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Published by The Economist on 7 December 1992

Subject: Management consultants

Physician, heal thyself

THEY used to think they were recession-proof. But management consultants have found the past two years tough. Many have seen their fee-income slump; job losses are commonplace; recruitment is almost at a standstill. It is a brave MBA who chooses consultancy as a career for the 1990s.

To find out where the industry has gone wrong, call in a consultant. Connie Irvin, who works for William Dunk Partners, a small firm based in New York, polled the chairmen or chief-executives of 30 big American firms for their views on the quality of the management consultants they had used. She got replies from 22. From that admittedly small sample come some unflattering insights into what the clients think.

The claims of expertise made by most consulting firms, reckons the survey, are exaggerated. A senior executive at Colgate- Palmolive says that clients "pay a lot of money to teach the consultants the business . All too often, believe many of the companies polled, consultants send in their best people to sell the consultancy project. After that "you never see them again; the key is [then] the two or three horses assigned to the project." These frequently turn out to be nags. not thoroughbreds.

The survey asked respondents to rate four of the biggest consulting firms - McKinsey, the Boston Consulting Group (BCG), Andersen Consulting and Booz, Allen & Hamilton on expertise, quality of individual consultants, value for money and ethical integrity. McKinsey was judged the winner, thanks to a mix of expertise, integrity and value for money. Andersen came last. But none of the four was judged to be "excellent" by the clients. Even McKinsey earned only an "above average".

The survey highlights the trend towards small "boutique" consultancies. These are often run by ex-business-school professors and concentrate on tiny but profitable consulting niches, such as "culture change" or the design of computer networks. The trend has not escaped the notice of the big boys. many of whom have snapped up boutique consultancies over the past two years.

To judge from the survey, this is unlikely to pay off. The companies polled seemed to prefer one-man-and-his-laptop firms because in these the consultant selling the service and making the big promises also carries out the work.

In consulting. clearly, small is better. You can take a small consultancy's word for it."

Copyright The Economist. Neither Warren Edwardes nor Delphi Risk Management contributed to this article.

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