Selecting A Management Consulting Firm

Getting it right.

If you’ve been tasked with a strategic, operational, or investigative matter for your company, selecting a management consulting firm can seem like an epic endeavor.

But it actually comes down to a handful of issues to evaluate. So, let’s consider how to select a management consulting firm.

Some basic points will help you get it right.

The important things to consider are:

(1) Quals
(2) Perceived Competence
(3) Staffing
(4) Cost.

Since we are a consulting firm after all, let’s break these issues out as bullet points.

Quals:

“Selecting a management consulting firm”

First come Qualifications or “Quals”, as they are known in the consulting world. They are widely viewed as a one-for-one proxy for expertise.

Yes, they are helpful. However, they are also extremely limited in actual utility.

The reason is due to the fact that many firms have extensive Quals. But importantly, those Quals are firm wide. They are not necessarily relevant to your geographic location.

Was the potential project lead standing before you on the team of that specific Qual? Moreover, have they done this work before? If so, can they readily explain those past experiences in common language that clarifies the problem, and the solution applied?

Perceived Competence:

“Selecting a management consulting firm”

Quals are useful, but they should not be your sole focus when evaluating depth of capabilities. “Perceived Competence” gets to the breadth and depth part of the skill evaluation equation.

But from a Q&A perspective, it should run tandem with Qual interrogatories. We break it out here to make the point clear.

The concept of Perceived Competence addresses how the consultants frame issues and discuss potential scope in an initial meeting.

“Sometimes, it’s far more compelling when an expert tells you what they can’t do.

It is the more nuanced side of engagement experience because it demonstrates whether or not these consultants get your particular problem.

Remember, denoting Quals – that litany of past clients – is just a list after all. What lies behind it?

And importantly, do you get the sense they can “do it all”? The truth is no one can. So are they honest about limitations? Strengths and weaknesses? Sometimes, it’s far more impressive and compelling when an expert tells you what they can’t do.

We’ve definitely lost opportunities with a blunt answer that didn’t serve our own interests. But professional integrity should lead the way on this.

To understand the approach to evaluating perceived competence, you will get to an honest answer here by prodding for more detail. For instance, what were the moving parts involved in that particular issue (maybe information systems or operational divisions, or business realities), and how did they interact?

That is to say, does the person before you grasp the entirety of that experience? Remember, this is the person or persons who will define your problem and your solution. It is therefore important that they get your company’s challenges in ways that suggest they’ve faced them in the past.

So, what didn’t go right in these past engagements, and why? Missteps are part of solving complex problems. They are inevitable and OK.

But were they solved and learned from by the person before you? We need to know that.

Staffing:

“Selecting a management consulting firm”

The unsung issue behind many a failed project. Is it simply scope? Maybe budget constraints? How about technology? No to all of these.

It’s the team on the ground. It is people.

This is where projects fail.

In hiring a firm, what happens after the work is won? That is ultimately what every client should focus on. They rarely do.

The ultimate success of your consulting project has far more to do with who will be on the ground with you, creating and executing the plan, than the premium brands the consulting firm may have served in the past or the perceived competence of who is before you at the moment.

So what does this issue look like?

Well, is that industry expert leading the talk a local resource? Or did they fly in for this meeting? Are they going to be working down the hall from your office on a daily basis?

Unless the budget is a significant one, their regular presence is unlikely if they aren’t local. And unfortunately, given the financial incentives surrounding many firm’s compensation structures, they won’t be working on the project at all after the initial sales call.

Is that industry expert staying after the sale?

So we want a list of who is actually going to be on our project and their percentage of responsibility.

Ideally, this would look something like:

Partner (5%): Strategy Oversight, Leadership Liaison
Senior Manager (5%): Strategy Oversight, Budget Responsibility
Manager (20%): Weekly Strategic Oversight, Team Management
Senior Consultants/Consultants (70%): Onsite Execution of Goals

Cost:

“Selecting a management consulting firm”

Here we are talking what is essentially project scope. Like all business endeavors, the trade-off will always be between how much is provided and how much one is willing to pay.

Scope creep cuts both ways.

Many clients focus on expanding scope as far as possible for the agreed upon dollars. The goal is to get the consulting firm to provide a solution from A to Z, regardless of how short the dollar spend.

Conversely, many consulting firms focus solely on winning the engagement at this stage. The scope promises extend to the horizon and beyond. Price will be revisted later.

Neither of these are best practice. And neither lead to the best outcomes because they are mutually exploitative. The client is seeking more while paying less – sometimes unrealistically so. The consultant is seeking to get a new engagement whatever-the-cost, and will reassess services provided later (downgrade deliverables).

Avoiding these negatives is not complex. But it does require advanced planning, and moving the anticipated project beyond conceptualization BEFORE selecting a management consulting firm. How do we do that?

Success Through Specificity.

Layout exactly what you need. Use the firm as a partner in this stage. If we’ve done our due diligence on the three previous points, we trust their judgement. And you want their take on what to do to get things done.

Understand that the staffing models of most firms requires a sharp eye on the budget by client personnel. Despite the best intentions of your consulting team on the ground, the billing pressure on firm employees can be intense.

That means if detailed steps have not been laid out in advance, you run the risk of cut corners and unfinished business on your project to meet the consulting firm’s profitability metrics at project conclusion.

So that specificity of goals, issues, and a step-through of who will do what, helps everyone to be on the same page from day one. It defines what needs to get done, who will do it (company or consultant), and what that means for cash outlay. In short, it prevents abuse by either party because cost is agreed upon upfront.

Internal Champion:

“Selecting a management consulting firm”

One other key item that we haven’t discussed is internal to the company.

Many companies assign an internal project champion. This person is responsible for daily interaction with the consulting personnel.

They also will be the one to circle back with client teams to get buy-in or inform project decision-making.

The internal champion must have social capital.

Before you sign off on your project, make sure leadership assigns this role to an employee who is high enough in the organization to get things done, and will be able to dedicate the time to the initiative.

The reason they need to have status in the organization is that many projects fail because company personnel expect the consultants to solve the problem with little to no assistance.

This is not realistic. An appropriate level of power for the client project lead prevents this mindset from taking hold.

“Even the best consultants can not possibly know every key aspect of your organization.”

Even the best consultants can not possibly know every key aspect of your organization. Nor do they have the necessary privileges as to systems, information, and relationships.

So it is imperative that company personnel are engaged and dedicated to the project, for any project to be successful. A key internal project lead (probably you, given you are reading this) must have the authority to ensure that engagement goals becomes reality.

Said more bluntly, the project champion must have the ability to reward or criticize client-side performance in a meaningful way. Consequences (good or bad) ensure action.

Concluding Thoughts:

“Selecting a management consulting firm”

It is extremely rare for business leaders to ask these kind of questions during consultant selection. Instead, the more common approach is to start with a non-disclosure agreement, convey their business problems, review Quals, listen to a presentation, and flip through a pitch book.

“Companies must drive the agenda or firms will.”

At some point, after an internal committee discussion, the company selects a firm. It can certainly turn out “OK”. But you should bring every advantage to your project that is possible. And this approach helps you do just that.

Admittedly, there are more items to consider when answering the question of how to select a management consulting firm. And these factors will vary based on your individual industry and corporate needs.

But remember, if you follow these four selection tenets, you should be well on your way to reducing out-sized risks and aiding a successful outcome as you select a consulting partner.

Feel free to reach out to us via the Contact Page with questions.