When I take a look at the consulting industry, two questions have always come to my mind:
- Why is it not an industry standard that consultants are paid based on results – an inherent guarantee of the value of the work?
- If companies are largely satisfied with the results of their consulting projects, then why do they often take their future business elsewhere?
To address these questions, North Highland decided to take the pulse of our industry to better understand how consulting is really perceived. In association with Forbes Insights, we looked deeper into strategy execution success and failure rates for companies working with management consulting firms. Top executives from multinational companies across the U.S. and U.K. were interviewed about the relationships they have with their consulting firms. At first glance, the results seem to demonstrate unequivocal success in the consulting business. The survey found:
- 90% of executives reported success
- 62% found the benefits of the project equaled the expected outcome
- 30% the benefits significantly exceeded their expectations
While most reported being satisfied with the outcomes of their consulting projects, it could be that companies simply accept a certain level of failure; and my belief is that client buyer level plays as role as well. While executives have a higher level of satisfaction with consulting engagements, according to North Highland’s broader consulting market research, the director level has a much lower level of satisfaction (31%)*. Additionally, a closer look at the Forbes Insights survey revealed an eye-opening dichotomy between satisfaction levels and willingness to use the same firm again: 92% of the executives surveyed considered their consulting projects successful; however, just half rehired that same consulting firm. As anyone in the business of professional services knows, it’s both time and resource-consuming to attract new clients. Consulting firms are clearly missing an opportunity to retain and grow their business portfolio with existing clients.
So, what can we do to increase the percentage of return business? It all starts at the beginning. Survey respondents identified the following challenges when it came to consulting engagements:
- Defining and managing the project and its scope
- A lack of sufficient resources
- Communication with internal teams and management
Consultants must listen to their clients early on and learn all they can about the company and its business challenges. If the consulting firm doesn’t spend enough time getting know the client, setting clear expectations and managing progress, missteps are sure to follow.
Responsibility and Integrity
Back to a previous point, an acceptance of failure by clients is certainly a cause for worry. There are large sums of money at stake – not only for the cost of the consulting project itself, but also for the impact of any failures. And let’s not downplay firm and employee reputations, and so much more. As an industry, we should push each other and our clients to compensate us for the results we achieve, not simply for hours billed or a flat fee. We should be guaranteeing outcomes. Our job is to manage the engagement, to bring the issues to the client proactively and come together to tackle any critical issues. This kind of approach forces the consultant to face the project’s demons. At North Highland, if we say we can do it, then we will do it.
Overall, the survey tells us that companies are looking for a customized approach, deep knowledge of their business and accountability for the project’s success. Many consulting firms have multifaceted offerings and consult in many different areas, and North Highland’s goal is to develop long-lasting relationships, not just engage in a series of one-off projects.
At the end of the day, this business is centered on our honor and integrity. For North Highland, this means making sure that our clients do better. When our clients achieve their goals, we have succeeded.
*Source: Seymour Insights, North Highland Brand Strategy Study 2014, Q13: How often would you consider your firm’s consulting engagements to be successful?