Management consulting the buzzword of the day. The very first management-consulting firm was founded in 1886 by an MIT professor Arthur D. Little. This firm was later incorporated in 1909.
So what is this business consulting? Management consulting is the practice by which organizations improve their performance. This improvement is through the analysis of the existing organizational issues and problems. Based on this analysis, plans for improvement are developed.
Management consultants are exposed to numerous organizations and hence are aware of the best practices in the industry. However you need to keep in mind that what works for one organization may not be transferable to another because of the specific nature of the situation.
Let us understand the specific services provided by management consultants. Management consultancies provide assistance to change management. They help develop coaching skills and help in implementation of technology and in the development of strategy. They bring about operational improvement services.
Often times, management consultants work with their own proprietary methodologies. They formulate their specific set of guidelines which help in identification of problems and this helps form the basis of recommendations for effective ways to perform tasks
Management consulting services can be broadly classified into eight main task categories and the consultants function as bridges for information and knowledge. It is believed that external consults can provide these bridging services more economically than client firms themselves.
Let us look at the skill set that is expected of management consultants. Management consultants need to have specialized skills on tasks. These tasks involve internal coordination costs for clients. Because of economies of scale, their focus and experience in gathering information worldwide and across industries renders their information search less costly than for clients.
The salary for management consultants is based largely on their location. Another contributing factor is their educational background.
Management consults provide business services. However there are numerous specialties, such as human resource consulting, virtual management consulting, information technology consulting,etc. Many of these overlap. These services are offered by the larger diversified consultancies while smaller organizations focus upon a few of such specialties.
In general, there are three main types of consulting firms. The first kind are the large, diversified organizations. Next come the medium-sized management consultancies and then we have the boutique firms that have focused areas of consulting expertise in specific industries, functional areas, technologies, or regions of the world.
Hiring a management constant is expensive. Services are charged on a time and material basis. The management consultants bill the client for the number of hours works. Out of pocket expenses like travel etc are billed separately. Sometimes though, management consultants charge on fixed bids for defined deliverables. Result based pricing is also a trend that is recently catching on. The other option is to charge on a hybrid basis with components of fixed pricing and risk sharing by both the consulting firm and client.
In recent times, the use of management consultancy is fast growing in non-business fields such as the public sector. As the need for professional and specialist support grows, other industries such as government and not-for-profit agencies are turning to the same managerial principles which have helped the private sector for years.