Why Do You Pay Your Consultants More Than Your Executives?
I recently asked a prospective client an important question: Why do you pay your consultants more than your executives?
If you are a senior leader at a large company, it’s a question you should be asking yourself, too.
The corporation in question paid millions of dollars last year to one of the Big Four consulting firms, ostensibly for “strategy development.”
“Yet, you have more than 300 employees who have the word strategy in their job title,” I pointed out. “How does that make sense? Have you hired the wrong people? Do they lack the right tools? Or do you not trust them to make the right strategic choices?”
I wasn’t trying to be a smartass. I really wanted to know – because I have seen the same thing at many of the large corporations I work with, and it baffles me.
Maybe it’s because I didn’t go to business school and have never been a corporate executive. I spent the first half of my professional life working as a financial journalist, and while I covered many of the world’s largest companies, I never really saw how they worked from the inside until I quit my job and become a management consultant (don’t worry, I’m not one anymore).
When I did, I was stunned – stunned by the number of freshly minted MBAs running around second-guessing the work of seasoned strategic planners.
“Who are they?” I asked one of my early clients, the president of a business unit inside a Fortune 25 multinational.
“They’re with (insert the name of your least favorite large consulting firm),” he said with a shrug. “We’re paying them to tell us what we already know.”
“Why?” I asked.
“So that our CEO can cover his ass,” he said. “The board is more likely to give this new plan serious consideration if it comes from them, not from us. That means they are more likely to approve it. And if they don’t approve it, the boss can blame them for coming up with such a stupid idea.”
A few months later, I shared this story with another senior exec at another big company that seemed to be facing a similar infestation. He chuckled and told me there was another important benefit that I was missing.
“If the strategy is approved and the plan fails, we can blame them for coming up with it,” he said. “It’s ridiculous, but that’s how the sausage is made.”
Of course, if you are a senior leader at a large company, you already know that – and you probably also know what the prospective client told me when I asked her why she was paying her consultants more than her executives.
“For their logo,” she said. “What I am really paying them for is to put their logo on my plan. They’ve spent the last six months interviewing members of my team, asking them about the strategy they’ve developed, about the research that went into it, about the competitive analysis they conducted, about similar plans being pursued by our competitors. When they’re done, they’ll put all that into a beautiful PowerPoint presentation that may include a few modest, iterative improvements if we’re lucky, but which will otherwise look a lot like the plan we’ve already developed – but with one really important difference: It will have their logo at the bottom of each slide, not ours. And that will make all the difference.”
The thing is, it shouldn’t.
As a leader, you should be able trust your highly trained and very experienced team to develop its own strategies and plans – strategies and plans that you and other decision makers weigh objectively and approve or reject on their merits or lack thereof. If you can’t do that, then you need to ask yourself why you can’t do that.
Is it because you’ve hired the wrong people?
If so, then hire the right ones.
Is it because your people lack the right tools?
If so, then equip them with the right ones.
But whatever you do, don’t outsource thinking.
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