Sunday, May 30, 2010

Consultant Insurance

Why do companies with experienced staff, having experts with years of background in their business’ intricacies, hire consultants, whose staffs are rife with youngsters just out of business school?

Companies already have their own experts who know their business intimately. They invariably study their operations from every angle, on an ongoing basis.

My conclusion has always been that these wet-behind-the-ears, often newly-minted consultants have always been a form of business insurance. Even though their ”fresh look” can be amateurish.

It’s much the way investment bankers are called on for advice. They, too, are often relatively inexperienced. They may know Wall Street lingo, but have little knowledge of the business in which they poke.

The business insurance rationale? When confronted by plaintiff lawyers, you can say you tried. You have taken adequate precautions in your duties as a manager by using consultants.

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