'Management consultants help achieve enormous cost savings'

The need for efficiency will help to drive firms towards impartial experts.
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The Independent Online

Political pundits may look askance at the public sector's heavy reliance on management consultants, but the role of impartial experts in anything from health policy to transport and education is, says Alan Leaman, chief executive of the Management Consultancies Association (MCA), "an integral part of modern government".

Although the popular view of consultants is that they "do little more than write long, expensive reports", the truth, he says, is very different. "The chief focus of modern consultancy is on project delivery and implementation, and, at a time of general austerity, we will continue to help achieve enormous cost savings for all our clients."

Research carried out among the MCA's 60 members – which between them account for 70 per cent of the UK's £9bn consulting industry – suggests that, for every £1 spent on consultancy fees, around £6 is returned through cost savings.

Little wonder then, says Leaman, that more than 90 of the FTSE 100 companies, plus virtually all government departments, routinely employ his members.

While top-dollar, public sector consultancy work grabs the headlines, two-thirds of the industry is focused on the private sector, where projects can include implementing big boardroom mergers, bedding down ambitious IT systems or coaching business leaders.

PIPC, which specialises in private sector work, is behind many of the world's highest profile business-change programmes, delivering around £4bn of projects at any one time. Two of its biggest roles were the £21bn Royal Bank of Scotland Group acquisition of NatWest in 2000 and the Littlewoods/Shop Direct merger in 2005, a deal which PIPC says delivered £200m in cost savings.

PIPC's group managing director, Simon Rawling, believes that for anyone looking to hire a management consultant, prior homework is essential. "Go and talk to previous clients, take up references and look in detail at both the good and the bad aspects of the firm and its reputation. Make sure you know what you want to achieve before you bring the consultancy in, and don't be tempted to hire a firm simply because you can't be bothered to do a job yourselves," he says.

Rawling believes that, as corporate belt-tightening continues, PIPC and other consultancies will take on more business. "As businesses look to make savings with large-scale transformation programmes, the need for our services will grow. While we always recommend that a client builds long-term expertise in-house, there are many occasions – such as takeovers – when it makes more financial sense to go outside the firm and buy in particular skills."

But he adds that buying from a reputable firm is crucial.

Leaman, who stresses that his members not only save their clients money but are also able to offer "an independent perspective and technical expertise on a whole range of crucial corporate issues", agrees that private sector consultancy will become more important, not less, as the downturn continues.

But to Dave Yip, the director for public consulting at the IT specialist Xantus, whose clients include central government departments and big state-owned businesses, the future for large Government contracts is less certain.

"There are a small number [of consultancies] that have, in recent years, built their entire businesses around the public purse and have almost attempted to take over Government departments in the process. I believe that this 'land-and-expand' approach to taxpayers' money has given us all a very bad reputation," he says.

But Yip believes that the attitude towards Government contracts will inevitably change. "Many of us accept that public sector consultancy budgets have increased enormously in recent years, and I have some sympathy with the view that they must be curtailed or at least examined more carefully.

"But I hope that the new administration will begin to look more favourably on our industry once the dust has settled and will see that, when it comes to our role as 'honest broker' between Government departments and technology suppliers, for example, consultants can deliver enormous savings to the taxpayer."

Yip predicts that the Government will become "a more intelligent buyer of consultancy in the future" and will inevitably focus more on making existing IT infrastructure perform better than on installing new, expensive systems.

With flagship public sector projects now likely to take a back seat, Leaman believes that the next big growth in consultancy is set to come from financial services and retail. But he is far from rubbing his hands with glee at the likely boom in business.

"I too want to see more intelligent commissioning of our members' services; and, for many projects, that means building long-term expertise in-house or hiring full-time staff, rather than calling in outsiders."

But Leaman also feels it is "important to acknowledge it when you need help, rather than to batten down the hatches and refuse expert assistance".

While many civil servants and trade unions remain suspicious of the role of consultancy in Government and in corporate life, Yip believes there is one more important contribution that his members can make in a period of austerity. "Like our clients, we share the common agenda of wanting to win hearts and minds, particularly when times are tough," he says.

"We've often been seen as outsiders, firms that do things to people rather than work with them for common goals. That, too, must change as the downturn continues."

MCA Code of Practice

* Put client's interests first

* Focus on delivering sustainable value to the client

* Employ people with the right skills and experience to help their client

* Be clear and transparent with the client

* Be trustworthy, independent and objective

* Be financially strong enough to deliver on their commitments

‘Staff say they are more motivated and believe they have the power to effect change'

In October 2007, a damning report from the Healthcare Commission criticised Maidstone and Tunbridge Wells NHS Trust (MTW) for failing to deal adequately with outbreaks of the Clostridium difficile bug. It also censured the trust's governance and existing management team.

The following year, with a new management team in place, the trust called in the management consultancy Hay Group to bring about cultural change from the management floor to ward level. It proposed a new leadership development programme that would clarify priorities and change behaviours throughout the organisation.

New executive and senior leaders measured and reviewed their attitudes to collective and individual leadership, and the Hay Group team helped convince them that passing everything back up the chain was no longer an option.

Since Hay Group's work, significant achievements have been made in infection control, and C difficile and MRSA rates are now among the lowest in the South-east. Compliance with A&E waiting times of four hours is now at 98.9 per cent.

Management culture is slowly being transformed with less silo working, better delegation and more access to top leaders. Members of staff at all levels say they are more motivated and believe they have the power to effect change.

Says trust chief executive Glenn Douglas: "I was convinced that Hay Group were as committed to the success of this organisation as I am, and I felt extraordinarily supported, involved and consulted with.

"In the beginning, the consultancy led 100 per cent of the programme. Now, after the transfer of skills and confidence, we're doing it ourselves."