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Why Hire a Management Consultant?

5/26/23 10:15 AM



Management consultants help businesses develop strategies, find opportunities, solve problems, and support management that they don’t have the time, resources, or specific expertise to do themselves. It is estimated that 72% of manufacturing companies in the U.S. have engaged a management consultant at one time or another. Based on an annual survey by Guiding Metrics, 87% of the companies that used a management consulting company were highly satisfied with the results, and 78% hired the management consultant for another engagement. For most companies who have chosen to seek this kind of help, it has clearly provided value.

To help your organization decide whether it’s worth the investment to bring in a management consultant, we will review some of the most common uses of the role and benefits.

Top 7 benefits of hiring a management consultant

Every company goes through periods where performance in one or more areas begins to slip, and despite the best efforts of the management team, the problem does not improve. If your organization has reached this point, you are left with a choice. Do you continue hoping that someone internal will find the solution, or do you seek outside assistance to resolve the issues? The more time that passes without a solution, the more financial losses grow.

There are many benefits to hiring a management consultant when problems arise:

  1.  The consultant brings years of experience and technical knowledge to the situation. This helps them diagnose a problem quickly and offer a vast reservoir of proven solutions. This also means your organization will undergo a less painful solution cycle, avoiding the risks and costs associated with trial and error.
  2.  Your company knows the full cost of the consultancy prior to the start of the engagement. This makes it easy to decide if the cost is worth the return. It also gives the opportunity to keep costs down by assigning some of the work to internal resources.
  3.  You’ll get a detailed, third-party business audit. The audit is a key tool of the management consultant, developed over years of practice. It is a thorough process, designed to get to the root cause of problems quickly while revealing the full scope of what needs to be done. If mishandled, a business audit can be disruptive and intimidating. But a management consultant is an expert at the process and will engage people in an empathetic, intelligent manner that’s aligned with the culture of the company. In the end, the entire team must participate in the final solutions, and that is most effectively accomplished when people believe they have a voice in the process.
  4.  A management consultant usually has a high ROI. This is because a consultant brings an 80/20 perspective, focusing on the things that will have the greatest impact on operational and financial results.
  5.  Management consultants utilize their time more effectively than internal resources. Internal resources are bogged down by administrative responsibilities that can consume most of their time. Management consultants do not have that burden. Also, they know they must be effective at time management to create value for their clients.
  6.  The costs of a management consultant are finite. Once the job is done, you will continue to enjoy the benefits of the work without having to dedicate ongoing budget to sustain it.
  7.  Establishing a long-term relationship with a management consultant can have benefits down the road (as long as you are not paying large retainer fees for the privilege of doing that). The consultant knows the company and the environment, and can help address problems as they arise quickly.

When to hire a management consultant

Coaching, training & interim resources

Assimilating a new manager or executive is one of the most costly and disruptive processes a company will undertake. There is no rule book on how to take on a new senior-level role, and few people have made career changes enough times to get good at it. The best action a company can do is provide the new executive with an experienced consultant who can coach them through the process.

The role of the coach is to provide perspective and guidance; to be a sounding board for those early days of learning and adapting, while planning for change and improvement. The coach also serves as a confidential resource for the executive to explore ideas more candidly without fear of judgement. This is helpful for someone in a senior role who’s expected to make significant contributions in a new environment.

In contrast to one-on-one coaching, training is more formal, regimented support. A management consultant is a great resource to help a company develop formal training programs that teach people the various responsibilities and skills associated with a position. For example, a new manager might be trained on time management, delegation, active listening, how to motivate, etc. designed to achieve certain levels of competency.

It is an unfortunate reality of business that supervisors and managers are promoted without receiving appropriate training. These people are promoted because of their technical skills and competencies, but are lost when tasked with ensuring the performance of the department, managing people, protecting resources, managing projects, and initiating continuous improvement processes. This never bodes well for the department, its team, or the person being promoted. Training can be one of the most important investments a company can make.

Finally, there are times when a vacancy occurs inside of an organization and the position cannot be left open. Management consultants make great interim or fractional executives. They can adapt quickly to a new cultural and professional environment, and are great communicators. You’ll likely hire a consultant who has already filled similar positions in their career, so they can quickly be effective. During such an assignment, they can also be a great resource in the recruiting process for a permanent replacement and support the onboarding.

Major projects & initiatives

Companies launch major projects for many reasons, but all initiatives have some things in common: they must achieve certain objectives, they cost a lot of money, they consume a lot of resources, and there are significant risks if the project fails. Considering these factors, it is critical to get the best, most experienced technical resources to help support these projects. In almost all cases, it is highly unlikely that internal resources with the capability and capacity to do that are available. This is where you should look for a consultant who has the skills to facilitate the management of the project.

Even when bringing in a consultant, an internal resource must be put in charge of the project to ensure that someone with authority and responsibility is accountable for its success. However, the outside resource provides guidance on what to do, what not do to, what to watch out for, and how to adapt as things change. This only comes from experience.

When a major project comes up, companies typically ask their best management and technical resources to lead it. This is perfectly appropriate. However, these internal resources are often expected to continue to perform their full-time jobs while taking on the new project. That kind of responsibility can be overwhelming. It is even more difficult to pull resources away from their regular job entirely, because most companies just do not have that breadth or depth of backup resources. Due to the lack of resources, companies not only risk the failure of the project, but poor operating performance. This can have catastrophic results.

If a major initiative is worth doing, it is worth doing well, which means getting the resources necessary to help make it successful. The nice thing about consultants is that they go away when the project is done.

Strategic planning

Strategic planning is about finding ways to differentiate what you do as a company to get an advantage over your competition and maximize the value proposition with your customers. For example, Dell decided to sell its computers direct on the internet instead of through traditional distribution channels. This allowed customers to customize their product and get it within weeks. It revolutionized the industry and, for a time, made Dell the largest computer manufacturer in the world.

Related: Do I Need a Strategic Plan?

Strategic planning is a process, not an event. It is not when a bunch of people go into a room and come out a few days later with a revolutionary way to change a company. It requires building a foundation of information, and then using that information to adapt the business model and create competitive differentiation. This is an area where a management consultant can be of great value to a company. They can lead you through a rigorous yet creative process to develop and enhance the organization’s competitive advantage. Like Dell, your strategic plan can significantly enhance profitability, growth, and market share if executed well.

Final thoughts

There are numerous good reasons to hire a management consultant. If you take the time to vet the consultant and establish clear, measurable expectations, a great return on the investment will ensue.

The top reasons companies do not engage a management consultant, often despite the need, are the cost, finding the right expertise, and the perceived impact on personal reputation or stature. These concerns can be overcome by doing some research, creating a clear engagement agreement, and defining a regular (and frank) communication structure. The significant results that can be achieved by engaging the right firm will always reflect well on internal employees and will most certainly improve the performance of the company.

Visual South offers the service of  management consulting. We call it ClearFocus Executive Management ConsultingContact us for more information.

John Altstadt

Written by John Altstadt

John is a former CEO and VP of Operations with over 40 years of manufacturing and consulting experience. He brings a great deal of broad experience and passion to helping businesses and their leaders improve performance.