'On the inside track' - internal consultants and consultancies in the UK

Why internal consultancies? - the background to our study
Using a 'consultancy' approach used to be the hallmark of external advisors, but an increasingly common trend has been to set up internal consultancies. Functions which used automatically to provide a given service within an organisation now find that they have lost this positional power. They have to identify and encourage demand, and be 'client-centred' in relation to internal customers. Almost all the participants on the Halcyon Group's Core Consulting Programme used to be externals, now the majority are people working within organisations who need to harness the energies of teams and colleagues without the old hierarchical structures.

As a way of finding out more about the trend towards internal consultancies, in 1995 we studied them in eighteen UK organisations. The sectors represented were: manufacturing, telecommunications, retail, public sector, media, energy and financial services. The internal consultants' functions included training, organisation development, marketing, information technology and public relations. The size of the consultancies ranged from single consultants, to a group of around 30 members. In our interviews we looked at the origins of the internal consultancies, their activities, and how they operated. We asked internal consultants what they had learned, and what lessons they would pass on to others. Our detailed findings are set out in our report 'On The Inside Track'.

What we found
Topics in the results of the interviews which were of particular interest included:
· change strategies;
· the organisational development of the internal consultancy;
· the influence of organisational culture; and
· relationships.

Often we found that new internal consultancies did not necessarily have a clear strategy for changing customers' perceptions about them. People working within an organisation just knew what they needed to do to influence their colleagues. But there were indicators of changes in approach such as: organisational restructuring, skill reviews, and physical symbols such as a new location, or a business manual. Internal consultants tried to achieve early successes for those whom they thought would be allies, and they worked at building new relationships - finding new routes into the organisation, and making contacts at new levels. Experimentation was important - try it and if it works, institutionalise it.

There was a variety of emphasis on the organisational development of the consultancy, depending on its size and culture. Some described strategies which included taking time to establish themselves and grow. In other cases OD was much more ad hoc. The concept of teamwork raised interesting questions, such as whether the consultancy was a team, and which team, if any, the consultants felt part of. Training and development ranged from process consulting to technical skills, and from links with academic institutions to in-house programmes and on-the-job training. Pressure of time and money was an issue, as was the need to meet a range of needs across fairly small numbers of people.

There was a mass of information about the influence of organisational culture, yet we did not find a specific culture which was especially conducive to internal consultancies. There were, however, helpful and hindering cultures with which consultants had to work. The consultants found themselves walking a tightrope between following cultural norms and challenging them in order to bring about change. Often it was people who had grown up in the organisation who were best able to do this successfully.

Establishing and maintaining relationships emerged as an essential skill. For internal consultants it was the way to get work, make progress, influence and learn. They said that what helped in building relationships was to use the right jargon, to make contacts at the right level of seniority, to develop personal networks, to use technical expertise, and to make it fun. What hindered was not sufficiently matching the organisational culture, a lack of senior awareness about them, staff turnover and organisational restructuring or mergers.

After the individual interviews, we held a workshop with all the contributors, and found they were reassured to learn that they all faced similar dilemmas. It quickly became clear that there are no simple answers; each consultancy has to work out its own way forward. This is reflected in key questions we subsequently developed for those who are setting up or running an internal consultancy.

The current picture and where next ?
We have been surprised at the rapid changes which have taken place since we began our study. For more than half the people we spoke to, the current picture is very different from the one they described. Many individuals have moved on, some to other parts of the organisation (such as being devolved to business units), others have left altogether. Some consulting roles were attached to particular initiatives which have now ended. One consultancy was acquired by a large consulting firm, another was dismantled when the organisation as a whole was merged.

The speed of change has further implications for new internal consultancies. It became very clear in our study that the need to spend time developing relationships and formulating written and psychological contracts is critical to success, yet achieving this in a rapidly changing environment may be impossible.

The temporary nature of internal consultancy arrangements is striking. Individuals and the organisation had only just gone through the transition to a consultancy when they had to meet further changes. Therefore it seems unlikely that the organisation gained any actual benefit from the move to an internal consultancy. The consultants had barely reached a point at which they were able to perform effectively. Yet in current and future organisations with fluid structures and with new philosophies of empowerment and teamworking, the need for individuals and groups who can operate with a consultative approach is increasingly important. Treating internal consultancies as just another management fad may be to dismiss an excellent means of making an organisation work well.

Copies of our report 'On the Inside Track' are available for £25.00 plus VAT. 

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