May 31, 2018

What’s the Value of Management Consulting?

Posted by Jeannette Cabanis-Brewin in Benefits Realization, Culture & Change Management, Project & Program Management, Human Capital, Project Management Office (PMO), Project Management Research, Resource Optimization, Strategy Execution | 0 Comments

Research indicates that the positive effects of management consulting services persist long after the engagement has ended.

Now, there’s a loaded question. But it is one we constantly strive to answer in our consulting practice; take a look at the “Results” sections of our client case studies, posted here, to get situation-specific answers.

In addition to these industry- and organization-specific value datapoints, we just ran across some research studies that point to the longer-term value of the improvements that companies make with the help of management consultants. In a blog on Forbes.com, Philip Salter pulls together findings from several global sources (Management Matters for Increasing Firm Productivity). A few of the high points:

  • A study from Harvard University looking at 35,000 US manufacturing plants found that management techniques explained the greatest difference in performance: even plants within the same company, producing the same stuff, had wide variances in results, which were strongly correlated to human capital management practices at the sites.
  • A 15-year survey of 12,000 firms across 34 countries reveals that management practices explain a large share of productivity gaps.
  • The US lags behind Canada, Sweden, Germany and Japan, according to the latest World Management Survey, but even small changes can reap big benefits. Andy Haldane, Chief Economist at the Bank of England, on the statistically significant link between the quality of firms’ management and their productivity: “one standard deviation improvement in the quality of management raises productivity by, on average, around 10 per cent.”
  • What works to improve management practices and raise productivity?  A randomized control trial in Mexico showed the positive impact of access to one year of management consulting services on total factor productivity—even after the program had ended. Another study from India found that even after nine years, improved management practices continued.

This data backs up the findings of our own studies over the past several years, which consistently show that high-performing companies and best-in-class PMOs are more likely to use contracted resources to manage projects, programs, and the PMO. For example:

  • 58% of PMOs overall engage contracted resources to help manage projects and programs
  • 67% of Best-in-Class PMOs do so (contrasted with only 51% of PMOs scoring at the Basic level).

The contrast is even more marked when you look at PMOs that bring in outside help to manage PMO operations:

  • Only 14% of PMOs overall enage contracted resources to help manage the PMO
  • 67% of Best-in-Class PMOs use this strategy (vs. only 10% of PMOs on the Basic level).

A few years ago, I also found research that indicated that the presence of skilled experts from outside actually raised competencies within the company even for tasks and roles that did not work directly with the consultant.

Raising the level of discourse about management issues, getting disparate stakeholders on the same page, setting up coherent frameworks, making good results repeatable … the average day for a professional consultant addresses the kind of issues that transform organizations.

But don’t take my word for it.

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