Survey on how and why top-level executives hire management consultants
Raj Goodman Anand
Founder of Goodman Lantern (UK) | CEO of Humanify LLC (US) | CEO of ClimbCode, driving Content Production in Telecom | AI Speaker
In an attempt to discover how and why top-level executives hire management consultants, Goodman Lantern conducted a survey of 206 executives in Fortune 1000 companies. The results showed that the three main reasons behind the hiring of management consultants were as follows:
- To give a much-needed shift in strategy
- To bring a fresh perspective
- Best practices across industries
While the above-mentioned two reasons for hiring management consultants were the clear forerunners, various other significant needs were addressed as well – staffing, training, and fundraising, to mention a few. In terms of specialised expertise, financial and strategical advice were highly sought after with technology and human resources following closely behind.
The Hiring Process
On the subject of head-hunting management consultants, a large percentage of the interviewees alluded to using popular search engines such as Google and Bing. Generally speaking, more traditional recruitment methods such as phone calls, referrals, and company reputations were significantly less popular.
Astoundingly, 63% of Fortune 1000 executives stated that their number one reason for not re-hiring a management consultant was arrogance. On the other hand, only 17% of the panel seemed concerned about the quality of work supplied by the consultant. From this, we concluded that a consultant’s attitude and general demeanour are the foundations for a successful partnership between executives and consultants.
Management Consulting Trends
According to our research, nearly 42% of Fortune 1000 companies are steadily moving towards hiring in-house management consultants rather than leaning on large consulting firms. Those who preferred to outsource stated that they were more likely to do so from a developing economy. Additionally, most of our interviewees preferred to stretch payment of consulting fees over the period of a year. Despite the expectation that the Management Consulting market will grow to over $350 billion within the next year, efforts to cut back on costs are still hugely significant.
Primary and secondary research relating to markets, costs, industry trends, etc. often falls on an external research firm working in collaboration with the marketing consultant. Naturally, this would incur additional fees. When asked who should shoulder this financial burden, more than 50% of our interviewees were willing to contribute to the additional costs incurred.
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7yI've known of a case where management consultants recommended a move that resulted in the company being taken over by a competitor because it lost many skilled staff as a result of the recommendation. I know of another case where a company lost skilled staff after taking the advice of management consultants. Personally, I wouldn't trust management consultants as far as I could throw them. They seem to ignore what the employees want and need, e.g. to walk to work or not to have to move house and disrupt their children's schooling, and concentrate only on what the management wants (hence their title). If the management were any good, they'd know what their employees require but then they wouldn't need to call in consultants!
FOUNDER: Alex & Smith | Digital Stock | Carbella | Redwing Media | E.O. Wilson Foundation | Amplifire BOARD MEMBERSHIP: Nature and Culture | E.O. Wilson Foundation | The Influence Board | Amplifire
7yVery interesting. One tiny nit—a best practise (#3) is to always spell practice correctly.
Director of People Analytics & Insights at Cencora | MBA, SPHR®
7yHow is it that of the respondents to this survey, ~60% prefer to work with large Big 4-type firms, the main marketing material organizations use to select a consultant are found on their website, and yet: ~60% "chose (found?) their consultant" using a search engine like Google/Bing AND less than 25% of them chose their consultant based on the size/reputation of the firm. Not questioning the survey itself as much as finding these particular results interesting when you put them side-by-side at look at them in the context of the others.
Managing Partner, Laura & Partners Consulting Limited & Council Secretary/CEO -Zambia Institute for Strategic Management
7yGreat read. The need for management consultants is growing insignificantly in Zambia. Several companies are sourcing management consultancy from the international firms as well as the mid tier firms. The small sized local forms are also doing pretty well on the market.