Why Good Management Consultants Are So Expensive?

although I am writing this blog post to note down my precise thoughts just for a handful of people, it might be useful for  a whole lot of other people too. That is why I am making it public.

This post is written in response to a frequently asked question that I face – and having no FAQ section in our website, this will have to act as a substitute.

Once again, this week, I was asked to justify the ‘very high’ hourly rate that I charge for my work.

Somehow people have no qualms paying nearly double of my rate (including support staff) for a large branded consultancy service – but resent a much lower rate when it comes from a much more competent consultant without a famous multi-century brand.

However, the conversation always starts as a justification for the hourly rate without any comparison points.

I recall several l years ago a similar conversation where I was challenged to justify the rates by a highly (extremely) competent senior executive. He, rightly, pointed out that he could do almost everything that I could do, so why would he need me.

I replied there is only one of you in the company, and not many more in the world.

But then, I pointed out that today’s executives are working at a pace which is akin to driving at 150 km/h (90 mph) on an extremely busy and rowdy highway. There are vehicles large and small rushing at breakneck speed from all possible directions. people are barely keeping to their lanes and easily cutting each other off. Risks of accident are extremely high. Those who meet with an accident are left on wayside. Those who make it to the destination, barely have time to recuperate before they start on another project.

No one has time to look in the blind spots. If you slow down you are overtaken and left behind – never to catch up again. Others are ready to jump into your seat at a moment’s notice. And, if they are not as competent as you – it does not matter.

If you don’t look in the blind spot, you risk accidents.

What you need is an early warning radar system that assists you to plot your way through the maze around you – taking all the relevant data points into consideration.

You pay the price for collision avoidance, for arriving safely at your destination with your sanity intact, and for enjoying the journey to a large extent.

After some thought, my friend on the other side added his keen wisdom to the conversation.

He said (and I paraphrase) “for a moment I was disturbed by the thought that if they are not as competent as me, it does not matter. But then I realised it is true, because branded mega-consultancies act a airbags, or other bags, of some sort. So my main decision now is whether I want preventive care, or palliative care!”

I pointed out the obvious – that prevention was far more valuable than palliation.

And, that size or brand image had only a small impact on the style of consulting practiced by a person.

In the end, it all came down to personal ethos. And, that should be the most important consideration when you hire a management consultant.

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Vivek Sood

Over the past 25 years, Vivek Sood (Mr. Supply Chain) has been privileged to work alongside the CEOs & executives who care about their businesses as much as he does about delivering exceptional results in business transformations for them. Combining operational experience with over 400 strategic projects covering more than 85 countries taught him a lot - a legacy he continues to share. Want to know more? Go to viveksood.com to read the story of his professional and personal adventures, including the time when he had to fight real-life pirates.

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