Advantages and disadvantages of external consulting

What does contemporary consulting look like?

The workload for employees is constantly increasing.

While demands increase, the time available for the tasks to be completed decreases significantly. At the same time, employers often express the wish for less overtime created, preferably none at all. Regulations are becoming increasingly complex, tolerances for errors are becoming smaller or even non-existent, and the issue of personal liability is increasingly becoming the centre of discussion. External advice and, thus, help in the matter is an obvious choice. Nevertheless, some large companies in the consulting sector have been criticised for years.

What does modern, contemporary consulting look like?

McK & Co.

John Oliver’s Last Week Tonight is now one of the world’s most influential political satire and comedy shows. One of the most recent episodes focussed on McKinsey (source). Comprehensively researched books have also recently been published, of which When McKinsey Comes To Town has had the most significant reach (source). However, the problem is more expansive than this one organisation. McKinsey paid nearly $600 million in a settlement in the US opioid scandal (source). Boston Consulting is accused of unfair contact practices to solicit business in investigations (source). Bain Consulting has been banned from public business for ten years after being found to be involved in the South African corruption scandal (source). PriceWaterhouseCoopers is battling a tax business scandal in Australia, with one partner already banned for eight years (source). Ernst & Young has been penalised in the Wirecard scandal (source). KPMG recently agreed to a payment after a multi-billion insolvency case, the amount of which was not even disclosed (source). While companies like Deloitte have also come to light with legal disputes worth billions (source), organisations such as Accenture have recently agreed to payments worth millions to government institutions (source). This list is just an excerpt, and all the aspects mentioned are not trivial. But why is so much emphasis still being placed on consulting?

Good consulting, bad consulting

Qualitatively (very) good consulting can have many advantages. You get an external, neutral view. The help you receive is often scientifically sound and can have an extremely positive impact on the further development of your organisation and the people involved. Transferring many years of experience in your industry from various companies can bring you a significant, comprehensive and time-optimised advantage. You also avoid expensive ‘trial and error’ approaches, as you still do not know what the right solution is after a mistake. Excellent consulting gives you the opportunity for self-empowerment and thus delivers lasting, far-reaching benefits.

Bad consulting, on the other hand, can damage your organisation not only financially. Bad consulting may even deliver results, but if self-empowerment is not imparted, then you are making yourself dependent on the consulting organisation. Quite a few consultancies have a reputation for doing just that. One action leads to the next assignment — a toxic business model. If, in addition, a clique of ex-employees of consulting firms, business club friends or simply private contacts selects the consulting firm, poor quality is inevitable. Anyone who uses cliques for business purposes does not have the benefit of the organisation in mind. Even worse are mandates that are almost predetermined in terms of outcome, often labelled with the euphemism “political mandate”. Here, the consulting firms conclude, purely by coincidence, of course, that the idea of the highest management and executive level was exactly the right one. They are then happy to help with the implementation. Any subsequent problems are an ideal hook for the next mandate. In some companies, it has been scientifically established that the consultancy services delivered were primarily based on making savings at the lower levels of the hierarchy pyramid and implementing better conditions at the upper levels (see ex-McK consultant Arch Patterson and his book ‘Men, Money and Motivation’; source). One of the recurring, central aspects of criticism of consulting firms is the use of recent university graduates without practical experience. It is common sense that without real-world work experience, a consultancy cannot have the same quality as one based on years or even decades of experience.

Conclusion

You can recognise bad consulting very quickly by three signs: insider cliques are chosen over a quality-oriented selection, results are dictated so that no real consulting takes place, and a record payment is made far beyond industry standards (even if successes or results are not delivered).

You can recognise good consulting by the aspects mentioned above.

However, it is also crucial that you refrain from generalising. Some people at the consultancies mentioned here deliver excellent work. However, the problems in these organisations are inherent and have been solved only to a limited extent for a long time. External consulting can be beneficial. However, this requires a professional, sustainable, quality-orientated approach from everyone involved.

You can find out more about modern, contemporary consulting in this week’s podcast: Apple Podcasts / Spotify

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Contact: Niels Brabandt on LinkedIn

Niels Brabandt is an expert in sustainable leadership with more than 25 years of experience in practice and science.