5 Prerequisites to Hiring a Management Consultant

Everybody has a general idea of what a management consultant does. After all, the name is self-explanatory; professionals that are consulted on management related issues ­ fairly straight forward. As simple and as uncomplicated as it sounds, companies and professionals often make irrevocable mistakes that can be easily avoided by hiring a management consultant. It is therefore crucial to recognise when the need for a management consultant arises and to take the necessary steps. With that said, many companies often decide against hiring consultants to avoid “unnecessary costs” for issues that can “easily be solved internally”.

Whilst it is often established that management consultants claim sizeable bills, these amounts are often incomparable to the money wasted on bad decisions taken by management. As a general rule of thumb it is best to turn to a management consultant for help with a business initiative after these parameters are investigated.

1. Initiative Type

It is crucial to seek the advice of management consultants when an established corporation or company is considering changes such as restructuring or modifying core business processes. Whilst other initiatives such as market development or product development are considerable undertakings, critical initiatives such as revamping the performance of a business performance is often reserved for consultants since even minor flaws could ultimately result in the demise of a business.

2. Expertise

One of the primary reason why management consultants are brought on board is for their expertise. Like other business activities that are outsourced, companies often lack the time and resources to obtain the desired goal. In these cases it is more efficient to hire a consultant to propose a suitable framework. The question that it ultimately boils down to is: Do you have the expertise to deliver the tools required to succeed within the established time frame?

3. Scope

Even though scope might seem easy to establish it is often surprisingly misleading. Scope is often attributed to employees that are directly affected by an initiative. This unfortunately is an inaccurate estimation of the magnitude of an initiative. For a proper assessment of scope, it is crucial to consider all stakeholders that will be affected directly or indirectly by a proposed initiative. If more than 30% of the organization’s stakeholders (including shareholders, suppliers, customers and employees) are being affected then it’s safe to classify the initiative as major and therefore more worthy of being handled with the aid of a consultant.

4. Business Strategy

The more closely the initiative is intertwined with your strategy the more important it is to get it right. Put another way, it is paramount to analyze how the initiative will affect the “essence” of your business. A design firm might shrug off the idea of training their customer service personnel but a utility provider will shudder at the mere thought of having poorly trained customer service representatives. The closer the initiative is to the main line of business the more important it is to have it effectively designed.

5. Competitive Edge

Most companies think that only internal personnel know how to maintain their competitive edge. This might be true for certain companies, but in other cases companies often become too complacent and forget that in an ever changing market. Barriers are easily eroded and differentiating strengths are easily mimicked. When faced with these circumstances it is often best to hire an external expert to help design robust strategies that are difficult to imitate by competitors.

Based on these 5 parameters it is best to hire a consultant when the need arises. Companies often assume that is it cheaper and better to handle major issues internally, which indeed, might be the case for some companies. On the other hiring experts that can easily handle business initiatives effectively could be a blessing in disguise.

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