Consulting is not a well-defined field. Definitions of a consultant range from “anyone who is out of work and owns a briefcase” to “a specially trained and experienced person who makes an organized effort to help management solve problems or improve operations through the application of judgment based on knowledge, skill, and systematic analysis of facts.”
The consulting field is wide-ranging and diverse. While a full treatment of it in all its breadth and diversity is beyond the scope of this summary, we will describe the major types of firms that make up the field, the activities and functions common to most areas of consulting, and the entry level opportunities that exist.
Aside from organizational size and structure, consulting firms are classified along dimensions such as scope, area of concern, approach, and range of services offered. The most important of these classifications is area of concern. A general distinction can be made between firms that are generalist and those that are specialists.
The majority of consulting firms fall into four major categories:
Large Consulting Firms
These are firms whose only business is consulting. They typically employ more than fifty consultants; a few of the largest employ more than a thousand consultants. Large firms may either be a “generalist” firm or have many divisions each with its own specialty. Some examples are the well known management consulting organizations Arthur D. Little; Booz, Allen & Hamilton; McKinsey & Company; and the Boston Consulting Group.
Small and Medium Consulting Firms
This type of firm employs from two to fifty consultants. It is estimated that 20-30 percent of all consultants work in firms of this size. These are often specialty firms, offering a small range of services or catering to a special type of client.
Management-Advisory-Services (MAS) Divisions of CPA Accounting Firms
These are divisions within organizations that also offer accounting, auditing, tax and other financial services. These divisions are typically quite large and operate internationally. The services offered by MAS divisions usually involve information systems, electronic data processing (EDP), financial management, and strategic planning. Although these “firms” are really divisions of larger organizations, Business Week reported that the Big Four CPA firms were listed among the top ten management-consulting firms in terms of dollars billed.
This group includes individuals who are sole owners of businesses, professionals (e.g., CPAs and engineers) who work as consultants outside their full-time employment, and university-affiliated academics, (typically business schools), who consult part-time. Individual consultants are almost exclusively specialists who provide limited services to a narrow group of clients. Academicians and professionals with expertise in such specialty areas as transportation, productivity, and the behavioral sciences have begun to compete effectively with the larger consulting organizations.
Recently, there has been a move toward more specialization, with some firms limiting service to one area and others dividing into divisions with different specialties. Specialization can be by management function, the client’s industry, size of project, or other criteria. The most common dimension of specialization is management function. The major specialty areas of business consulting are as follows:
General Management Consulting
This type of consultant frequently works directly with the client’s top management team on matters of general concern. Projects in general management might include studying strategic management decision making, and revising organizational structure or management style.
A financial consultant advises management on issues of financial planning. Projects in financial consulting might include the study of and recommendations on capital expenditures, enterprise development, and the design and implementation of an accounting system.
Consulting in marketing can take place at three levels. The highest is marketing strategy formulation. The next is marketing activities and operations. Projects at this level include evaluation of sales and advertising, assistance with distribution, and product development. The third level is marketing research. Here, the consultant collects data and may advise the client about decisions to make on the basis of the data.
Consulting in production management can focus on the product itself (design, quality, etc.), the methods and organization of production, or the people involved in production. In the second area, a project might involve redesigning the workflow layout to improve productivity (process redesign or re-engineering), or assisting in inventory control. A project involving the “people side” of production might be concerned with compliance with government safety rules or development of a program to improve job satisfaction.
Information Systems and Data Processing
Consulting in information systems is a primary interest of systems analysts and MAS consulting divisions. These consultants deal with issues regarding the kind of information, how much, and in what form it is needed for management decision-making and control. They also assist in system development, improvement and integration. A possible project could include development and implementation of an EDP system for a client, or a feasibility study of computerizing financial control systems.
Traditionally, consulting in this area focused on personnel administration, job evaluation, and the development and evaluation of compensation systems. Recently this area has expanded to include more behavioral-science research methods and intervention strategies. Projects range from job analyses and employment-test validity studies to designing and implementing career-planning and organizational development programs. A related area in which consultants practice is labor-management relations. A consultant might work as an advocate for one side or a mediator between union and management.
Government-related consulting firms specialize in keeping up with current legislation in specific areas in order to advise clients on compliance with government regulations. A firm might advise clients on the regulation of packaging and advertising, the deregulation of transportation and financial services, and also, how the client will be affected by and if possible take advantage of changing regulations.. Strategic Planning - This is one of the fastest growing areas for management consulting firms. Consultants help management develop and evaluate long-term strategic plans, and advise them on major decisions such as acquisitions and mergers.
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