As Economy Grows, so Too The Business of Consulting
WANTED: ADVICE AND EXPERTISE
ILKE thousands of other Americans, Chris Christensen lost his job two years ago as a manager of a military aerospace contractor. In a year and a half, he sent out 750 resumes - all without a positive response. He finally decided to start his own management consulting business.
``The only way I can do what I know how to do is to be a consultant,'' says the 55-year-old Mr. Christensen. He converted a guest room in his condominium on the outskirts of Los Angeles into an office, obtained lists of businesspeople from the local library, and plied the phone lines offering his services.
A year later, Christensen is still living off his retirement money. He says he expects it to take another year for his business to become profitable.
The number of independent consultants such as Christensen is booming. Business is hungry for their expertise, new courses to hone consulting skills have full rosters, and unemployed middle managers see a future in the field.
The Wharton Small Business Development Center, an affiliate of the University of Pennsylvania's Wharton School, offers a three-year-old course on the ``art'' of successful consulting, which attracts about 60 students a year. Clark Callahan, assistant director of the development center, says the course is aimed at high-skilled people who have been laid off and want to go into consulting.
Instructor William Dorman says most of his students are highly qualified, with at least 10 years experience.
As the United States economy begins to pick up, these laid-off workers are being contracted back as consultants by the same companies that trimmed staff through the lean years of the recession.
The growth of the industry ``collates with the strong growth of the economy,'' says Patrick Byrne, vice president and managing director of North American operations at A. T. Kearney Inc., a Chicago-based management consultancy. As companies downsize and lay off large numbers of white-collar workers, they need management help, Mr. Byrne says.
David Lord, editor of Consultants News, an industry publication based in Fitzwilliam, N.H., adds: ``Corporations are seeking to control their costs and improve performance. At the same time, [they want to] reduce the cost of their own personnel and resources. In a competitive economy, they seek experts who have knowledge of similar situations.''
``The biggest single value of the consultants is `fresh thinking,' '' says Alex Shibanoff, an independent consultant and the director of the Consultants Bureau in Brunswick, N.J., which provides referral services for consultants. ``A corporate president is standing in the middle of the forest. He can only see the tree. A consultant can step back and see the big picture.''
The Consultants Bureau estimates that there are 100,000 management consulting firms in the US and another 100,000 ``solo practitioners,'' or independent consultants. The organization says the consulting industry is expanding by 15 percent a year.
Management consulting revenues in the US reached a record high of $16.7 billion last year, almost tripling from $5.5 billion in 1985. In the early 1970s, revenues were less than $1 billion, according to Consulting News. The group estimates that industry revenue is growing by about 10 percent a year.
The number of independent management consultants is growing in part because ``it [the profession] is so easy to enter,'' Mr. Lord says.
``You can start a business with a computer, telephone, fax machine, and stationary,'' adds Mr. Shibanoff, who used the technology four years ago to get into consulting.
``It is obvious that many people are not qualified [to be consultants],'' Lord says. Many small consulting companies and solo practitioners fail: ``If someone decides to become a consultant, the likelihood is that in five years he will not be a consultant,'' he says.
The consulting business is not as easy as it looks, says James Kennedy, publisher of Consulting News. ``Even though you are a successful executive, it doesn't mean that you are a successful consultant,'' he says.
In some ways, Kennedy adds, consulting is more difficult than a management position because consultants can only say, ``You should do it.'' Unlike a company executive, consultants can never say, ``Do it.''
As demand for consultants rises, their roles have been changing. Before, companies used consultants ``to be informed'' and ``to know what the latest ideas are,'' Lord says. Now, companies want to know exactly how the consulting job will translate into better performance. As a result, consultants have to provide a ``greater variety of skills.''
``There is a confusion and lack of definition about the words `management consulting,' '' says Arthur Turner, a retired professor at Harvard Business School, who taught courses on the consulting process in the early '80s. Because the definitions are so broad, it is difficult for clients to know how to select the right consultant, he says.