When to Hire a Management Consultancy

When to Hire a Management Consultancy

To Hire or not to Hire

Organizations undergoing change can often make irrevocable mistakes that could have been avoided by hiring management consultants with specialist knowledge and objective guidance.

They choose to forgo external help for a number of reasons. The motivation of cost saving is often the primary determinant in deciding whether or not to hire a consultancy, but management may also underestimate the effort and impact of change initiatives, and believe that internal expertise and resources can independently handle these projects.

Even though there is a cost associated to hiring an external consultancy, this investment can be well worthwhile when compared to the detrimental impact on cost, time and employee morale that poorly planned decisions can have.

To ensure that planned change effectively achieves its desired outcomes, it is important to recognize the situations in which obtaining the help of a management consultancy can provide substantial benefits and be worth the effort.

Organizations must carefully assess goals behind planned initiatives and objectively determine their internal ability to carry them through independently without the need for outsourced expertise. To do this, the following considerations should be made.

1. Nature of Initiative

Hiring a management consultancy can make all the difference in the success of planned initiatives that deal with major change, such as restructuring or modifying core business processes. While initiatives such as market development or product development can also be considerable undertakings, critical initiatives such as altering business strategy or optimizing business performance are more effectively handled with the guidance of experts on the subject, since even minor flaws can ultimately result in the downfall of the business.

2. Expertise

A main reason why management consultants are often brought on board is their expertise. Just as when other business activities are outsourced, companies often lack the time and resources to obtain desired goals. It is more efficient in these cases to hire a consultancy to propose appropriate plans and solutions. The basic question that should be addressed in this case is whether an organization has the expertise and resources to deliver the solution required within an established time frame.

3. Scope

Even though project scope may seem like a straightforward aspect, it can often be misleading. Project scope is often defined by the number of employees that will be directly affected by an initiative, but this can be an inaccurate estimation of its magnitude. To properly assess scope, it is important to consider all stakeholders that will be affected directly or indirectly. If more than 30% of the organizations stakeholders (including shareholders, suppliers, customers and employees) are affected, then it is safe to classify the initiative as a major change and one that is better handled with the aid of a specialized party.

4. Principal versus marginal change

The more closely the initiative is linked to the organization's core offering, the more critical it is to get it right, so it vital to understand how the initiative will affect the essence of the business. A design firm may shrug off the idea of training its customer service personnel, but a utility provider can go out of business with poorly trained customer service representatives. The closer the initiative to the main line of business, the more important it is to have it effectively planned and designed.

5. in-house and external knowledge

Many companies may believe that only their internal staff understand how to maintain their competitive edge. While in-house knowledge and expertise is extremely valuable, it can also be complemented by objective assessment and a broader outlook. An organization's management and employees can become complacent, narrow-minded or too set in their ways. They can become too inward-looking and forget about both the opportunities and threats that come with operating in an ever changing market. Barriers to entry can be overcome by new players and unique advantages can be copied or beaten. When faced with these circumstances, hiring external experts can provide objective assessment, specialist knowledge and a fresh perspective on things.

Looking at these parameters can help business managers determine when their organizations are well equipped to undergo their change journey alone, and when it is beneficial to partner with a management consultancy for more effective outcomes.

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