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Neil Liversidge: Why I never trust management consultants

I always admired the late Lord Weinstock. When he retired from General Electric Company the Financial Times gave him a couple of pages to pass on his accumulated wisdom to anyone aspiring to emulate him. One observation I recall him making was, “Every penny we ever spent on consultants was a complete waste of money.”

When I read that article in 1996 I had already seen two of my previous employers crippled by management consultants and it was about to happen again.

During my 1989-91 break from financial services I ran the fitting operations of a struggling furniture firm. At the root of its problems was a lack of investment and an unpleasant bullying approach to customer relations. Clients were inveigled into signing a contract, the small print of which required them to pay for the furniture in full before it was even delivered, let alone fitted. That, combined with serious quality and service issues, resulted in little customer satisfaction and lots of litigation.

All who worked there knew what the problems were but the boss hired management consultants who drew all the wrong conclusions but told him what he wanted to hear. By 1993 the firm was bust.

Meanwhile, I had departed for Knight Williams, one of the first vertically integrated firms. It had high charges and poor performance. Realising I had backed another loser, I and some colleagues tried telling the bosses what changes were needed. Again, the truth was unpalatable so consultants were hired. Disaster ensued.

In their brilliance they invited disgruntled clients to focus group meetings. Individuals who thought they had experienced an isolated incidence of poor performance suddenly found others in the same boat.

The focus groups fused into an action group and the media became interested. Granada TV’s World in Action programme knocked the final nail in the coffin and in 1995 Knight Williams closed.

I joined DBS, which at the time was led by the inspired and inspiring double-act of Ken Davy and Martin Greenwood. Until I set up West Riding, DBS was the best firm I ever worked for. At some point, however, somebody decided management consultants should be hired. A lot of money later they had reorganised the customer services division and the head of the consultants’ team joined DBS as a director, filling the job she had created for herself.

What had previously worked well no longer worked at all. Everything duly reverted to the status quo ante, but the damage had been done.

I left in 2002 and in 2004 founded West Riding, determined never to work for anyone else ever again. Since then I can honestly say I have never once found myself stuck for ideas. If I was, however, the first people I would consult for advice would be my own staff.

Actually, I would not need to, because they share their thoughts and ideas with me anyway. They are the best consultants I could ever hire.

So, keep your office door open, and your mind with it. But management consultants? Shoot on sight.

Neil Liversidge is managing director of West Riding Personal Financial Solutions 

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Neil

    I’m really delighted to be able to agree with every word. I actually have done (and am now returning to) consultancy work. Quite simply I have always thought that if a firm needs a management consultant they need to sack their own management for not being up to the job. (Are you listening at Canary Wharf?)

    Of course some of these swan around with the MBA qualification – and we all know that it stands for Master of Bugger All. Some of the ones I have come across have trouble running a bath, let alone a business.

  2. What a sad, jaundiced view. You’re right that the views of staff are often most valuable – what is often less apparent is their ability to act on these ideas and deliver change.

  3. Well said Neil—the management consultants work out what the management want to hear and then write their report accordingly. This also explains why government departments are a dog’s dinner—Too many consultants and not enough work ethic

  4. PS and Lord Weinstock was also a hero of mine.

  5. I must say, reading Neil’s stories of business failure, it’s not immediately apparent to me that management consultants are the main cause. In the first, he tells us that the business in question had an “unpleasant bullying approach” and “serious quality and service issues.” The second, he says, had “high charges and poor performance,” resulting in “disgruntled clients.” I’d say that both these firms were doing an excellent job of heading straight for the rocks, without the need for much external assistance.

  6. Neil, my observation would be that all the cases you cite are examples of management of businesses with issues, hiring awful “consultants” and following their recommendations. So actually the fault lies not with the consultants (although they may well have been useless), but with the management. For both getting the company into issues in the first place and or then hiring and listening to people who clearly don’t know what they are doing.

    Having met many, many managers and consultants about the subject, along with HR, Human capital etc people, it is very clear that there are VERY few people in the world, with the specific skill set needed to identify problems, analyse the options and come up with solutions that actually work and that work in the real world. They aren’t fluffy, hugging type people, they are the analytical people who say it like it is. They are never likely to win popularity contests.

    However they do exist, usually not working as management consultants and if a good manager/business owner recognises them, they would be well advised to snaffle them up and not let them go.

  7. I’m reminded of a joke that management consultants absolutely hate:

    An optimist will say the glass is half-full;
    A pessimist will say the glass is half-empty;
    A management consultant will say “Hmm, looks like you’ve got twice as much glass as you need here”.

  8. Well done Neil – another great article which reminded me of what I was told about management consultants many years ago by a wise mentor of mine – “They borrow your watch, they tell you the time and then they charge you for it”. Regards. Dick Carne

  9. @Tim: If you successfully elicit your staff’s views – which is the point of the article – it’s the job of the manager to evaluate and act on them as appropriate. Your point is not very clear. @ Lucian and Duncan: You got half the point. The consultants were worse than useless. That was one half of the point. The other half was that the management teams in question ignored the people who were best placed – and already being paid – to advise them, i.e. their own employees. At the furniture firm,even at this distance in time, I can recall that the main problems were: 1) the paint machine was antiquated and could not turn out the same colour two days running; 2) the factory workers’ bonus was based on production per se, so time-consuming one-off ‘specials’ were pushed to one side and consequently customers were left with incomplete bedrooms for months (the factory got paid for knocking out 99% of a bedroom even though the customer had paid for 100% of it!); 3) the fitters were self employed but otherwise treated like employees, creating exactly the kind of tensions and problems we see in financial services, where the consultant’s interest is not necessarily aligned with that of his/her firm and/or the customer. Even the young trainees we took on recognised these problems in short order. The point was made over and over again but the owner didn’t want to accept it, because it would have meant running his business differently and that concept was well outside his comfort zone. At KW likewise I’d worked out after 3 months in the job what the problem was and soon I learned others had come to the same conclusion, but the owners had their ‘model’ and were determined to stick to it. They wanted to find other reasons for their problems because, again, accepting the real reasons would have meant changing much of how they did things and binning their dogmas. The main point of my article was to encourage business owners to tap into the original thought and intellectual resources of their own staff. As I said above – keep your office door open, and your mind with it. We’ve just hired a new member of staff here at WR. Part of the job ad said “Contribute original thought to the business. We pay people to think and to have and use initiative. We don’t think we know everything. If you think you’ve got a good idea about how we should be doing something better or whatever, don’t be shy – tell us. Nobody is too new or too young to think, form an opinion and be given a hearing.” Apart from it being true it encouraged applications from precisely the kind of people we wanted. Back to management consultants, I can understand how the owner managers of private companies get away with calling in management consultants as they are responsible to nobody but themselves, but were I a major shareholder of a public company where the management was spending money on such people I’d be asking “I thought this is what we were paying you to do? Have we hired the wrong person? Should we now be giving you a pay cut seeing as how we’re now going to be paying somebody else to do your job?” Finally, to all the management consultants I’ve upset, I should tell you that I recently did a Myers Briggs test on myself. Apparently I’m categorised as a type ‘ESTP-A entrepreneur’ who doesn’t give a toss what others think of me. Sounds about right!

  10. Brilliant Neil. Simple, accurate and so very true.

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