However, while these changes in an organisation can be difficult for the employees (no one likes to see collegues lose their jobs), senior management often dont cut back on their pay packets or their perks, thereby creating an us and them culture in a business.  If senior management don’t walk the talk, they run the risk of undermining the culture of a business.

I was chatting the other day with a friend who was reflecting on what was happening in the business that he worked for.  He was talking about the “death by a thousand cuts” approach management was taking to making people redundant.  He said it felt like every week someone was let go and he was just wondering when it would be.  Funnily enough, he said that a number of people in the business were holding out just to get a package – amazing what people do.

However, in the same breath he mentioned that he felt like there was one rule for the senior management and another for everyone else.  Senior management were known for always travelling business / first class (even on the shortest of trips), using limo’s rather than taxi’s, only staying at the best hotels and dining at the best restaurants.  He also mentioned that he had heard of one manager ensuring his international trips went over weekends and then using that weekend as a company paid skiing holiday.

While management often do work hard, they must remember that they are not playing with their own money but the shareholder’s money.  Every dollar not spent by the company can be used to retain employees, not passed onto the customers in the form of price increases, or can be returned to the shareholders in the form of a dividend.

I always remember a what a Director at McKinsey and Co said to us young consultants about something as trite as breakfast.  He said that we should have breakfast in a cafe on the way to a client’s offices rather than in the hotel.  Why, because it is essentially the same food at less than half the price and why should the client pay for our laziness?  And he was right.

So what should management do?  Well first and foremost it should walk the talk.  If they are trying to drive down the costs of a business, they should start with how they operate.  They should be seen to be reducing their own spend and doing things more cheaply.  Fly economy class.  Take taxi’s rather than limo’s.  Eat at good but not the best restaurants.  Stay of 4 star not 5 star + hotels.  And most importantly, don’t take liberties with shareholder’s money.

It can be hard to justify price increases to customers when management may be seen to be indulging a little too much from the corporate trough.

First i have to come clean.  I spent just under 5 years with global management consultants McKinsey & Co in the late 90′s and do have a new consulting business, Classified Ad Ventures, that provides online classified businesses with advice and guidance on what to do next.  That said … on with the discussion!

There are two types of consultants – those that are there to help management think through problems by bringing in specific expertise and those that are there to work with existing staff for a a specific project (e.g. customise SAP).  My comments are really around the first group – the strategic and operational advisors to management.

Management walk a fine line when they use consultants.  When used well, consultants can help a management team see clearly what they need to do.  When not used well, they chew up time, resources, set unrealistic expectations and merely restate what the management team already knew – but in a neat story and with nice charts! 

The best use of consultants usually involves a clear problem that needs solving, the problem being the most important to the business, and a management team that has knows what it wants to do and has the ability to do it.  The consultants challenge the current thinking with a goal of delivering a more robust outcome.  The consultants need to have strong subject matter expertise to make sure that the management team doesnt spend heaps of time bringing them up to speed. 

However, uing consultants has downsides and often it is the downsides that eventuate.  One downside is that consultants become a crutch for a business.  The management team relies on them more than the internal team as they are the “experts”.  It can get to the more ridiculous situation where management cant make a decision without consulting the consultants first – i have seen it!

Another downside is that once the consultants are in a business, management tend to rely on them rather than the team who are employed there.  This can create a division and a perceived lack of trust between the management team and the empoyees.  As the employees often have to implement the recommendaions of the consultants (if they get implemented), this can lead to “white anting” of a series of recommendations.

Another downside is that expectations are raised to unrealistic levels.  The consultants present to the Board – either directly or indirectly – what a business could in theory do and the Board latches on to these opportunities and then starts to think that the management team should be able to achieve them.  The problem is that most management teams that are good dont use consultants – they just get on with it. 

A final downside with using consultants is that they are often very smart people who have strong logical minds but have not actually run a business of the size they are consulting to.  They are passionate but not necessarily qualified in some of the things they are making recommendations on.

So when should you use consultants?  That is clear – use them on specific projects that need some sort of change implemented that the current management just cant make happen.  For examle, they can be used at the mid-manager level on projects such as cost reduction.  The discipline they bring to the problem will help achieve greater results than if left internally. 

They should also be used when management is entering unchartered waters and know that they are out of their depth.  The consultants should have deep industry expertise and experience and should focus on short and sharp recommendations.

The bottom line is that if the management team knows what it is doing and is tight knit, they probably wont need to use consultants – they will intuitively know what to do and will just get on with it!

What specific turning points (sudden or gradual) moved you significantly forward along your path moving up the corporate ladder towards becoming a CEO? Secondly, what was the first thing you did coming out of college or grad school that got you set on a path of success/progression? Or, were there initial obstacles that you had to deal with?

So the first question … first!!  The biggest turning point was taking a risk.  I saw an opportunity to run a company and i made a sales pitch to the board, had the incumbent sacked and took over running the business.  I made my own luck.  If i had not taken the risk and made a pitch to the board – the safety net would not have appeared and i would not be typing today.

As for the second question – the first thing i did after college was going into sales with IBM. This was a great start as i learned to sell – computers, myself, everything.  From this i was able to understand what makes a sales person tick — no sales, no revenues – therefore this is probably the most critical skill i learned.

I also did an MBA and went to work for McKinsey and co for 4.5 years … this is much better than an MBA.  Management consulting (for a short period of time) is a great lesson.  Too long and you just become so detached from the real world!!!

There you go … some more about me.