Management Consultants, Decent Work and Economic Growth

The United Nations has defined a number of Sustainable Development Goals (SDGs) which are an urgent call for action to end poverty, improve health and education, reduce inequality, and spur economic growth while tackling climate change and working to preserve our oceans and forests.

This article describes how management consultants can support the achievement of SDG 8: Decent Work and Economic Growth. It is based on my input to one of the Lord Mayor's Coffee Colloquies which bring together varied voices from around the world to talk about how their work supports the achievement of one of the SDGs or another pressing global issue.

How management consultants can contribute to decent work and economic growth

Despite the mystique that sometimes surrounds it, the process of delivering management consulting services is relatively straightforward.  We undertake projects which usually involve analysing a client’s business problem and recommending a solution, together with its associated benefits, that impacts people, processes or technology.

A management consultant can contribute to creating decent work and growth in:

• the way that we perform our work, and
• the type of solution that we recommend

For each of these, there is an easier option that is unlikely to provide good jobs and growth and a more difficult option that is.

Ways of working

The management consultant can approach performing the work either by:

• performing all the work themselves (the easier option), or
• involving the client staff, for example by forming a joint team or coaching the client staff to perform some or all of the work.

Involving client staff in the work is more likely to lead to the creation of decent work as it is an opportunity to develop the skills and experience of the staff involved and provide them with greater work opportunities in the future.But it doesn’t appear to happen as often as it should. In the Consultant Value Add: Maximising Value from your Management Consultant report published by the Centre for Management Consulting Excellence (CMCE), 57% of clients identified coaching client staff to perform project activities as the best way for consultants to deliver value. However, none of these clients considered this to be a factor in selecting a consultant.

Proposed solution

For the solution proposed by the management consultant, there are also two key options:

• Cost reduction (the easier option)
• Revenue enhancement

The cost reduction approach often involves the elimination or simplification of jobs. It is relatively straightforward to quantify the potential savings (simply multiply the number of jobs to be eliminated by an average cost per employee).

The alternative, more difficult, task is to redefine the roles that are retained to make them more attractive than existing roles and redeploy any surplus staff into good jobs that generate increased revenue.

Research published by the US-based Good Jobs Institute illustrates the impact of these two options at Home Depot, a US-based retailer of building and home improvement supplies (which took the easier option), and Mercadona, a Spanish supermarket chain, which has taken a more difficult option.

In 2000, Home Depot adopted an approach to improving profitability that included reducing the number of in store staff and the percentage who were full time and replacing higher paid knowledgeable staff with lower paid inexperienced staff.

Although it provided immediate savings, after six years, same store sales were lower by 2.65%, customer satisfaction had reduced by 10% and the share price had flatlined while that of its main competitor, Lowes, had trebled.

Mercadona takes the more difficult approach. To ensure customer satisfaction,its in store employees are able to make decisions to reduce costs and increase sales. It achieves this by investing an average of more than €1000 per employee each year in training and by paying new hires an average of 17% above the statutory minimum wage.

As a result, it has staff turnover of less that 5% and has a market share of 26.2%, over two and a half times the market share of its nearest competitor.

The call for action

In conclusion, management consultants can contribute to the creation of good jobs and growth but this requires management consultants to avoid the easier option, and propose ways of working that transfer skills to client staff and avoid solutions that provide benefits by cutting or simplifying jobs. It also requires clients to select consultants based on the extent to which they propose to do this.

 

Jim Foster, Director, Centre for Management Consulting Excellence (CMCE)

July 2024