Why management consultants really do add value

Several things flow from this. Only actuaries have more disparaging jokes told about them, which suggests first that the industry has an image problem and, second, that no one is quite sure what it does.

Everyone can see the costs but are less certain about the benefits.

Hence the bad joke that a consultant is someone who borrows your watch to tell you the time; or that the central purpose of any bit of consultancy is to sell a client the next bit of consultancy.

And while we are on the subject I did once meet a consultant whose pitch was that he was better equipped than the client to judge the quality of work of consultants so he should be employed to do that.

Now in good times none of this matters very much because there is enough money sloshing around for businesses not to penny-pinch and for consultants to make a good living.

In recession it gets tougher because consultancy is one of the easiest things to cut, particularly if what it contributes is unclear.

Mindful of this, the Management Consultancy Association, reinvigorated since Alan Leaman arrived as chief executive from the Association of British Insurers, decided to bite the bullet and commission Tim Morris, Professor of Management Studies at Oxford, to conduct a study of consultants' value.

The results were startling: some 58% of clients said they were satisfied with the work consultants did and estimated that their work was worth between two and 20 times as much as it cost. Most settled on between eight and 12 times.

Averaging this out and taking into account other projects where the value is equivalent to the price — presumably the less-satisfied customers — then the MCA reckons that the benefits provided by clients are around £6 for every £1 spent. This comes out at an impressive £56 billion.

Perhaps it's time to kill the jokes.