Industries & Professions /
Governments, companies, and other organizations have sought the advice of experts for thousands of years. The roots of modern consulting began in the late 1800s and early 1900s. Pioneers in the field include Arthur D. Little, Frederick W. Taylor, James O. McKinsey, Edwin G. Booz, and Frank and Lillian Gilbreth. Arthur D. Little is considered by many to be the first management consulting firm. It was founded by a Massachusetts Institute of Technology professor of the same name in 1886 (and incorporated in 1909). Frederick W. Taylor was the creator of the “efficiency cult” in American business. He invented the world-famous “differential piecework” plan, in which a productive worker could significantly increase take-home pay by stepping up the pace of work. Taylor’s well-publicized study of the Midvale Steel plant in Pennsylvania was the first time-and-motion study. It broke down elements of each part of each job and timed it, and it was therefore able to quantify maximum efficiency. Taylor earned many assignments and inspired James O. McKinsey, in 1910, to found a firm dealing with management and accounting problems. Edwin G. Booz founded Booz Allen Hamilton in 1914. It was the first firm to serve both business and government clients. Frank and Lillian Gilbreth developed time-and-motion studies to evaluate the efficiency of industrial employees’ work habits. They were hired to survey the design of different companies and then prepare proposals to redesign the methods used in their operations and tasks. Because of the demand for their specialized service, Frank Gilbreth started a consulting firm that handled requests on a freelance basis.
Some of the earliest consulting firms were born as a result of communication needs. In 1906, a reporter named Ivy Ledbetter Lee was named press representative for coal mine operators. The operators had problems with the press. Lee convinced the mine operators to respond to press questions and to supply the press with information on mining activities. After his role in the successful turnaround of the coal mine situation, Lee went on to work for the Pennsylvania Railroad Company, the wealthy Rockefeller interests, and other clients, establishing himself as a public relations expert.
Governments and corporations also became regular users of consultants in the earlier years. In the 1930s, the Great Depression created demand for consultants to help businesses survive and prosper during this difficult economic period. The passage of the Glass-Steagall Banking Act in 1933 mandated a variety of banking reforms, which also created demand for consulting firms. During World War II, government agencies made a point of hiring publicity consultants since positive public exposure prompted congressional awareness and aided in fundraising. Consultants also played a key role in providing advice to the government regarding armaments manufacturing and other important wartime production. In the years after World War II, the field of consulting gained respect as a result of its contributions to the successful war effort.
Consulting soon found its way into politics. Candidates running for office needed experts to communicate with the media to develop positive public images preceding an election. Hiring a full-time staff member with expertise in polling, for example, would be too expensive; however, hiring a consultant to work only during the pre-election period provided an excellent alternative. In the 1950s, Dwight Eisenhower hired advertising specialists to design effective ad campaigns. At the time, it was a new and relatively radical method of running a campaign, but one that has continued today. After Richard Nixon’s unsuccessful bid for the presidency in 1960, he hired public relations and press consultants to help him regain popularity in his bids for elected office. With their help, he was able to reestablish a positive image among voters and was elected president in 1968. Today, high-priced political consultants work on all of the major political campaigns.
In the 1970s, consulting services became extremely popular, and many consulting firms opened offices in foreign countries. The emergence of the personal computer in the 1980s and the Internet in the 1990s created strong demand for information technology consultants. Increasingly strict tax laws and government regulation on businesses and financial services caused rapid growth in tax and accounting consultancy firms. Demand also increased for consultants as a result of the passage of the Sarbanes–Oxley Act of 2002, which addressed accounting and corporate governance scandals and placed stricter controls on corporations and the accounting industry.
As the arena of consultants has expanded, hiring specialists has become an established business practice. It is more cost effective to hire a specialist temporarily rather than hire a full-time, salaried employee. Plus, consultants who have previously worked for other companies in the same field bring additional experience and insights to the project. Today, consulting services have become a key resource for the business world, government agencies, and nonprofit organizations.