Effective Use of Business Consultants
by GORDON L. MURRAY Partner, Executive Office
Presented before the Financial Executives Institute,
San Francisco Chapter—January 1966
AT SOME T I M E or other most managements succumb to temptation and
engage consultants. The motive for such a decision may be legitimate,
the selection may be sound, the result may be beneficial—and then again, they may not be. In any event, the wisdom in such decisions depends
on both parties understanding the characteristics of an effective client-consultant relationship.
I have been both consultor and consultee: —consultor with a firm of management consultants and now with a firm of CPAs; consultee while an officer of industrial companies that used consultants. Some of what I have observed has been good and some not so good, but out of this experience has come a perspective on fundamental considerations that should be made both by the prospective client and by the consultant. But first, let's take a look at management consulting as we find it today.
MANAGEMENT CONSULTING IN THE U.S.
From time to time, various estimates are made on the extent and growth of management consulting in the U.S., but they are only estimates,
because no one really knows for sure. Generally, these estimates indicate there are roughly 2500 consulting firms employing a total of 24 thousand or more professional staff members. These firms' fee income in dollars aggregates ¾ billion or so. In addition, CPA firms retain management advisory services staffs, the eight large firms alone having a total of perhaps two thousand professional staff in their management services departments. Finally, many individuals, perhaps six thousand or so, function as consultants for their own account.
The growth in consulting in the last ten years has been substantial and at an increasing rate. Some well-informed persons say the total increase has been between 60% and 100%. I have seen estimates indicating
that as high as 70% of companies use consultants at one time or another. In any event, there is ample evidence to indicate that business consulting is substantial and viable and a quite significant factor in our economy and society.
WHY COMPANIES GO OUTSIDE FOR ASSISTANCE
What are some of the reasons that a company seeks outside assistance?