Why can't consultants fix their own business while fixing other people's businesses?
Haebom
The world's largest consulting companies are in crisis. Demand for consulting increased significantly during the COVID-19 pandemic, but as normalcy returns, clients are trying to cut costs. As consulting contracts plummeted, leading consulting companies such as McKinsey, BCG, and Deloitte also began restructuring, including reducing staff, delaying promotions, and reducing benefits.
As competition for recruitment has been fierce, retraining or dismissal is not easy, so there are many cases where employees are retained even if there is no work. Some people work long hours, while others say they only watch Netflix because they have nothing to do. In some cases, performance evaluations are strict and employees are quietly fired.
There is a trend among client companies to reduce consultant budgets and instead invest in technologies such as artificial intelligence (AI). Of course, consulting companies are also using AI to seek new business opportunities. Additionally, changes are occurring in the industry, such as the increase in hiring of solo freelance consultants.
Although some executives are optimistic that the downturn is temporary, spending cuts at clients are expected to continue for some time. This is because major businesses are decreasing due to the contraction of the mergers and acquisitions (M&A) market and restructuring of banks.
Meanwhile, the perception of a ‘job for life’ is collapsing. Deloitte cut 1,200 jobs, and EY laid off more than 100 U.S. partners. The partner layoffs were unusual and shocked the industry. McKinsey also cut 1,400 employees.
University recruitment is continuing, but the start date is being delayed. According to a recent Wall Street Journal report, some new employees survive by working part-time as delivery workers, waiting with nothing to do for months. Some of them find it difficult to find other jobs because of their high salaries.
As the consulting industry faces a serious crisis, attention is focused on whether it can bring about change on its own. It seems necessary to make efforts to respond to changes in customer demands and find new business opportunities. However, courage and a flexible mindset that are not afraid of change will be more important than anything else.
The reasons why consultants cannot solve their problems can be analyzed as follows.
Lack of objectivity: Although we are objective when looking at other people's problems, we tend to become subjective when it comes to our own organization. It becomes difficult to face the essence of the problem.
Intertwined interests: Because the interests of each member are intertwined, it is difficult for anyone to easily lead change. We are not willing to give up our vested rights.
Immersed in inertia: We become immersed in long-term practices and culture, which prevents us from seeing the need to innovate. You just think of it as someone else's story.
Lack of executive ability: Although they are good at giving prescriptions to others, they are not willing to take steps to solve their own organizational problems. Plans do not translate into action.
Limitations of methodology: Typical consulting methodologies may not be enough to solve self-organizational problems involving various stakeholders.
Overconfidence: The passion and energy that comes with working for others is not applied to one's own work. Because you think you know too well.
In fact, monks cut their own hair.
Therefore, in order for consulting companies to overcome the crisis, it seems that they need leadership that looks at themselves rather than others, and communicates and persuades sincerely so that all members can participate in the change. We must find new breakthroughs with flexible thinking rather than being complacent with existing practices and methodologies.
In a way, the three major consulting firms and the four major accounting firms are also seeking change by recently increasing the number of people in the data and AI departments. Some say that simply laying off employees or temporarily worsening financial conditions is the end of consulting, but I personally remember a story told by someone who has worked as a consultant for the past 10 years or more. You said that consulting is about “persuading” and “creating a reason to do something” in a logical manner. In this way, consulting felt like a very human work.
