Being able to measure the impact of consulting has become something of a holy grail for clients and consultants alike. Clients want the reassurance that, in bringing in consultants, they have made the right decision and that their selection of a particular firm will stand up to scrutiny. Consultants want to be able to demonstrate a track record of quantifiable results to an increasingly sceptical client base. However, no two consulting projects are alike and measuring them against a single standard would be highly misleading.
The MCA Awards Survey therefore asked clients to rate the extent to which the consulting firm had exceeded, met, partially met, or not met their expectations in the following categories:
motivational (eg improvements in staff satisfaction);
ability to finish a project on time;
greater management capability;
improved customer satisfaction;
changes to headcount;
acquisition of new customers;
increased market share;
better share price performance.
Although clients are obviously concerned that a consulting project should be completed on time and within budget, they otherwise tend to judge the success of consulting projects in terms of ‘softer' issues such as motivational impact, customer satisfaction and management capability (see Figure 1.3). They are also more likely to be concerned about productivity and cost-reduction issues than revenue-generation ones.
Figure 1.3 looks at what proportion of clients said that their expectations had been either met or exceeded in projects where these critical success factors were judged to be important. Almost all the projects were completed as planned and almost 90 per cent of clients believed that consultants had met or exceeded their expectations in motivational terms. Trilogy's work with Tesco (Case study 3.1) and Penna Consulting's work with Evotec OAI (Case study 4.2) both involved gauging and implementing ways of improving staff engagement. The consulting firms performed well, too, in those softer areas important to most projects, such as improving management capability. The work of RightCoutts with the Harrogate Healthcare NHS Trust (Case study 6.1) was not designed to tell the Trust's senior managers the answers to all their problems, but to improve their ability to take the right decisions more quickly. Similarly, the success of Edengene's work with two different areas of BT (Case studies 2.2 and 5.1) depended on improving BT's ability to generate and evaluate new ideas. Consultants also do well when it comes to helping clients improve productivity - almost three quarters of the projects entered for an award met or exceeded clients' expectations when it came to this area, and many of the following case studies illustrate this: Kepner-Tregoe's work with Sun- Microsystems (Case study 5.4); Atos Origin's work with the Bradford Hospitals NHS Trust (Case study 7.3); and Impact Plus's work with Aon (Case study 9.4).
Figure 1.3: The critical success factors used by clients to measure the impact of consultants
But the consulting industry can not afford to rest on these laurels: when it comes to harder, more quantifiable measures - and particularly to those relating to growing the revenues of a business, rather than cutting its costs - there is significant room for improvement.
Figure 1.4: Comparing client satisfaction levels
Analysing client satisfaction in different types of consulting suggests that:
Clients of outsourcing-related consulting projects were more likely to be satisfied across the board than clients of other types of consulting. In particular, their expectations for increasing market share, increasing revenue and improving customer satisfaction were more likely to be met. The growth of the outsourcing market, which has accelerated since the millennium, is often attributed to macro-economic factors - falling share prices, a focus on costs. However, these findings suggest a more positive reason: many clients are simply pleased with the results.
By contrast, clients of IT-related consulting are more likely to be dissatisfied. These were the clients who, across all the different categories of expectations, consistently rated consultants as less likely than average to exceed expectations. Disappointment was most apparent when it came to rating the impact of projects in broad business terms (increased revenue and market share, improved share price performance). Of course, it may be that technology consulting clients simply had higher expectations than outsourcing clients, but it does suggest that clients continue to find it difficult to relate the immediate increases in productivity that come from using IT with business performance overall.
HR consulting clients are more positive than others when it comes to cost reduction and headcount issues - not surprisingly. Perhaps more worryingly from the consulting firms' point of view, they are less likely to be satisfied when it comes to improving productivity or management capability.
The surprise in change management consulting lies in the extent to which projects exceeded clients' expectations when it comes to the financial impact. Increased revenue and market share, and improved share price performance are all areas which we do not particularly associate with something as traditionally ‘soft' as change management. Like outsourcing-related consulting, change management consulting may be benefiting from low expectations - neither clients nor consulting firms have historically found it easy to correlate its ‘soft' process with ‘hard' economic facts. That expectations are being exceeded here may indicate that this is now changing, that clients can see a connection between changing people's behaviour and overall performance.
Strategy consulting was one of the principal casualties of the 2001-02 downturn in the consulting market and, although this type of consulting may now be picking up speed, it still appears one of the more vulnerable areas of consulting. There are only two areas in which strategy clients' aims are more likely to be met, compared to other types of consulting - headcount and cost reduction. Those measures that reflect growth rather than retrenchment - increased revenue and market share, improved customer acquisition rates and satisfaction - all scored particularly badly, suggesting that clients still see strategy consultants as delivering less than they promise.
The overall scorecard is therefore good, but consultants can do even better. And that is the challenge for the consulting industry. As Anne Bennett, a consultant at ER Consultants, puts it:
We need to reframe how clients see consultants. Compared to the amount of money auditors and lawyers take out of a business, consulting should be a net gain. Hiring consultants shouldn't be seen as an admission of management failure or a smack in the face to your own staff. Consultants aren't there to take over a client's business but to supplement in-house skills. We need to overcome the predominately transactional nature of consulting at present, and move to a more transformational agenda.