April, 2015
Consulting services exist because organizations’ human resources do not always have the knowledge and experience needed to respond effectively to environmental challenges. Under these circumstances, it is often more cost-effective for these organizations to contract for term-based guidance—consulting services—than to hire or develop internal human capital. According to Dean and Secor (2003), such services must present a value proposition: they “must make money, cut costs, improve services, or reduce risks and exposure for their clients” (p. 8).
Many consulting firms limit their practice to particular industries and/or specific organizational functions. Nevertheless, the structure and operations of these niche firms can perhaps best be understood in reference to the broader practice of management consulting.
Richter and Schmidt (2006) described management consulting as “a sector widely regarded as a prototypical example of a modern knowledge-intensive service industry” (p. 366). The Encyclopedia of Management further explained that “Management consulting is generally a contract advisory service provided to organizations in order to identify management problems, analyze them, recommend solutions to these problems, and (when requested) help implement the solutions” (“Consulting,” 2012, p. 169).
According to the Encyclopedia of Global Industries, management consultants provide services in areas such as “financial planning, organizational planning, marketing advice, information technology consulting, human resource planning, and logistics advice” (“SIC 8742,” 2011a, p. 949). Consulting firms vary widely in size. Their employees tend to work in teams. The hierarchy of a firm is likely to include staff at various levels: partners, managing consultants, regular and senior consultants, and research associates (“SIC 8742,” 2011b). In many consulting firms, such as the one in Chao’s (2005) study, entry-level consultants are recent university graduates who come to the firm with little or no work experience. If assimilation processes are successful, they take on progressively challenging assignments and advance through the ranks.
Higher education is a stressed industry. Not only have American colleges and universities had to weather the challenges of a poor economy in recent years; they have also endured a long-term trend of diminishing state funding. Ironically, even as public funding has decreased, the federal government has increased its regulation of the industry. Adding to financial and regulatory woes are factors such as (a) shifting demographics, which make it difficult for some institutions to recruit students; (b) increased competition from a variety of education providers; and (c) the expectation of responding promptly to constant technological advances. In the face of all of these stressors, it is no surprise that higher education leaders are increasingly turning to consultants for help (Blumenstyk, 2014).
Higher education consulting is not a monolithic business. Though all firms in this sub-industry focus at least some of their attention on serving higher education institutions, they vary widely in their size and specializations. According to Blumenstyk (2014), industry heavyweights such as Accenture, McKinsey, and PricewaterhouseCoopers actively serve the higher education market. News outlets have reported in recent years that consulting firms are building their capacity to address the needs of colleges and universities. Within the past five years, established business consulting firms have launched new divisions targeting higher education institutions. Their stated goals include solving “complex operational problems” (“TABB Education,” 2011, para. 3) and “business performance improvement” (“Compass Higher Education,” 2012, para. 1). Firms that already have an education division, such as Huron Consulting Group, have publicized the addition of key managers with expertise in higher education (“Huron Consulting,” 2011; “Huron Consulting,” 2013). Consultants responsible for managing services to higher education have typically spent their careers in consulting firms or in higher education institutions.
Some consulting firms specialize in executive search—that is, in helping companies fill high-level management positions. Their consultants are sometimes referred to as headhunters (Zaccaro, 2007). In fact, quite a few executive search firms provide services to institutions of higher education; some do so exclusively, while others maintain practices for multiple industries.
According to Finlay (2013), “Headhunters . . . are paid a fee by employers (their clients) to find job candidates for them. They thrive because employers do not know how to find the best job candidates, and potential candidates do not know what jobs are available” (para. 1). Finlay noted that most headhunting firms work on a contingency basis; that is, they are compensated only when they bring a candidate to a client, the client offers the candidate a job, and the candidate accepts it. Headhunting fees are said to equal as much as one-third of the annual salary of the position that the client is seeking to fill (Finlay, 2013).
