Management consultancy is the process of buying outside expertise in order to improve an existing business set-up. The highly skilled personnel of such companies look at any aspect of a business that might need improving, and suggests remedies. Despite the first management consultancy firm coming into existence in 1886, this sector did not really take off until after World War Two, where a number of now big name consultancies were founded.
In its early development, the idea of bringing in a management consultancy to a business was much more popular than in the USA than in Europe. This may be because while Americans saw this as an effective way to bring expertise to parts of their business which might need attention, the European management model considered people in charge as individuals who knew what they were doing already, and did not require external input. One of the reasons for this, it has been suggested, is that European managers were educated to a significantly higher level to their American counterparts.
Over the years though, the use of management consultancy services in European businesses has become much more popular. This change really began after the war when international trade, led by the USA, increased dramatically.
One modern slant on the management consultancy is Internal Corporate Consulting groups, which as the name suggests provide consultancy services from inside the company. There are several advantages and disadvantages to these teams.
A management consultancy can be effective when the process is implemented in accordance with the current strategy of the business. It also usually means there is significantly less time for the team to get to grips with the business, as they will already be familiar with it. Another good point is that the risk of sensitive information being passed to outside organisations is reduced. One of the main reasons why such internal teams have developed though, is reduced cost.
Disadvantages of employing an internal team include the fact that they might not have a totally objective viewpoint - one of the big plusses of hiring an outside consultancy. A more cloistered internal group might not be fully aware of the current best practices, which an experienced team, who has dealt with various business models, might. It is considered problematic to judge whether an internal consultancy team is actually cost effective - particularly as they are on the books all the time. In harder economic times they can be one of the first teams to be cut.
Governments too, have increased their use of management consultancy services over the years. The UK Government has increased spending greatly since taking over from the Conservatives in 1997. This is largely due to significant increases in National Health Service spending.
There has also been some criticism of management consultancy firms, with various charges being levelled against them. 'Stating the obvious' is one, while providing 'pre-packaged' solutions for businesses, thereby failing to address the actual dilemma faced by the company. Overuse of buzzwords is another issue, blinding clients with fancy sounding terms which simply confuse the situation.
Overall though, it is undeniable that management consultancy firms have gained prominence and their continued use suggest that they have a significantly beneficial effect on companies' fortunes.
Author Resource:-
Anna Stenning is an expert on good management consultancy having trained with consultants before.
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