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