There's a Stranger in Town...

Why organisations will probably always have a need for consultants.

Last time, we looked at the impact the framing effect can have upon your point of entry into an organisation and how this directly influences the amount you as an individual can achieve in the medium term.

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This time, let’s look at someone who isn’t part of your organization: the much-maligned consultant.

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The – apparent – paradox with consultants is that their efforts are often unappreciated by organisations who are reluctant to use them and dissatisfied with the results – yet – those same organisations continue to engage them.

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I say apparent because I’m going to outline why this is simply two sides of the same coin, and that the currency here is Entropy.

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Imagine you are a senior manager within an organization. Perhaps you have just had a promotion, or you have been asked to sponsor something that you know will be reported up to the Board: it’s time to raise your profile.

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There’s just one small problem. You have come to the realization that the people, processes and IT that you have access to are insufficient to underpin the outcomes for which you are now accountable:

-?????? You spoke to HR and they helpfully informed you that once you had the headcount and job description approved, it would only take 6-9 months to find someone.

-?????? You spoke to your teams and though you believed that they tried and you sent one of them on a training course, they haven’t given you the confidence you were looking for that they know how to do it.

-?????? IT asked if you have internal budget approval and if so, they could spin up a project to support you in 4 months’ time if the Portfolio Board agrees to prioritize it.

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Somewhat dejected, you ask a colleague for their thoughts over a coffee and they ask you whether you’ve spoken to procurement about engaging a consultancy.

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The procurement manager was actually quite helpful, even though there are a few hoops to jump through and it will still take longer than you wanted it to get started. You speak to your manager and they agree that it is probably the best option and they support you in getting the necessary approvals.

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Your HR business partner finds out and you have a rather tetchy conversation:

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“Your manager should have identified the need for those capabilities in the last organisational design review” “You were both in those workshops”

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“Now you want to spend more money not building that internal capability?”

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“And when the money runs out? We still don’t have the capability!”

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Your response was that the business Needed This Doing, it was a ‘Board priority’, and you had wasted 3 months confirming that the organization was in no position to deliver that outcome in anything like an acceptable timeframe.

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So, this is Day Zero for the consultant. There is both demand for their services and an underlying resentment that such demand exists.

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But was such demand inevitable, or was it perhaps as the HR business partner was suggesting, a case of failure demand that you created?

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To understand why the demand for consultancy support was probably inevitable, we need to first understand why the failure demand was also inevitable and why it isn’t anyone’s fault that it was.

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I have had the privilege to work with many HR functions over the years and the more I have done so, the more respect I have for the delicate balancing act it really is.

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It is also much clearer that the design of an organization is more art than science, and this is because organizations unlike organizational charts, operate in a continuum:

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-?????? The market is in constant flux;

-?????? The business must adapt to the needs of the market;

-?????? The organization must adapt to the needs of the business;

-?????? HR must create a design for that organization and then get it signed off.

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Even if we put to one side the challenge of using PowerPoint and Excel for this purpose, the underlying problem here is that HR are being asked to chase the horizon. There will always be a lag between market demand for change, the business waking up to this fact, the organization trying to mobilize a response, and HR trying to then capture that new state in Amber. By the time HR has achieved the sign-off they seek, the C-suite are already pencilling in the next review for the business.

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We have over the last 18 months had a case study on this with Generative AI. The emergence of Generative AI has led to what is now tens of thousands and will soon be hundreds of thousands of people losing their jobs across the globe; their roles are no longer required, or if they are then in much smaller volumes. This has led to the rapid redrafting of operating models for businesses and invalidated the existence of functions from organisational designs.

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Is it reasonable to expect that either you or HR could have anticipated this? I would suggest not.

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Is it likely that your organisation will have the internal skills to deploy this new technology?

Unlikely.

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Will the business need to adapt?

Absolutely.

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Will you need to hire consultants?

Almost certainly.

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What this serves to show is that consultants exist to respond to demand, and that this demand comes from market change and the ability or otherwise of organisations to adapt to that market change.

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This takes us then in two potentially interesting directions that will serve as the topics for future editions.

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The first is asking the question as to what organisations might be able to do to improve their capability to respond to market change (and perhaps hire less consultants in the future).

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The second is to ask the question as to what can happen when organisations make ‘big bets’ on new technology, as many have on Generative AI, and what lessons can be learned.

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In the meantime, I’m off for a run with my friends in HR. You’ve got to keep moving.

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