The Effects of a Volatile Economy on Management Consulting

The era we are in now is being shaped by a preoccupation with risk and security (an enduring legacy of September 11, 2001) compounded by the lasting effects of a failure of the financial system (2008). The Canadian economy is now absorbing the impacts of the dynamics of oil prices – layoffs in Alberta and plans for expansion in Ontario. The outcome of theses cumulative events has affected government policies and is being felt in management consulting in several ways.


Clients Building Capacity to Adapt

The major change has come from businesses that cannot (or will not) pay high fees for their external advisors. Many larger firms have instead opted to establish and build significant internal consulting teams. These teams are charged with implementing and enhancing core operational systems. The members of these teams are highly qualified professionals who have typically been schooled by major consultancies. The effect of this has been dramatic - the conceptual work and modeling traditionally undertaken by external management consultants is now being done internally.

Businesses that have survived and have managed to achieve a level of financial sustainability are now focused on managing both growth and stability. They want to keep their valuable employees, retain valued clients, and manage costs. They are investing in employee engagement services (coaching, employee surveys, mentoring) and client retention strategies (re-design of Customer Retention Management systems to increase functionality, re-introduction or strengthening of balanced scorecards and benchmarking).

These businesses want to achieve the right balance between internal resource allocations and cost cutting. It would appear that they are also investing in a greater organizational capacity to adapt by investing in:

  • Leaders capable of skillfully affecting change through their behaviours and ability to influence.
  • Flexible processes and systems.
  • Building looser, networked structures that can be adapted to opportunities.
  • Innovation (technologies, management processes, delivery systems, business models).
  • Futures (small investments in potential businesses or business lines).
  • Processes that simplify operations and result in decreased costs.

Perhaps the greatest shift I have seen in management thinking is the strong desire to control all aspects of the business while being transparent (a consequence of ubiquitous social media). Social media has opened organizations to scrutiny both internally and externally. Concurrently, the democratization of knowledge has also allowed organizations of all sizes to seek out and integrate richer information into their decision-making.


Shift in Expectations of Consultants

Client expectations of external consultants in this milieu are significant as they increasingly seek out:

  • Deep operational knowledge and technical skills.
  • Candor and pragmatism in diagnostics and recommendations.
  • Full disclosure and ownership of methods, techniques and data.
  • Training and development of staff associated with the work undertaken by external consultants.
  • Focus on only part of a major project or initiative (such as a process).


Looking Ahead

It is not clear what the future holds for management consulting as these demands leave little room for growth. One strong possibility is that management consultants will become less affiliated with major consultancies and more flexible as free agents or as part of a looser network of skilled, technical experts.

The skills of a successful consultant in this milieu will have to include:

  • Deep expertise in several areas, many of them operational.
  • Capacity to acquire new skills (lifelong learning).
  • An ability to work effectively in teams, often several teams simultaneously.
  • Strong interpersonal, broader social, and networking skills.
  • Adherence to a strong set of ethical guidelines.

Today’s management consultants carry a great deal of personal responsibility for their success. The talent, expertise, and personal trustworthiness of a management consultant is as important as the organization he or she represents.

As client organizations exercise due diligence of their external advisors, the consultant’s profile is under greater scrutiny than ever before. Virtually anyone can call themselves a management consultant without any formal education or accreditation. However, as the complexity of business increases and the need for specialized expertise or know-how grows, perhaps it is now time for businesses to begin insisting on standards and the certification of management consultants.

For businesses, certification is a way of tangibly ensuring that what had been assumed about character and trustworthiness can now be relied upon.

For the professional management consultant, certification offers a “seal of authenticity” to clients and potential clients about the experience, expertise and ethics of the practitioner.