I have worked with some clients that think that consultants are there to take their abuse. Seems like a rather expensive way to vent one’s frustrations, though. I often wonder what their boss would say if they had to file an expense report for spending a thousands of dollars of the company funds on tirades that have no positive effect for the company.
Make good money! 
My first association, when what a consultant does was first explained to me, was to Pulp Fiction which was still a new movie at the time. Winston “The Wolf” Wolfe is basically a consultant. You call him when you have a problem your regular “employees” can’t handle on their own. He comes, tells them how to handle it, covers the important parts to make sure they’re done properly, and the problem gets solved. Sometimes the regular employees, like Vincent Vega, don’t like being told what to do, especially when their screwup caused the problem in the first place. If the consultant has enough cachet, he can do as The Wolf did and tell them to, “Pretty please, with sugar on top, clean the #^¢*ing car.”
I can understand the role of consultants on specific issues like technology or law - it makes sense to temporarily hire an expert in the field if you don’t need a fulltime employee for that issue. But I have a harder time grasping the value of a general management consultant - shouldn’t any organization that’s big enough to hire a management consultant already have its own management? If I was the owner of a company and we had reached the point of needing a consultant, instead of saying “I’d like to hire you temporarily to give my managers some ideas” I’d be more likely to say “I’d like to hire you fulltime to replace my managers”.
You are right to have your doubts and suspicions - a lot of ‘management consultancy’ is snake oil for the white collar brigade.
However, in theory, there are a number of ‘valid’ reasons why companies with a heavy management structure in place might still have cause to hire management consultants. (1) There is a specific project requiring specific management expertise / experience that is hard to find or too expensive to bring in-house on a full-time basis. (2) The full-time managers have enough on their plate (or claim they have) just doing the day-to-day management stuff they are theoretically paid to do, and so when extra capacity is required in the short term, eg for some project that isn’t expected to last more than 3-6 months, the consultant provides it. (3) There’s a big, long-term project that will require a mix of management expertise and specialised knowledge in several distinct areas, and it simply makes more sense to work wth a management consultancy company that will take on the contract to oversee the whole thing, and that can draw upon its pool of specialised geeks as and when required, than it does to try and get all the required team on the full-time payroll. (4) Recruitment problems: attempts to hire the right full-time personnel are unsuccessful (eg because of a market shortage), time is running out on Some Important Project, and so the consultant gets called in as a temporary solution to buy the company some breathing space.
Those are all common reasons. But the commonest reasons of all are, and always will be, (a) laziness and (b) blame avoidance. It’s easier to make out the case for hiring a consultant (whom you can work like a dog) than it is to roll up your sleeves and get some work done. Then if the project goes well, you bask in the credit. If it doesn’t, the consultant is a handy receptacle for any and all blame.
A consutant’s job is to make themselves redundant.
I work partly as a consultant for schools establishing programs for highly abie students. I’ve worked as a specialist in this field for decades, making all the mistakes possible, but eventually established programs which people seem to think are pretty good. Schools hire me to ensure they don’t have to make the same mistakes and learn at the painfully slow pace I did. I work with their teachers, students and parents, provide curriculum and realistic implementation, and then get the hell out of there and let them get on with it.
Lynne
ianzin pointed out some reasons. Also, there really isn’t such a thing as a “general management consultant” who just comes in and throws ideas around. Management consultants are generally experts in a particular area - technology, supply chain, a particular industry, whatever. They usually know that area of expertise much better than any company management in “industry” (consulting jargon for non-consulting businesses) because usually management is more focused on the day-to-day operations. Also, a lot of consulting involves gathering information. They bring in an army of more junion associates and analysts to collect and process that information so they senior folks can make their recomendations.
And quite often companies do hire consultants full time as permenant members of their team. It’s quite common for people to work at firms like McKinsey, Bain, BCG, Booze Allen and Accenture for a number of years and then move into a management position in industry when they are done with the excessive travel and long hours.
Management consultants are also useful because they provide an outsiders view.
Inside a company, you often do things because you don’t have exposure or experience to what is going on outside. Or for political reasons - this is huge. Someone may have a great idea, but politically, it isn’t palitable - or its controversial - or they don’t have the clout to sell it.
A management consultant can get over all these humps. We hired an IT consultant for the same purpose - we knew the answer, but there was one person on the team quite vocal about it being wrong. $10,000 worth of consulting later, we had shut him up with an expert who told us other companies who fit our profile were implementing the same technology in the same way, and there wasn’t anything unusual in our environment to keep it from working. Most people, including management, felt the $10,000 was well spent to “validate” what we thought.
Having been “all over” the consulting industry, I almost laugh out loud when someone says they paid X company to give them the “best practices” for some particular process. If they only realized that they paid someone a HUGE amount of money to do an internet search and make stuff up to fill in the gaps, they would probably die. Fortunately, I get to spend a great deal of time now designing technical solutions to support the “made up stuff”.
I generally agree with others that there isn’t much “general” in consulting. It is mostly specialized expertise except I do know one very generalist consultant. He is a CPA but does very high-level management consulting for smaller companies. My FIL has used him for years and he is great but costs $500 an hour. Despite my FIL having owned an run a company for 40 years, he still isn’t that good at a lot of it. He is a salesperson first and foremost and the supply chain supply, technology, HR stuff and everything else tends to fly right over his head. Joe runs a management meeting once every other week to do the actual management stuff that they take care of internally in big league companies. They can’t hire him full-time because he would cost almost $1 million a year but they can use him to help fill in the management gaps of a family business that has grown beyond the management capability of its founders. That isn’t all that uncommon.
Most of the good companies have actually documented their “best practices” and have established industry benchmarks from actual data.
I should point out that there are different levels of consulting and the firms are very different. True high level management consulting is done by a select group of firms, McKinsey probably being the most well known and prestigeous. They have rigorous hiring standards and tend to take only the top graduates from select schools. They pay very well and are the most prestigeous.
As you move furthur down the list, you tend to get into more IT consulting based firms. These firms are relatively easy to get into with some Access or VB skills. Their staff tends to be young, the hours and travel long and the turnover high. Many of these firms aren’t “consulting” IMHO, they are more like IT outsourcing shops. They don’t make recomendations to their clients. Their clients say “build me this” and they build it.
And some firms (like Accenture, CSC, CA, and others) are a mix. They might recommend solutions that justify bringing in a huge implementation team to build.
The thing to remember that not all business problems are a technology problem.