What is Management Consulting?

1. What Do Management Consultants Do For Companies?

There is a lot of variety when it comes to management consulting as it depends on the sort of area that needs to be focused on, for example, a business or organization that is suffering in their financial department may acquire a financial management consultant to help resolve any ongoing issues that they are having. Instead of hiring for a general role, there are a lot of sub-niches when it comes to this type of work because of the variety of areas that consists within a business structure.

The main defining word for management consultants is ‘management’, a consultant’s main role is to take top-level business problems, the ones in which concerns the CEOs, Chairmans, Board of Directors (BOD), and Boards of Management (BOM), and take over the management in that area. Management consultants are used to help organizations solve issues, create value and maximize the growth of the company. They are hired to bring better business performance by using their business skills in the areas that are lacking, bringing them on board with new, fresh ideas, concrete, and well-tested strategies.

They will be concerned with the structure, management, operations, and strategies that are currently being used within the company to find those lacking areas that need to be tackled to provide the business with better performance. Management consultants are not only there to see what is technically ‘wrong’ with the company, but they are also there to recommend changes and implement solutions.

2. Why Do Businesses Engage With Management Consultants?

Management consultants are usually taken on by a business because they are needed to fill a skill gap for a period of time. Instead of the stress of hiring someone to just do a singular job, it is a lot cheaper for businesses and organizations to hire externally for a fixed monthly or contract fee and get those issues within their companies solely worked on.

Hiring management consultants is a better business solution than trying to find someone who can 'tick all the right boxes; because you don’t know where or when the next issue may come about, if a business was to hire someone for one role full-time and then another issue was to occur in a different sector and that person was not qualified or confident enough in order to deal with it, then you’d start hiring full teams, spending more money when the issues could have been solved by hiring management consultants who are experts in the fields that need attention.

Management consultants come with experience that a company does not have internally and are used as assets that drive potential in certain projects or areas that require their focus. Management consultants do not get in the way of the day-to-day running of the business and solely focus on the tasks that they have submitted.

Another reason that a business or organization will want to hire a management consultant is that they are flexible. They can provide end-to-end solutions but also focus their expertise in a specific area depending on what the business needs.

3. Who Are The Top Management Consulting Firms Available?

As stated in the beginning, BCG, Bain, and McKinsey are the top three management consultancy firms that are on the market, but why are they the best? Let’s delve in.

3.1 Boston Consulting Group

The Boston Consulting Group is a global consulting firm that partners with leaders in society and business, supplying them with the best service to their most challenging problems and presenting them with incredible opportunities. Since they were founded in 1963, its success has been driven by its spirit of deep collaboration and its global community of diverse individuals that are determined to make the world and each other better each day.

The Boston Consulting Group, also known as BCG, are pioneer in business strategy and works closely with all its clients to embrace a transformational approach that is aimed at benefiting all stakeholders. BCG empowers organizations to build sustainable competitive advantage, grow and drive positive societal impact. They do not just situate in one area, their global team excels wherever they are needed, they unlock the potential and change that needs to occur in businesses to allow them to fully take hold of the impact that they could be making.

3.2 Bain & Company

Another management consulting company is Bain, known for working with ambitious clients that want to define the future of their business and stop hiding from their potential. They attract global leaders that are coming to them to be able to solve industry-defining challenges with strategy, marketing, operations, information technology (IT), digital transformation, advanced analytics and so much more.

They have a unique approach to the way that they conduct business to help them grow beyond what they thought was possible, this is by using a system called Results360® as this allows them to be able to help structure, orchestrate and enable sustained results.

Bain measures the success of their company by the level of change and success that they can bring to their clients. More than 60% of the Global 500, private equity funds represent 70% of global equity capital, leading non-profits and innovative start-ups.

3.3 McKinsey

The last of the big three is McKinsey, founded in 1926. McKinsey is designed to operate as one, a single global partnership that is united together by a strong set of values, they have an incredible commitment to diversity and are able to be part of a massive positive social impact through the work that they are doing. They have an approach that is always looking to recruit skills that will develop them even further, no matter where that person or team is based.

They thrive on bringing the best to their clients. With over 90 years of experience in the field, the portfolio of clients, start-ups and general businesses that they have helped are extraordinary. The way they formulate success strategies is by ensuring that the right team is assigned to the right jobs, with extensive research into the overall goals they can handpick the best employees that will drive the right innovations for the best results.

Their consultants include medical doctors, engineers, designers, data scientists, business managers, civil servants, entrepreneurs, and research scientists.

McKinsey has openly said that they know that since being founded, the environment has changed and companies’ attitudes towards what they are doing and what they are bringing to the world with their products and services. Adaptability has been one of their biggest developments in the past and now they are able to give that experience and knowledge to other companies so that they too, can be as successful as possible.

They combine their bold strategies alongside transformative technologies that can help organizations become more sustainable through innovation, achieve lasting gains in performance, and build workforces that will thrive for this generation and the next.

4. Why Are Management Consulting Companies Paid So Much?

That these companies get paid a lot of money for the work that they do is not new, it has been happening for decades now and there are usually always big clients after big clients willing to pay a large fee to get the right management consultants.

But why are these management consulting companies able to charge such a large amount for the work that they do? It is because they will always bring what is called the ‘best practice’ to their clients. These companies will be working with many clients in the same industry with the same problems and all of them will be getting great results, their tried and tested strategies and innovations are one of the reasons they are able to charge more than you think is needed.

It is kind of like the saying in the marketing world 'if you can make one dollar into two, you'll never be poor' this is similar to the management consultancy companies, they know what works and what doesn't, so they are able to bring that to companies and usually get them out of tough situations that may lead to the demise of the company.

Management consultants come to clients with the most updated, the most current, and the most proven solutions to the table. As stated before, they are dedicated to moving a business from where it is currently sitting to a better place, this may be financial or otherwise. Consultants can charge big prices because of the knowledge that they bring, they have seen over the years how the markets are changing, and are able to adapt and change accordingly.

5. Facts About The Pricing Of Consulting Work

McKinsey typically charges ~$750,000 US – $1,000,000 US per month per standard team. So, if a project was to take 6 months to complete, a company is looking at $4-5 US million.

A McKinsey team size for a general project would be but is not limited to:

• 1 Engagement Manager (EM)
• 1-2 Associates
• 2-3 Analysts
• 1 Team Assistant
• Support Staff

McKinsey also likes to attain clients on a shorter contract first (2-3 months) to see what impact and influence they can make for the company before then heading into 6-monthly and yearly contracts.

So, though the pricing may seem rather high, it is not like just one person is running the entire show. They hire to what jobs and tasks need to be completed.

6. Conclusion

Management consulting is a very diverse industry where individuals can use their knowledge to influence other companies in becoming better than they were yesterday.

The best part is that anyone can become a consultant, if you have extensive skills in an area that you know would be beneficial to a company then you are already heading in the right direction.

Management consulting is usually driven by the results that a person or team can bring to the table. The main role is to help a business solve current issues and drive them in the right direction that is best for its business.