What is Management Consulting: A Comprehensive Guide

Management consulting refers to the practice of providing expert advice and assistance to organizations with the aim of improving their overall performance and effectiveness. Management consultants, also known as business consultants, work closely with clients to analyze their current business practices, identify problems or areas for improvement, and develop strategies and solutions to address these issues. According to IBIS World, there are more than 5.5 million people employed in the Management Consulting industry worldwide, with nearly 2 million of those in the US as of 2023.

Management consulting involves the provision of expert advice and assistance to organizations seeking to enhance their operational efficiency, address strategic issues, and achieve sustainable growth. These organizations can span various industries, including finance, healthcare, technology, and more.

Management consultants, or simply consultants, are highly skilled professionals who collaborate with clients to identify problems, develop solutions, and implement strategies to drive positive change. Management consultants typically have specialized knowledge and expertise in various areas such as organizational structure, strategy development, operations, finance, human resources, marketing, and technology.

Management consultants perform a variety of essential functions to support their clients. Here are some of the key roles and common areas of expertise.

1. Strategy development: Consultants assist in formulating and refining organizational strategies, helping companies adapt to changing market dynamics, enter new markets, or explore innovative business models.
2. Process optimization: Consultants analyze existing processes and workflows, identifying bottlenecks and inefficiencies and recommending streamlined approaches to enhance productivity and reduce costs.
3. Change management: Successful implementation of new strategies or initiatives often requires change management expertise. Consultants guide organizations through transitions, ensuring smooth adoption and minimizing resistance.
4. Organizational design: Consultants help structure organizations, effectively define roles and responsibilities, improve communication channels, and foster a collaborative culture.
5. Technology selection: With the rise of digital transformation, consultants provide guidance on selecting and implementing appropriate tools, systems, and platforms to enhance operational efficiency and competitive advantage.

Management consulting offers several tangible benefits to organizations seeking to achieve growth and overcome challenges. Some of the key advantages include:

1. Expertise and objectivity: Consultants possess specialized knowledge, experience, and industry insights that they bring to the table. Their external viewpoint allows them to provide unbiased recommendations and fresh perspectives.
2. Efficiency and cost savings: By identifying inefficiencies, consultants help organizations optimize processes, reduce waste, and achieve cost savings. Their expertise in operational improvement drives streamlined workflows and increased productivity.
3. Access to best practices: Consultants stay abreast of industry trends and best practices, leveraging this knowledge to help clients adopt innovative approaches and stay competitive in the market.
4. Problem-solving and innovation: Consultants excel at problem-solving, employing analytical tools and frameworks to address complex issues creatively. They bring innovative ideas and strategies to the forefront, fostering a culture of continuous improvement.
5. Learning and capability building: Collaborating with consultants provides organizations with opportunities to learn from their expertise, enhancing their internal capabilities and empowering employees with new skills and knowledge.

The largest and most prestigious management consulting firms are commonly referred to as the Big Three or MBB. This group consists of McKinsey & Company, Boston Consulting Group, and Bain & Company. Beyond the MBB there are several other top firms known for management consulting, strategy, and accounting.

Top 10 Management Consulting Firms

• McKinsey
• Boston Consulting Group,
• Bain & Company
• Accenture
• Oliver Wyman
• Booz Allen Hamilton
• Deloitte
• PricewaterhouseCoopers
• Ernst & Young
• KPMG

Management consultants are in high demand across various industries. While popularity can vary based on factors like market trends and economic conditions, some industries consistently rely on management consultants for their expertise. Here are some of the most popular industries for management consultants:

1. General Management and Strategy Consulting

This sector encompasses a broad range of industries and involves advising clients on business strategy, organizational design, mergers and acquisitions, and performance improvement.

2. Healthcare Consulting

The healthcare industry, comprising hospitals, pharmaceutical companies, and healthcare providers, use dedicated healthcare consulting firms for process optimization, cost reduction, strategy development, digital transformation and regulatory compliance.

3. Technology and IT Consulting

Technology-driven industries, such as software development, telecommunications and e-commerce, often require dedicated IT consultants to help with IT strategy, digital transformation, cybersecurity, data analytics, and technology implementation.

4. Financial Services Consulting

The financial services industry, including banking, insurance, and asset management, requires management consultants to navigate complex regulations, improve operational efficiency, develop risk management strategies, and optimize customer experience.

5. Manufacturing & Industrial Consulting

Manufacturing companies frequently engage management consultants to enhance supply chain management, optimize production processes, implement lean practices, and improve operational efficiency.

6. Environmental Consulting

Environmental consulting firms help their clients understand and manage their environmental impact, comply with environmental regulations, and develop strategies for sustainable development.

7. Energy & Utilities Consulting

The energy sector, including oil and gas, renewable energy, and utilities, relies on management consultants for market analysis, strategic planning, project management, regulatory compliance, and sustainability initiatives.

8. Retail and Consumer Goods

In the retail and consumer goods industry, management consultants assist with market research, sales and distribution strategy, pricing optimization, brand management, and customer experience improvement.

9. Transportation and Logistics

Management consultants help transportation and logistics companies with route optimization, cost reduction, supply chain management, logistics strategy, and process improvement.

10. Government and Public Sector

Management consultants play a crucial role in advising government agencies and public sector organizations on policy formulation, process reengineering, digital transformation, and performance management.

Other industries for management consultants

These industries are not exhaustive, and management consultants may also work in specialized areas such as education, hospitality, real estate, and more. The popularity of industries can shift over time as new industries emerge and existing ones evolve.

Understanding industry benchmarks is important for leaders of Management Consulting firms to help assess where they need to focus on process improvements. Management consultancies made slightly less per project in 2022 (160K) according to the most recent Consulting Benchmark Study conducted by SPI Research. However, they operated more efficiently than other types of consulting and professional services organizations with the highest on-time delivery (82.7%), lowest staff size (3.29 people), and a short average project duration of 5.98 months, all while operating with decent margins.

Key Performance Indicators for Consulting & Professional Services: Source: SPI Research, February 2023

For a full breakdown of management consulting KPIs, and to see how your firm stacks up against your peers and industry benchmarks, download the 2023 SPI Professional Services Benchmarks Report.

2023 Professional Services Benchmark Report

Benchmark your firm and discover key metrics that drive efficiency and growth for your consultancy.

See How Your Firm Stacks Up

Finally, it is crucial for management consulting firms have a deep understanding of the industries they serve by staying up to date on the latest trends, benchmarks, regulatory changes, emerging technologies, and best practices within those industries.

With over 5,200 consulting firms as customers, Deltek has a deep understanding of common pain points and pitfalls for management consultancies. Visit our Management Consulting Resource Hub to find a comprehensive list of resources we have created that can help management consultancies improve business processes, win more business, and become more efficient.