Market of Consulting in Business
There are many opportunities in the field of business consulting, but one area that continues to grow is management consulting. This article will focus on how management consultants apply different techniques and approaches when assisting organizations with developing and implementing strategies. These business consultants use a variety of methods and approaches when helping organizations to reach their goals, maximize their potential, and minimize their risks. An organization may use an external consultant, an internal consultant or a combination of both. The article also explores how consultants can be an asset to small businesses.
Keywords Business Consulting; Competitive Advantage; Consulting Firms; External Consultant; Industry; Internal Consultant; Management consultants; Small Business; Strategic Planning
Marketing: Market of Consulting in Business
There are many opportunities in the field of business consulting, but one area that continues to grow is management consulting. Management consulting dates back to the early 1900s, and had a strong engineering orientation in devising solutions to an organization's problems (Oosthuizen, 2003). The Institute of Management Consultants' (2007) mission and vision statement defines management consultants as “recognized experts in their disciplines or industries, who provide a superior resource to help members increase value to their clients, enhance effectiveness of client organizations, and improve the quality of our communities.” These business consultants use a variety of methods and approaches when helping organizations to reach their goals, maximize their potential, and minimize their risks. Clients may be internal or external; therefore, it is important for these consultants to determine their audience as well as determine their needs. "It is incumbent upon the good consultant to find out the back story so that he or she can better ensure a desirable outcome for everyone involved" (Marren, 2004, p. 5).
Management consulting and strategic consulting are concepts that are used interchangeably. The concept refers to when a person or organization helps a company improve their performance and develop strategies to maintain a competitive advantage. Management consulting may involve the development of best practices, analytical techniques, change management interventions, coaching skills, technology implementations or strategy development Management consultants will use their expertise to help corporations identify problems and recommend solutions. The key is to create recommendations that are customized for the specific organization (i.e. the client) requesting the intervention.
Growth of Management Consulting
The demand for consulting has been growing and the area of management consulting has grown into a $100 billion global industry. Although management consulting has been a popular practice in the corporate arena, the use of consultants has spread to other industries such as government and non-profits. In addition to individual practitioners, there are three major types of consulting firms and each has a specialty. There are large, diversified consulting firms (i.e. IBM Global Services, Accenture) that specialize in a variety of services such as information technology and strategic consulting. Boston Consulting Group is another type of consulting firm. These types of organizations tend to offer strategic consulting services only and work across a variety of industries. The third type of consulting firm has been referred to as a boutique firm. Boutique firms tend to be small and focus on specific industries and technologies. All three of the above-mentioned approaches reference consultants that are external to the organization. However, many organizations have started to hire internal management consultants.
Internal vs. External Consultants
An organization may use an external consultant, an internal consultant or a combination of both. Organizations should evaluate the consulting phase and consider the reasons why they wish to utilize the services of a consultant when determining which type of service to use. Cummings and Worley (1993) created a process consisting of five phases in the consulting process. These phases are entering, contracting, diagnosing, intervening, and evaluating.
a. External Consultant — This stage tends to be the most difficult stage for the external consultant because the individual needs to market himself and build a client base. Once clients have been identified, the external consultant must build relationships and become familiar with the organization.
i. Advantage: Select projects based on their criteria
ii. Disadvantage: Need to learn company jargon
b. Internal Consultant — Little time is spent on entry for the internal consultant since he is considered an insider of the organization.
i. Advantages: Ready access to clients
ii. Disadvantages: Obligated to work with everyone
a. External Consultant — The consultant must work with the client to develop a mutual understanding of what the expected outcomes and deliverables will be. At this stage, the consultant and client communicate expectations and create a legal contract that both will be bound by. The purpose of the contract is to clarify goals, roles, use of resources, and ground rules (Block, 1981).
i. Advantages: Can terminate project at anytime; maintain "outsider" role.
ii. Disadvantages: May incur "out of pocket" expenses, especially when unexpected events occur.
b. Internal Consultant — The internal consultant works under a contract as well. However, most are verbal versus written. The internal consultant has internal clients that require services. However, one of the disadvantages is that the internal consultant must be sensitive to the "personalities" and politics of the organization. An external consultant can be more vocal with their opinions because they will eventually leave. However, the internal consultant has to remain within the organization and be sensitive to backlash and retaliation.
i. Advantages: Information can be open or confidential.
ii. Disadvantages: Must complete projects assigned; may experience client retaliation and loss of job.
a. External Consultant — During this stage the external consultant will start collecting data such as employee surveys, meeting with focus groups to get follow-up information and feedback, and conducting individual meetings in order to develop an analysis and make recommendations for change. Once the plan has been developed, the consultant will schedule a meeting to provide the client, and special guests, with feedback on what needs to occur in order to implement the plan.
i. Advantages: External personel exude prestige.
ii. Disadvantages: Data kept confidential often increases political sensibilities.
b. Internal Consultant — This phase is the same for both the internal and external consultant.
i. Advantages: Has relationships with many organization members.
ii. Disadvantages: Openly sharing data can reduce political intrigue.
a. External Consultant — The design of what issues need to be addressed are the focus of this stage. It's important that the external consultant can get the participants to buy-in to the process because authentic information is required at this point. There has to be commitment on the part of the participants, and the external consultant may include this request at the beginning when the contract is being written. The external consultant needs to be assured that there will be individuals taking ownership of the outcomes and that the process will be implemented and maintained once he has left.
i. Advantages: Can insist on receiving authentic data and internal commitment.
ii. Disadvantages: Must adhere to the regulations, standards and boundaries of the client organization.
b. Internal Consultant — Although this phase is the same for both the external and internal consultant, there is one exception for the internal consultant. Buy-in is key for the external consultant. However, the...
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