When companies want to improve their efficiency and profitability, they hire consultants. Management consulting is a difficult task, as many clients are not able to provide consultants with clear reasons for their problems, yet they demand quick results. Furthermore, clients can be inflexible and often difficult to convince. As a result, some organizations fail to overcome their troubles, despite paying hefty fees for consultants, and don't implement consultants' advice fully. But even though it is difficult to deal with such customers, consulting has become an inevitable aspect of business.
The consultants perform the following tasks:
- Identify areas of concern.
- Analyze issues.
- Streamline procedures.
- Suggest solutions.
The management consulting business fluctuates wildly, depending on many factors. Approximately 500,000 people work in the consulting industry, accounting for about $100 billion in annual revenue. About 50% of these consultants are from the U.S. In the last decade, the industry has grown four times in comparison to the GNP.
There are various types of consulting firms on the market. They can be mainly divided according to three factors:
1. The size of the firm. Most consulting firms are small, and the majority of them are one-person organizations. About one-third employ less than four people. Half of them have annual billing of less than $500,000. The top 50 firms in the U.S. generate approximately 75% of the revenue. Many one-person consulting firms often depend entirely on a sole client. Most consulting professionals are advised to avoid starting their careers with such firms, as they lack a depth of range. However, it is not rare for veteran consultants to conclude illustrious careers in their own firms and not employ anyone.
2. In-house and external consultants. According to the definition of consulting, a consulting firm is always external in structure. However, there are many organizations with their own in-house consulting, usually tied to planning departments. But such organizations make up only one-fifth of the total market. For people who don't consider consulting a lifetime career but who are looking for exposure to senior management problems early in their careers, in-house consulting departments are good entry points. The truest breed of consulting lies in working at an external consulting firm. Those who are serious about their consulting careers should strive to join these firms.
3. Degree of Specialization. While the majority of firms provide advice in a large number of areas, some make their marks in specialization. Organizations often pay well for expert advice. The specialization depends on the firm's function and customer group.
Ten Most Respected Consulting Firms in the U.S.:
- McKinsey & Company
- Boston Consulting Group
- Bain & Company
- Booz Allen Hamilton
- Monitor Group
- Mercer Management Consulting
- Mercer Oliver Wyman
- Mercer Human Resource Consulting
- The Parthenon Group
- Deloitte Consulting
The prevailing myth is that consulting firms employ only Ph.D.s and MBAs, but in truth, they mostly look for graduates who are sincere and who are good communicators. Surprisingly, according to the U.S. Bureau of Labor Statistics, 28% of consultants do not possess degrees of any kind.