The Bigger the Consultant Firm, the Less Value They Generate
It was 1998 and my partners and I were looking to merge with another similar size group as our next growth step.
There were some sticky issues and personalities.
We all agreed to contribute to the hiring of a consultant to help grease the wheels and bring us together. We had a collaborative leadership model at the time, so we needed a consensus choice. For that reason we went with a nationally known firm.
What we got was a lesson in the school of hard knocks.
The consultant we hired brought us together, all right. Once we received the first bill for their facilitating services, we all met and decided it wasn’t worth the money.
It was the first big step toward building our collaborative culture, deciding we could do things ourselves. It was a six-figure lesson—use a consultant when you need, but don’t hire a big one, keep them targeted and hire them for specific expertise.
It’s a lesson that’s reflected in the data.
A recent analysis of revenue-per-employee in S & P 500 companies showed that the lowest performers were mostly large consulting houses.
In fact, they have to spend more than $2 on hiring new employees to achieve $1 in revenue growth.
That’s a lot expense—expense for which you pay through higher fees.
Data like that really give us consultants a bad reputation.
The big consulting firms can get away with it, though, because their “big names” allows their clients to tell the right story to their bosses and themselves.
Given my reputation, I don’t often lose out on engagements to these large consulting houses. But when I do, that’s the reason.
“We hired the sector “name.” We hired the “best.”
“If something goes wrong, it’s not my fault.”
“No one ever lost their job by choosing XXXXX.”
If that’s your corporate culture then safe, expensive results are what you’re going to get.
But if you want outsized value, if you want ongoing gains far in excess of resources invested, if you want real success…