenario

The global market for the management consulting services has been estimated to be worth of over $130 billion. It accounts for more than half of the total global consulting market. It has been observed that business expenditure on management consultancy services increased by 4 percent, on average, every year. Carrying a worth of $70 billion, the operations consulting makes the largest segment in the sector, while the HR and strategy consulting are almost of the same size, of value around $30 billion.

What Do Management Consultancy Firms Do?

Since management consulting accounts for more than half of the consulting industry, most of the players in the market are either dedicated management consultancy firms or organizations with a business division that provides management consulting services. In the case of the latter, it generally concerns big IT service providers (who offer implementation support in change management), recruitment firms (who extend their interim and recruiting services as well as HR advisory) or provisional employment agencies (who integrate upscale consulting services to the temp and contracting portfolio). If we talk about numbers, a big part of the market is composed of freelancers – also called the freelance management consultants, who are active as independent contractors or advisors.

The Functional Areas

Most of the management consultancy firms provide services for almost all areas of business – from marketing to IT, to HR and finance. The wide span of consulting areas makes it a prospective career, offering a diversity of projects, opportunities and challenges for personal development. This may involve working globally with multinational clients, even if one doesn’t join one of the big firms. The major consultancies have hundreds or thousands of employees and offer captivating career opportunities for those aspiring to be a management consultant.

Management consultancy firms provide their services through their expert, professional, certified and dedicated management consultants, who are hired by the senior management or decision-making authorities for advice on strategy and all organizational matters. Management consultants may be asked to device a new strategic plan to, for example, realize higher growth, or commissioned to guide on novelty or cost saving strategies. Implementing the projected solutions is also one of their tasks, and in practice the implementation side of consulting makes the principal market for management consultants. Assignments may differ from improving the effectiveness of business processes, the application of new IT systems, subcontracting of redundant or mundane tasks or optimizing the business supply chain. Management consultants usually remain involved till the change transitions are complete and transformed ways of working become part of the normal business operations.

How Do They Do that?

In the starting phase of a project, much of the time is consumed on getting familiar with the client’s business, which includes but not limited to, meetings with senior management, meeting with department heads, employee interviews and company data collection. Consultants (based on their level) are often in charge for the data analysis also, taking the data they obtain to turn it into valuable insights or information to share with the management of the company. They often use Excel to generate spreadsheets and PowerPoint to produce presentations to present such insights as well as their observations.

And as you might have an idea, a big part of being a management consultant is traveling to the client location. For few consultants, this is as-needed, while for others this implies adopting a Monday-through-Thursday on-the-road routine. However, it's worth nothing that, larger firms, in general, necessitate weekly travel, while smaller scale ones tend to bid more balance. Andrew Conrad, an independent consultant, mentions that he enjoyed this part of his job the most. He says it is great to sit among a group of peers whom you could both work with and interact socially.

The leading management consulting firms have developed critical expertise in business’s key areas. Therefore, when businesses face mission-critical problems or challenges that necessitate that expertise, an effective way to resolve the matter can be to hire a management consulting firm.

For instance, think of a scenario of a big consumer electronics business that has decided to enter a merger with a similarly sized rival. While both businesses have done small acquisitions in the past, neither of them has ever entered a merger of this scale. Therefore, neither will have the in-house expertise or experience to assuredly execute well. Note the operational word assuredly here. The businesses might do it themselves, but in view of the high stakes, they want to implement assuredly and therefore leveraging expertise from a specialized management consulting firm makes sense.

In a lot of cases, consulting firms are contacted to provide an objective, third party view on a key decision a business is making (for instance, it could be a new, big multi-year investment, an expected acquisition, a strategy move, outsourcing, etc.). Why does this occur? Shouldn't the business’s key stakeholders who know their business best be flawlessly capable to make that decision? Yes or no. Let's unpack this.

Yes, they'll comprehend the business well and probably have more of the background than any third party. But some other challenges almost always arise. The business owners may face "blind spots" or some biases. Thus, bringing in an external voice will help them encounter those and deal with them objectively.

All Management Consulting Firms are NOT Same!

Our concluding thought is that not all management consulting firms are same. If you are, for instance, a leading global business having an urgent pricing issue, which management firm do you hire? Are all the consulting firms equally proficient to help you navigate that issue? How do you think about which one to approach? Searching the right consulting firm involves knowing their specialization, expertise and the services they are most known in the industry.