Why are there so many consultants working in the public sector?

The Observer’s Nick Cohen has been having a go at management consultants again. He is particularly resentful about what he describes as their plundering of the public sector, claiming that government spending on management consultants is now running at around £2 billion a year.

There are, of course, good reasons why organisations sometimes hire management consultants. Whenever there is a project that is outside an organisation’s normal field of operation, it makes sense to bring in people who have done it before. It is cheaper and quicker than trying to train up your own people. Sometimes, especially for more complex and ambiguous change projects, it can be useful to have someone with an external perspective to challenge and stretch your thinking. All the same, £2 billion a year is a hell of a lot of money.

There may be another side to this story though. A friend, who was working for an organisation in the public sector, recently told me about meeting of senior managers in her department. The director called his team in and told them that there was to be a moratorium on using consultants. All those currently working in the organisation were to leave at the end of their current contracts and no more were to be taken on.

The managers looked at each other aghast. Eventually, one woman broke the stunned silence and said what everyone else was thinking:

Oh God! If we get rid of all the consultants we’ll have to rely on our permanent staff.

In many ways, consultants are easier to manage than permanent staff. If you have a personality clash with a consultant, or if he stops delivering what you need, you don’t have to go through a difficult performance management process, you can just ask the consultancy to send someone else. While they may be more highly paid then permanent staff, consultants are often rewarded by results. It is in their interests to be enthusiastic and committed to your project. They are also less likely to get disillusioned by the organisation and its politics as they know they will only be with you for a relatively short time. Consultants are rarely affected by the cynicism and surliness that sometimes sets in among the permanent staff.  

Perhaps public sector managers are simply taking the line of least resistance. It could be that they just find it easier to use consultants than to deal with the motivation and performance issues among their own staff. If so, that will only change when managers acquire the skills and mindset necessary to tackle these difficult issues.

And how could they make that happen? Dunno, let’s call in some consultants and ask them…..

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5 Responses to Why are there so many consultants working in the public sector?

  1. Matt Munro says:

    Don’t kid yourself – they are only there to take the blame when it all goes wrong (by which time they won’t be there). In the public sector especially they tend to dazzle senior managers with their flash cars, astronomical expense accounts and sharp suits – public sector managers unused to such flambouyance think they must be good if they are this expensive – it’s a con, an old salemans trick that is costing the taxpayer a fortune.
    And they don’t get paid by results they get paid by the hour (usually at least 3 figures an hour at that) whethey they cock things up or not.

  2. Pingback: The private sector likes using consultants too « Flip Chart Fairy Tales

  3. Matt Munro says:

    Have you ever tried managing a consultant ? Why do you think so many consultant led projects fail ? Because they are only intersted in lining their pockets, not in the delivery of public services (NHS computer system anyone ?).
    Financially they are attractive becasue they are effectively itinerant labour who can be removed when no longer required or the money runs out and (more importantly) they don’t increase the public sector pension liability

  4. Rick says:

    If they’re that bad, why don’t you just get rid of them all?

    If consultants are as big a con as you say, how come the public (and private) sector is still using them after all these years?

  5. Matt Munro says:

    Because the public sector is a hierarchy and if the the top of the office use them (in droves) then that culture will trickle down.

    Other reasons:

    They take the blame when things go wrong (even though they still get paid) – thus absolving current incumbents of any wrongdoing.
    They give individual and collective gravitas to the insignificant
    This project (and therefore I) – this must be really important as we have a team of consultants working on it
    They prevent management from having to face the fact that they don’t know how to run their own business – most pure “management” consultancy involves asking the workforce how things could be done better, putting the answers in a fancy binder, presenting it to the board and walking away with a huge cheque. From personal experience most of their recommendations would be blindingly obvious to a GCSE business studies student on a day’s work experience.
    In short they are corporate whitch doctors who have turned the old staff “suggestions box” into their own personal goldmine. I have never seen any independent evidence to show that they increase the long term efficiency of an organisation, or that they make the organisation more than they themselves cost it in fees.

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