Overpriced and Overestimated?

The paradox role of external consultants in the public service

Right off the bat, I cut my teeth as an external consultant – first in Berlin and then when I moved to New Zealand. I’ve come to the point in my career that I spent more years as a public service employee than as a member of an agency. Being in a consultancy allowed me to work in loads of different fields, private and public - and I recommend it to anyone in my field wholeheartedly. Perhaps it’s easier to form good memories early in your career when you still feel like you’re tangibly learning all the time, when recurring patterns haven’t cast a shadow on your optimism yet – but I recall feeling like I had a role to play in the bigger institutional ballet as an external, working with the internal teams. Well... mostly. But let’s build to that.

Let me also clarify: today I’m speaking of consultants – meaning people who are employed for firms that specialise in some form of advisory service. NOT of contractors, as in, typically self-employed individuals that work within an organisation. The two sometimes get conflated, as they both tend to charge hourly- or daily rates and get employed for specific programmes for fixed-terms. Contractors may also act as “consultants” in the sense of advisory work. But the reason why they work in this type of employment can be manifold and their integration into the team can be more direct. Today I speak to the former – consultants from private companies like PWC, Deloitte, EY, KPMG and smaller “boutique” ones alike.

Criticism of the role of external consultants – especially the big international juggernauts – is an ever-present undercurrent in our discourse (and media reporting) on public service.

Cost is usually the biggest factor, and every government that I can remember in my time in Aotearoa had to make some kind of promise to reduce consultant spent. It’s a reasonably easy thing to get hung up on, partly because - unlike to many other issues we’re facing in the public sector - consultant cost- and spent is pretty reliably transparent (good on us). All public institutions answer the same set of 200+ questions to their select committee once a year in their “Annual Report”. So everyone can have a look at contractor spent of the last year, and consultancies tend to pop up fairly high among the common suppliers of tech and infrastructure – like in this example from DIA’s Annual Review from 2020-21

Screenshot of the DIA’s Annual Report 20-21, Question 69 on Contractor spent

It’s an interesting example – I actually mean to just pull a random example of these reports from my research database, but here we can see “Three Waters Reform Programme advice” listed from Ernst and Young, Martin Jenkins, Mafic Partners Limited and Minister Ellison Rudd Watt. And without getting into the pros and cons of this reform programme – this is quite a common scenario I’ve seen: big flagship programmes not only get one consultancy in, but several ones that work together and with the internal staff - oftentimes even formally leading entire parts of the work.

It’s easy to get a bee in ones bonnet when we see such massive figures and multiple layers of consultants. As I’ve written before, I always like to caution people unfamiliar with public sector work not to immediately get fired up about cost. Because, it depends... Perhaps that’s money well spent – perhaps not. Today, I want to talk about a few facets of the role that consultants play and what that tells us about their paradox role in the public sector – beyond the cost alone.

Superior expertise

The value of consultants – and the justification for their minimum $250+ per hour price tag – is that they posess and apply superior expertise and internationally-recognised methods. This can be true in some circumstances. I was a usability and customer experience consultant when those were brand-new methods in New Zealand. So my team and I would genuinely bring a new method to the clients we were working with, one that was nigh impossible to hire for at the time (hence my skill-shortage visa).

I believe this is much more true for smaller consultancies: niche skills in engineering, assessment, auditing, specialist knowledge in IT, legal, health and infrastructure questions – and so forth. There must be hundreds of smaller agencies that specialise in services that a public organisation might need every now and then. I’ll leave the economics of whether to hire a niche specialist or whether to contract them in for another day – this also bleeds over into the field of contractors. But to me, this seems a reasonably justified setting between expertise and public services.

Where it gets murkier is the big internationals and their expertise. When you look at how they describe their services on their online presences, you’re in for some serious buzzword-bingo. Marketing-speak that you can read anything and everything into:

“[Our] Process and Operations services bring our capabilities in management and process improvement to help companies optimise operations.”

No way! How?

