Since the beginning of the economic downturn way back in 2008, few departments within businesses have gone through the same degree of change and acceleration as human resources has. HR directors the world over had to face and make difficult decisions. Besides, the rethinking of remuneration strategy, the need for bouts of redundancies, the desperation of employers to secure the highest possible calibre of employee talent, together with the need to effectively manage change within the business, have brought HRDs to the board table to prove their strategic relevance to the organisation, their resourcefulness and finally their capacity for innovation.

In his article entitled “HR Consultants Uncovered: Recognition of each other’s strengths makes for a good HR consultancy relationship”, David Woods of HR Magazine explains that despite the fact that many believe that the economic recession has been the finest hour for dynamic people strategy, evidence shows that a growing number of HR professionals have during this period looked to consultants for advice and to guide them through the aforementioned challenges.

In support of his argument, Woods makes reference to the US-based Kennedy Consulting’s examination of HR consulting markets worldwide in 2012 which has revealed that cost management and regulatory reform are driving a rise in spending related to HR consulting. In fact, the market research company IBIS World has found that in 2012, in the US alone, there were 81,784 HR consultancies in existence, employing 201,188 staff − and together they have pulled in $25 billion over the last five years. However, it is not just the big organisations that are making the money, emphasises Woods. In fact, the IBIS World study found that three-quarters of the revenues are coming through the smaller consultancies, which employ five people or less.

In addition, the Kennedy study of global consultancies – which includes Accenture, Aon Hewitt, Buck Consultants, Deloitte, Hay Group, IBM, KPMG, Mercer, NorthgateArinso, PwC and Towers Watson − attributes ‘dramatic growth’ in the human capital management space to employers striving to realise appropriate staffing levels, while at the same time planning for future demand and addressing the challenges associated with dealing with a multi-generational workforce. Woods continued to explain highlighting the fact that employers today are seeking more efficient structures to quench their thirst for effective global HR departments, as well as making a greater use of technology and analytics within their HR processes.

Finally, Woods explained how the HR consulting sector recently experienced consolidation and unprecedented M&A activity, with organisations like Towers Watson, Aon Hewitt, Mercer, Penna and Oracle completing high-profile mergers in the past three years. This, according to Woods, serves to underline the potential for big money to exchange hands and big deals to be made on the back of the investments from HR directors. Having said that, Wood questions as to whether these consultants are making the money from employers who could easily do the work themselves. Here he points to the UK where 90 per cent of consultants surveyed by the Institute of Consulting (IC) said that their clients had been previously let down by consultants who had over-promised, failed to add value, lacked the right skills and charged too much. In this regard, Huw Hilditch-Roberts, director in charge of the IC, asserted: “Many employers have had a bad experience finding consultants they can trust − and who deliver results.”

Moreover, Annie Hazelrigg, client director at HR and performance consultancy DPA, argued that, “Consultancy is a broad church and classic consultancy is not as clear as it often could be. Ultimately, as a client, you are paying the consultant for their time. But HRDs need to be sure about what they are looking for: do they want consultancy − or do they want the consultant to actually deliver a project? So there are two flavours of consultancy − those that are open and interested in sharing ideas and those who just want to get things done.”

James Miller who has worked as an HR consultant in the past, but returned to in-house HR roles, commented that: “The role of HR consultants is important. But failures happen when they present a strategy to the HR director, who then polishes it and takes it to the board as their own. If this programme rolls out and fails, the HR director will have to look into a new strategy in 18 months and both the consultant and the HRD lose credibility.”

“The HRD is a generalist and can’t take an objective view of their business, in many cases. Here, consultants can bring an outside view and in-depth knowledge and research - this is especially true of small businesses that don’t have an HR department and need this expertise,” Miller added.

“But unless the client challenges the consultant with their own knowledge of the business and works with the consultant, they will be unable to truly believe in and champion the consultant’s suggestions − the strategy could turn out to be nothing more than a re-brand of someone else’s HR plan,’’ Miller concluded.

On the other side of the divide, Woods makes reference to Angela O’Connor, founder and CEO of her own consultancy, the HR Lounge. O’Connor admits that having been an HR director herself she has made mistakes in working with some consultants, she said: “I have had negative experiences, because they have wanted to implement an off-the-shelf product; or, having been pitched by a senior team, I found a more inexperienced consultant arrived to deliver the work.”

“But HRDs working with consultants have to know what they want. It has to be a collaborative relationship. Sometimes, clients tell me they know they have an issue in their business, but they don’t know what it is. The relationship needs to be based on knowledge transfer, because there are bits of strategy the HRD can do alone and they won’t need consultants for,” O’ Connor maintains.

“Clients will be nervous about bringing in a consultant. They might feel they are failing in their job, but they will have to carefully consider if they want every product the consultant is suggesting. The consultant should remember the relationship is based on the client’s needs and not their own. They are not the HRD; they are there to guide, not to make decisions about the final direction. That role lies with the HR director,’’ she concludes.

Brett Walsh, global leader for human capital at consultancy Deloitte, admits his organisation has experienced growth in the UK and abroad during the economic downturn. However, Walsh is careful to emphasise the difference between consulting and putting ‘blanket’ processes or ‘off-the shelf’ solutions in place within organisations.

“I don’t recognise that Deloitte puts ‘blanket’ initiatives in place. We are not a provider selling products and services to HR directors and as such we wouldn’t be involved in providing salary data, coaching and skills or leadership training. We can introduce HRDs to new delivery methods and we can help organisations transform HR.”

“But, while I wish we could use the same toolbox for every organisation, the stakeholder management in each company will be completely different, so we have to change the shape of our tools every time we work with an organisation, because no two are the same,” Walsh maintains.

So if the rise in consultancy involvement is a symptom of the importance HR is being seen to be playing globally, then it becomes the responsibility of the HR director himself in ensuring that their relationship with the consultant is managed proactively, highlights Woods.

Finally, DPA’s Hazelrigg agrees that the role of the HRD is vital in setting out the boundaries for a consultancy relationship.

“Consultancy is a practice − it is an art − but no amount of knowledge transfer between consultant and client can substitute the work of the HRD.’’

“Consultancy is about empowering people and we work with some brilliant HRDs that have their finger on the pulse of the organisation. We bring in the ‘stuff’ and they ‘stir’ it into the business. This last mile must always lie with the HR director,’’ Hazelrigg concluded.

Ms Camilleri is a researcher at the Foundation for Human Resources Development (FHRD)