Executive search is but one of many specializations in the higher education consulting market. A directory published annually by University Business gives some idea of the level of competition and differentiation within the field. The 2014 edition of the directory listed 18 firms operating in areas as diverse as planning, enrollment management, assessment, distance learning, library services, and marketing, among others (“2014 Directory of Higher Education Consultants,” 2014). Judging by the available supply, demand for higher education consulting services must be substantial.
2014 directory of higher education consultants. (2014, August). University Business, 17(8), S4+. Retrieved from http://go.galegroup.com.ezproxy.liberty.edu:2048/ps/i.do?id= GALE%7CA379315024&v=2.1&u=vic_liberty&it=r&p=AONE&sw=w&authCount=1
Blumenstyk, G. (2014, December 15). Hired guns: The consultants. The Chronicle of Higher Education, 61(16), 25. Retrieved from http://search.ebscohost.com.ezproxy.liberty .edu:2048/login.aspx?direct=true&db=a9h&AN=99996376&site=ehost-live&scope=site
Chao, C. (2005). Toward full participation in management consulting practice. Education + Training, 47(1), 18–30. doi:10.1108/00400910510580601
Compass Higher Education Consulting CHEC launches. (2012, August 29). Education Letter. Retrieved from http://search.proquest.com.ezproxy.liberty.edu:2048/docview/1034571180
Consulting. (2012). In S. D. Hill (Ed.), Encyclopedia of management (7th ed., pp. 169–171). Detroit: Gale. Retrieved from http://go.galegroup.com.ezproxy.liberty.edu:2048/ps/i.do?id=GALE%7CCX4016600062&v=2.1&u=vic_liberty&it=r&p=GVRL&sw=w
Dean, D., & Secor, C. (2003, January). How to launch and grow a consulting practice. Women in Higher Education, 12(1), 8. Retrieved from http://go.galegroup.com.ezproxy.liberty .edu:2048/ps/i.do?id=GALE%7CA96254761&v=2.1&u=vic_liberty&it=r&p=AONE& sw=w&asid=233abd3aebdfa125e3a8c0d4a58d69a0
Finlay, W. (2013). Headhunters. In V. Smith (Ed.), Sociology of work: An encyclopedia. Thousand Oaks, CA: SAGE Publications. Retrieved from http://literati.credoreference.com.ezproxy.liberty.edu:2048/content/entry/14166941
Huron Consulting Group adds higher education change management and HR expert. (2013, February 6). Education Letter. Retrieved from http://search.proquest.com.ezproxy.liberty.edu:2048/docview/1282589702
Huron Consulting Group adds higher education expert. (2011, November 12). Investment Weekly News. Retrieved from http://search.proquest.com.ezproxy.liberty.edu:2048/docview/901354569
Richter, A., & Schmidt, S. L. (2006). Antecedents of the performance of management consultants. Schmalenbach Business Review, 58(4), 365–391. Retrieved from http://search.proquest.com.ezproxy.liberty.edu:2048/docview/219607704
SIC 8742: Management consulting services. (2011a). In Encyclopedia of global industries (5th ed., pp. 949–959). Detroit: Gale. Retrieved from http://go.galegroup.com.ezproxy.liberty.edu:2048/ps/i.do?id=GALE%7CCX1930300126&v=2.1&u=vic_liberty&it=r&p=GVRL&sw=w
SIC 8742: Management consulting services. (2011b). In L. M. Pearce (Ed.)., Encyclopedia of American industries (6th ed., Vol. 3, pp. 3055–3061). Detroit: Gale. Retrieved from http://go.galegroup.com.ezproxy.liberty.edu:2048/ps/i.do?id=GALE%7CCX1930401010&v=2.1&u=vic_liberty&it=r&p=GVRL&sw=w
TABB Education launches consulting and research service delivering management and operational solutions to higher education institutions. (2011, June 4). Investment Weekly News. Retrieved from http://search.proquest.com.ezproxy.liberty.edu:2048/docview/868478475
Zaccaro, S. J. (2007). Executive selection. In Encyclopedia of industrial and organizational psychology. Thousand Oaks, CA: SAGE Publications. Retrieved from http://literati.credoreference.com.ezproxy.liberty.edu:2048/content/entry/sageindorg/executive_selection/0
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