I’ve worked with consultants from all big agencies, and

I can’t recall a single instance when I thought what they were doing was in any shape or form superior, advanced, more specialised compared to what my colleagues at the time were doing.

Yes this is a stereotype - men in suits. But it’s not entirely wrong, is it? Photo by Hunters Race on Unsplash

Mind you, I’m speaking to corporate consulting here: business cases, process reviews, transformation projects, design projects, and the likes. Serious caveat.

All of the companies that we consider “the big four” are accounting firms. And when it comes to that – I have no reason to question their expertise in that field. Well, perhaps EY considering they are being sued for signing off fake accounts over many years in Germany’s biggest accounting scandal (a fun read, fraud AND spies, this story has it all).. but whatevs.

Auditing is a crucial part of our economic system, and the role of these big firms in that should not be understated. But they’ve all grown additional and much wider-ranging services, which I’m feeling less enthusiastic about.

I can’t judge all services, but the only remarkable thing about the design- and ideation- processes that I’ve seen a few big-four agencies run, was an elitist insistence on using their OWN design language that was ever-so-slightly riffed off the common jargon. Plus, an excessive use of personnel. There was not just a faciliator and note-taker – no, there were whiteboard artists, assistants to the facilitators, hosts, directors standing in the back with their arms crossed and looking serious... all on billable time. For what, vibes?

A beautifully-drawn whiteboard picture of the discussion that a group has is nice – but is it a whole billable-day worth that “nice”, in tax-funded money terms?

It’s possible that I’m unjust here to some workers in these firms, but then again – there’s a certain self-selectivity of who these kind of firms attract.

Superior culture

Recently I reviewed some notes I took when I was working on a programme which was lead by one of the big-four (alongside a 20-strong internal team). I made it a habit of noting some examples of the collaboration between both sides for my personal sanity, with personnel anonymised of course. This does not concern the details of the work, just the tone that characterised the whole engagement:

[In a meeting to analyse the results from workshop with internal experts]

Big-four: “They just don't get it. They don't have the experience in it.” ['they' meaning the workshop participants]

Me: (laughing in disbelief) “ … They have decades of experience in the field!”

Big-four: “But not in this. They have their own field but they're not specialists in this. This is complex stuff. They may just need more time to understand it.”

This superior attitude of: “internal experts are dumb, blinkered, lack experience” is something I’ve observed WAY too many times when I was in on the internal side, harking back to the prejudice that many seemto hold against public servants. This is not the odd “bad apple”. Sometimes the consultants literally walk into the room with an air of: let’s show these numpties how it’s done. These relationships can be straight-up antagonistic from the start.

To me, that is an exclusively big-four experience, not one with specialist-driven consultancies. I can only interpret this as a result of who they hire, and how they position them in their internal culture. So in my estimation, the thing that those consultancies chiefly provide (at least in my field) is a superior attitude and sales expertise.

We need an external perspective

This is a common motivation, and one of the reasons we see so many consultancies involved in restructuring: the expectation that an outside perspective will bring some “fresh” thinking, a helicopter view that the hired staff can’t get to.

This I find more difficult to relate to, because I haven’t really seen this materialise in any way.

I recall a time when my team and I ran some user research for a small company whose website is their main distribution channel. We found quite a few usability issues that were barriers to customers, but also reasonably easy to fix in development. We presented our report to leadership, with the internal IT team also sat around the big boardroom table. With every new slide we showed, the team’s posture slumped more, eyes rolled harder, some ended with their heads in their hands. The reaction was confounding and disturbing for us – what had we done?

When we finished, the CE turned to their IT manager and said something along the lines of: “this is brilliant, why haven’t we done this before?” And the manager took a veeeery long breath and said:

“With all due respect, we have. For years. We have tried to tell you MANY times.”

When the meeting ended we had a chance to talk with the IT team in a hushed tone.

Every single item we reported was known to them. They had beaten their heads bloody for months asking for resource to make the fixes, and their leaders simply had not believed them. So they had spent a few grant hiring us instead.

