Performance Improvement and the Evolution of Consulting
By: Dwight Mihalicz|Published on: Jun 9, 2021
Management consulting is a very young profession, especially when you compare it to professions like medicine and accounting. Such trades have been around for hundreds and even thousands of years.
Consulting, on the other hand, started as a profession only in the late 1800s, and universities started teaching it some time later. For instance, Harvard founded its Graduate School of Business Administration in 1908.
The development of this profession mostly began in the United States and a handful of countries in Europe. What’s more, even today, most of the industry activity is in North America and Europe. According to the latest research from 2016, as much as 78% of the global management consulting spend is within the boundaries of North America and Europe. Despite that, the whole industry is still very large. Some research sources show the total spend approaching $US 1 trillion, but these take a very broad definition of consulting. The latest numbers with the most credible definitions of consulting show that the total spend measures around $250 billion, with an average annual growth of 4.3%.
This growth indicates there are opportunities everywhere, but particularly in areas of the worlds outside of North America and Europe. The economies of these regions will continue to grow rapidly. That can only mean that the management consulting industry can grow as well. It can grow and mature together with other enterprises, many of which are driving the economic advances in those areas.
Of course, the year of the global pandemic, 2020 was a major setback for economies everywhere. The management consulting profession also took a hit. It is looking now like economies will recover fairly quickly post pandemic. The same is true for the management consulting industry.
That growth, however, will result in a consulting industry with a different look and feel. Just as organizations have had to pivot and deal with an increasing pace of change, consultants also must change how they support their client organizations.
A Change Needs to Come
Most organizations and their consulting advisors are usually focused on the outputs of the organization when looking at performance improvement. The regular questions that arise are:
- How can I produce more and sell more?
- How can I improve processes to decrease costs and increase profits?
- How can I cut costs and improve margins?
- With questions like these being the most common ones, most organizations fall into the trap of short term thinking. It’s mostly driven by the financial markets and investor positioning.
This needs to change.
Organizations need to think about the input measures as well when thinking about performance improvement. I think of these organizational systems in three buckets:
- the structural elements such as business models, strategy and organization design. These are foundational to what a company does and what it wants to achieve.
- the outcome measures, which are culture, performance metrics and ultimately profit,
- the people measures – how well we use our people to execute our strategy and achieve our outcomes.
The people measures are all about the input side of the equation. These again fall into three buckets:
- Accountability and Authority. Organizations need to have a road map for how work is delegated, and for how people collaborate. This means that organizations need to have a framework for accountability and authority. This becomes the road map for ‘how we work together’. Without this, the people inside the organization need to ‘make it up as they go along’. Some will get it right – some won’t. Either way there will be a loss of effectiveness, and\ increase in role conflict, and work flow will suffer. These are real, unnecessary costs to effectiveness that can be identified and removed.
- Managerial Leadership. Most managers are promoted because of their technical or professional proficiency, and then are expected to figure out the managing part. As a result, managers do not focus on their managerial leadership work. Many or most Directors, VPs and CEOs don’t even feel they need to manage. All team leaders from the head of the organization down must both lead and manage. Hence the term – managerial leadership. There are huge effectiveness opportunities here.
- Fit to Role. Organizations need to do a better job of getting the right person into the right role. Luckily this is fairly straight forward at the front line, and most organizations do a good job at entry level appointments. After that, from Lead Hand to Front Line Manager to Director and on up, organizations do not do a good job of matching the capability of people with the complexity of work they are expected to accomplish. This results in most roles focusing on work that is insufficiently complex, resulting in short-termism and micro management. As a result, the strategic initiatives that should be driving growth do not get sufficient attention.
Organizations need to focus more on the input side of the equation. There are huge efficiencies that can be had. The workforce will be more engaged, more productive, and the outcomes will be greatly improved.
The consulting industry needs also to be focused on the bigger picture, and how all of the pieces inside the organization fit together for performance improvement overall.
This is exactly what management consulting is all about. Management consultants, when faced with the problem brought forward by the client, do the analysis to find the root cause, and then work with the organization to resolve the issue and implement a sustainable solution.
The future of consulting lies in a mutual-benefit approach between enterprises and their consultants.
The mechanism for achieving this a global body that is a federation of the Institutes of Management Consulting around the world. All Institutes collaborate through ICMCI – the International Council of Management Consulting Institutes. ICMCI oversees the only global standard for the certification of management consultants, the CMC. The CMC designation is fully portable globally, and assures the competence of the CMC as one with the technical skills, the experience, and the demonstrated competence of completing successful projects. The baseline for the delivery of management consulting services has also been introduced through the ISO 20700 checklist training program, which details the contracting, delivery and closing of management consulting projects.
Organizations can benefit from the professional expertise of management consultants when initiating performance improvement programs. When doing so, look for those with the CMC designation, as they have been accepted by their peers into the profession. Alternatively a consultant with ISO 20700 Checklist training has demonstrated their commitment to management consulting as a profession.
Without identifying the professional management consultant, organizations run the risk of engaging someone with ‘Consultant’ on the business card, but who is really a contract employee with specialized expertise. If they are hired for that expertise, there is a risk that the root cause will be missed, and the organization will be investing resources to solve problems at the symptomatic level.
Effective Managers is an adherent of focusing on the whole enterprise. When initiating performance improvements, consider the whole enterprise and what you can do to make it better. Better for employees, managers, customers, executives, the owner, and investors. With such a mode of thinking, it’s not only the enterprise that will benefit but the communities where the enterprise operates. The social and economic conditions there will all change for the better.
Let us focus on how we, client organizations and management consultants, can focus on the performance improvement of the enterprise as a whole, to improve effectiveness of organizations while evolving together into the future.
Feel free to contact me through Effective Managers if you want to learn more.