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Management Consulting Services
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A business considering hiring a management consultant wants to access the best advice and expertise possible. When Projections previously reviewed the top management consulting firms, it was clear that being the largest company does not necessarily equate to being the best choice. Many factors determine "best," including types of services offered and how well those services meet a client's specific needs, like staying union-free. Another important factor is cost. How much does it cost to hire a management consultant? The cost varies considerably from firm to firm and, like any project, depends on what is involved in the particular project.
Companies hire management consultants for a wide range of reasons. A company may need help responding to a union organizing campaign, improving employee engagement, managing labor relations, improving a digital communications system, identifying labor skills gaps, or managing a change initiative, to name a few. Since management consultants provide a wide range of services, it's good to first consider the factors influencing the cost of hiring skilled management consultants.
Consulting companies charge in a myriad of ways. They include hourly rates, daily rates, and a flat project fee based on the project type. Some consulting companies will figure a non-negotiable rate, while others may be willing to negotiate.
The other point to keep in mind is that there are independent consultants who work as individuals, consultants who work for consulting firms, and consultants who contract with agencies. The advantage of sourcing management consulting services through a company is that you get access to the consultants and their network of resources. This includes experienced personnel, consulting tools like workplace and union vulnerability assessments, industry knowledge, media connections, and various experience levels and types of experience.
For example, suppose your goal is to stay union-free. In that case, you want to hire a management consultant or team of consultants who can help management proactively identify employees relations vulnerabilities and develop a response plan. You may need consultants who are experienced in areas like strike contingency planning and union contract negotiations. If your company needs assistance with crisis management, the management consulting company should be able to do things like present different scenarios and work with managers to develop appropriate responses.
The cost of management consulting is partially driven by the tools the company has already developed and utilized for the benefit of clients. The cost of developing customized tools for unique client purposes will add to consulting rates. However, a management consulting company with various solutions already developed that are easily deployed for different clients can charge less because less consultant and technical time are required. When clients need customized organizational development, communication, or leadership and employee training resources, the consulting companies that have the resources in-house can offer faster services for less cost than consulting companies that outsource.
Discussing rates for management consulting is not easy because the rates and methods of rate calculations depend on so many factors. It's one reason management consulting firms don't publish their fee structures.
As Consultancy.org says, "Consulting firms – especially those active in the higher segments of the market – do not unveil their fee structure. Consultancies regard their rates as one of their key competitive assets and therefore manage their fee structure as a 'trade secret,' similar to salaries, which are also shrouded in secrecy. In addition, fees commonly vary per region/client/service offering, so firms keep tight control over their fee structure to minimise the threat of reputation risk, public debate or having to renegotiate their fees with clients."
Management consulting firms vary in size and are generally classified as large, mid-sized, or boutique. Boutique firms are very small and provide services in a local area. Their rates may be lower than large or medium-sized consulting firms, but their services are limited. The contract fee models include a fixed fee, time plus materials, and fee-per-milestone reached.
The first thing to know is that consulting firms usually add overhead to their consulting rate, like 30-60 percent. It may or may not be shown separately on the rate presented.
Very large management consulting firms may charge an hourly rate that starts at $300-$500 an hour but can quickly go to $1,000 per hour if partner-level consultants are involved. Small to mid-sized firms will charge less, and they may charge $250 per hour and up. Having said that, if you hire a single, entry-level consultant, the rate may be well under $200 per hour. The cost is based on a market-driven equivalent consultant salary, any overhead, and additional expenses identified during contract negotiations. The management consulting firm employs consultants, and like any company, must pay the person's salary and benefits.
Reviewing open positions on the job locator site Indeed gives a great idea of what management consultant salaries and qualifications are at this time. The salary is based on the consultant's particular experience, like change management, union organizing campaigns, organizational development, or employee engagement. Other factors include educational degrees, experience with various tools used for strategy and plan development, specific industry knowledge, certifications, and proven skills like relationship building, problem-solving, strategy development, collaboration and communication skills, and digital skills. It's also important to hire a consulting firm that stays on top of labor-management consulting trends.
A senior consultant in change management may have a salary market value of $200,000 annually, while a consultant performing general leadership training might make $50,000-75,000 per year. An expert in leadership coaching likely earns much more because leadership coaching skills are unique and require up-to-date knowledge of modern successful management styles that fit changing workforce needs. It's easy to say, "it depends," but the cost to hire a management consulting firm really does depend on many things.
Consulting companies will also charge for travel expenses, including mileage, airfare, lodging, and food. When possible, negotiating a flat fee is a good idea because it locks in an amount that fits your budget. Having said that, not all projects are a good fit for a flat fee contract.
Mega-consulting firms charge a lot. A company like McKinsey and BCG have very expensive billing rates that won't fit many organizational budgets. For example, an IGA audit of McKinsey's government rates found the company charged a weekly team-based rate and has five consultant categories – Senior Partner, Partner, Engagement Manager, Associate, and Business Analyst. The audit showed that the five teams consisted of lower-paid engagement managers, associates, and/or business analysts. One associate consultant team had a weekly rate of $56,707, and a team with one engagement manager and three associates charged a rate of $201,487. The minimum requirement for the engagement manager is two years experience; for the associate, it's one year experience; and for the business analyst, it's no experience.
Clearly, many businesses cannot afford an annualized management consultant rate of over $10 million.
When you consider a management consulting services contract, be sure the firm is upfront about details.
In other words, know what you're buying before signing a contract.
What all this means is that you must carefully determine your consulting needs so the management consulting firm selected is a good fit in terms of the project expectations and the costs. Since consulting companies don't publish their consulting rates, you should begin a search by contacting companies that seem appropriate based on a general assessment of what the firm offers. If you need help with a union organizing campaign or strike planning, for example, you wouldn't consider a firm that doesn't have consultants with expertise in that area.
However, a company interested in leadership training should consider more than the consulting firm's ability to offer leadership or employee training programs. You need to consider the management consulting firm's course delivery system, knowledge of current leadership styles, experience in training organizational leaders, whether the courses fit the leadership levels, ability to customize training, if necessary, style of presentation, and cost. Do you want online eLearning leadership training, facilitated remote training, or in-house consultant-led training?
Frankly, most businesses don't need a very large global management consulting firm like McKinsey, Bain, Kearney, or Deloitte. They need a mid-sized firm that can offer customized management consulting at more affordable rates.
IRI Consultants offers a wide range of expert management consulting services including labor campaigns, labor relations readiness, change management, public advocacy, and digital media. Projections and IRI Consultants brings decades of experience to clients and a wealth of resources that include UnionProof consultants and tools to address labor union-related matters and A Better Leader team with expertise in leadership development and training. IRI Consultants brings affordable clear solutions that meet your needs in all areas of management consulting.
With over 25 years in the industry, and now as IRI's Director of Business Development, Jennifer has gained a unique perspective on what it takes to build a culture of engagement. By blending a deep understanding of labor and employee relations with powerful digital marketing knowledge, Jennifer has helped thousands of companies achieve behavioral change at a cultural level.