I’m not saying that this is always the case – that there are not circumstances in which an external view can be genuinely new and bring a new tangent into an internal discourse that’s stuck.

But in so many cases, it’s a strange concept to be asking external people with often “generalist” disposition to assess what is almost always a specialist and contextual question.

I’ve written before about the self-reinforcing cycles that lead to ingrained distrust between leaders and their own staff – even when people are well-intentioned. I believe this happens a lot more in situations when leaders decide they want “outside expertise”, than the opposite.

There may be internal baggage, strained relationships, or simple the hope for greener grass on the other side, that may motivate leaders to seek advice from the outside over listening to critical messages from their own staff that sound atonal to them.... which lead me to the possibly most important point:

Hiring a choir to preach to

A little while ago I was approached by someone often working in transformation- and restructure settings. They explained how they do their research to the best of their abilities, with all the intentions to be a neutral, unbiased player with no cards in the game – only to have their final work “directed” by the expectation of their client.

Let me put that into another context from an undisclosed time in my career:

There were several times when my colleagues and I would prepare a final report, and were made to understand that certain details we included were “not palatable”, not aligned with “what the customer expected”.

This is the dark underbelly many don’t want to talk about. Even I get sweaty-hands thinking about it. Yeah... we were asked to fudge over bits that were too critical. We had slides removed, words edited, conclusions rewritten until they fit.

Anyone who thinks this is a rarity is living in a dream world.

A consultancy works for customers, and customers get what they want – so they will return as customers again.

This doesn’t mean every consultant report is a work of fiction. The influence here is often a lot more subtle. Yes it is very rare that someone makes something up - but it’s common to be asked to “ease off” certain aspects. And in the end, it comes down to the semantics of it all.

You can’t say “exclusion”, you just write about “participation”. Negative words on all levels get cut, problems are opportunities, right?

No such thing as free and frank advice in this setting.

Consultants as an extension of hierarchical power

Herein lies the paradox that we may not pay enough attention to: when you bring in external consultants for a “fresh” perspective, they sooner or later become subject to the same incentives, pressures and expectations as the internal experts – in fact, their added incentive to keep the client “happy” adds a further warping dynamic to those that already stabilise the status quo. More often than not, they serve as pawns to amplify the power and beliefs that already exist.

I’ve seen leaders throw out, or quietly ignore, work that was wrestled into existence in a very uncomfortable tango between consultants and staff – worth millions in billable hours – because it was too generic (by design), too specific (what they asked for), and not in line with their expectations (to hear confirmation for their existing believed).

I imagine a leader reading this and feeling misrepresented. I’m sure that individuals can recall instances when they got external advice that helped them see a new perspective, or change their mind. But that’s the tricky thing about complex systems. If one leader has such a moment, that’s not the rule, but the exception. And unless that leader is the CE, they have other leaders to convince of their perspective. I’ve seen this lead to intense, impressive negotiations, that typically end with the outlier retreating with “pick your battles” on their white flag.

Conclusion

There is a lot that is deserving of critique in the world of consultants. Painting them all with a broad brush is wrong, though. The design expertise that I’m familiar with is an area full of grey tones between value and waste, and so the role of consultants in this space is particularly tricky to judge.

I do think there is a lot of corporate snake-oil being sold, coasting on brand recognition and unsubstantiated believe that “buying” from a big international brand brings quality, reliability and foresight. I don’t see how that believe is deserved.

Plus, it comes at the cost to the effectiveness and credibility of internal talent, and adds a complicating layer to bigger pieces of work – more stakeholders to navigate.

This may well be different in other fields of expertise, and the role for external auditing and procurement of niche skills for targeted tasks doesn’t seem to even live in the same ballpark as the slide-deck-slinging, billable-hour gangs that roam the strategy- and transformation spaces.

Most of all:

We must understand the public sector’s instrumentalisation of external consultants as an extension of a managerial culture, institutional incentives and unreflected habits that grows from the inside out.

The outside is all to happy to sell the public sector whatever pays. But the call is coming from inside the building – as so often.