When did you last buy a pair of shoes? Whether you bought smart brogues for your next conference or snapped up some slippers for the winter you saw what you liked and you bought them. I am sure that when you bought the shoes you didn’t get a free can of polish, or some extra insoles. Both you and the sales team were aware of the transaction; no-one gave you anything extra and you didn’t expect anything extra. The point is, this process, which is understood by both parties in the retail industry, doesn’t seem to apply to the consultancy sector – where over servicing is rife.

There are a huge variety of consultancies out there but, whether they are in IT or operational performance, they all have one common characteristic: they all have to manage a varied and fluctuating client base. This means that the allocation of their time and the services they provide has to be managed very tightly. And it would seem that on the face of it, all is well.

According to the latest MCA report on the UK Consulting Industry, approximately three quarters of companies that use consultants were satisfied, or very satisfied with the work those consultants do. So the clients are obviously happy, in fact they are very happy. Digging a little deeper into the MCA report shows us that customer satisfaction came from consultancies producing results more quickly than their clients would have been able to achieve relying on their own resources. This makes it far and away the most valuable aspect of consulting.

This all looks rosy. But are consultancy firms giving too much to their clients in their race to give quality service? Are consultancies practicing what they preach?

The analogy of the cobbler’s shoes is a good one in this instance - I know, I’m back to footwear but bear with me. Our cobbler is so busy with his work that he forgets that he also has to look after his own asset, namely his own shoes. Similarly, busy consultancies can loose sight of the fact that they have to project manage their own business as well as that of their clients. Forgetting this can dramatically affect your business without you realising.

A common misconception among consultancies is that giving a comprehensive service to a client will naturally lead to their ongoing retention and a lengthy and fruitful relationship. However, we all know from past experiences that this is not necessarily the case. You may well be doing a great job and getting good feedback but it doesn’t mean that you are doing the best for your company. Just ask Capita, who have lost the congestion charge contract to IBM, despite no obvious errors or failures.

A consultancy is at its most profitable when the professional and commercial aspects of the business are balanced: doing a great job and running a great business. That means firms need to have a structured approach to the way that they manage clients and projects.

Management need firstly to be proactive in wanting to educate their staff. There is absolutely no substitute for a hands-on, face-to-face approach. Let’s use our cobbler friend as an example again: he makes his money from the end product, the price he charges incorporates his time, materials, design and finishing. But in a consultancy environment the contract is agreed before work has begun, so it is vital that the whole firm is aligned together, or else it can start to cost you dearly.

It is important to understand why some firms fail to manage their own ‘project’ effectively. The first, and possibly the most common, mistake is to fall into the trap of over committing. A client, often a new win, can take up far more resource than expected, usually because the work load that is required during the first few weeks can be excessive. But this should be factored into the project plan right from the start.

Consultants’ natural desire to please the client also needs to be managed. You want to give a good impression, you like them, and you naturally want to do a good job. But a desire to please can often lead to unsustainable commitments and over servicing.

Giving your team a breakdown of how much time they should be spending on each client can help kill the admin burden that can engulf daily work. You want your staff to be spending the majority of their time on the billable work. For example; take a small consultancy with ten employees, an annual turnover of 1 million and a healthy profit before tax of £130,000. Charging out each employee at £100 per hour it is easy to calculate that each member of staff pulls in twenty two billable hours per week. However, if you can increase your staff’s billable hour mark to just twenty five you can increase your income and double your profits. And this is really the crux of the issue. You may well believe that your business is a profitable as it can be. But how do you know? If you break down your profit margin you will be able to see if there is an admin burden. A look at turnover and charges will also show you how many billable hours you actually charge per week. It is not micro-management, it is simply converting as much written-off time as possible into billable time.

Nor should educating staff stop at the billable hour. A regular review with the people working on any given account is another useful opportunity to asses where the project is and if the team are over servicing. It will also give you a chance to pass on some advice on the process of managing projects and clients.

Therefore you need to create a formal schedule of achievable goals and, critically, an understanding of how much time you want your team to allocate to any given project.

Over-optimistic time scales have serious implications for what you can legitimately bill the client. By over committing your team in order to produce the ‘quick’ and successful goals you can set yourself up for unsustainable targets as the relationship grows. Once you realise you are unable to maintain these levels of work it can be difficult to go back to the client in order to increase the budget.

When there is little or no guidance or monitoring of how the project is being managed on a day-to-day basis it can lead to legitimate billable man-hours slipping under the radar and becoming a cost that you have to absorb.

Hard though it is to believe, there are still plenty of agencies and consultancies out there that do not record time accurately. When you’re selling time and expertise it is crucial that you have ways of measuring both. It allows senior management to keep track of projects and enables clients to see a break down of the time being spent on their project. This can ease any budget concerns and could possibly encourage a client to increase their budget.

Timesheets and project plans will have a fairly immediate effect but will also pay off in the long term. The implementation of a project management system can be a very useful addition to the process of assisting your staff in managing their clients and for you to streamline the business as a whole.

Management dealing with a new business lead suddenly have an accurate reference point of similar past projects which they can refer to. They can then give new clients a more detailed breakdown of time scales and costs than they would possibly have been able to do without one. The project schedule will therefore not overstretch staff and also enable clients to have clear, defined expectations.

There may be quite a few areas that need to be addressed in order to cut down on the un-planned, written off, time that can cost consultancies dearly. But by getting a structure in place that helps you address these issues your agency can stamp out the over servicing, tie up the lose ends and get back on the path to profitability.



Hugh Stafford-Smith
UK managing director, Maconomy
Hugh Stafford-Smith is the UK managing director Maconomy, a leading provider of business solutions for professional service companies. At Maconomy, his focus is on ensuring that the organisation remains 100 per cent committed to customer service, while delivering products that offer the best possible solution to industry issues. He has seen the company perform well since he joined in August 2006, and that success is predicted to continue.


About Maconomy
Maconomy is a global provider of industry-specific business solutions for professional services companies and marketing communications organizations. Maconomy business solutions help optimize project and resource management, manage costs and drive profitable behaviour throughout an organization. 95% of Maconomy customers get a positive ROI from Maconomy solutions and pay for their investment within an average of 25 months. Customers include Deloitte, KPMG, Millward Brown, Philips, PricewaterhouseCoopers, WM-data, WPP, Rambøll, Omnicom Group, Publicis Groupe and more.