Management Consultants Thinking Small

Small- and mid-sized companies in Germany are avoiding big management consultants in favor of smaller advisors willing to commit years to a project.
Uzin Utz has spurned consultants that pour it on thick.

No one wants to hear academic explanations about a building site. Thomas Müllerschön, a board member of the building supplies maker Uzin Utz in the southern German city of Ulm, prefers getting to the crux of the matter quickly.

“If someone wants to lose weight,” he said, “a scale is the most important tool.”

Mr. Müllerschön wants his company to trim down, so he took on management consultants, but not the usual kind of advisors. He hired Keylens Management Consultants Munich, a firm focusing on Germany’s small- to mid-sized companies, known as the Mittelstand. They have committed themselves to work with Uzin Utz for three years – having them jump in, help restructure and jump out was not acceptable to Mr. Müllerschön.

“The initial steps are simple,” he said. “But for me, it is important the partner stays on when things get critical.”

The contract Mr. Müllerschön signed with Keylens is not a standard deal. The consulting firm will charge a basic but modest fee for its services, but also will take a percentage of any profit increases the project generates. Basically, it will be financially worthwhile to Keylens only if the concept is successful over time.

More Mittelstand firms are getting choosier about how they select consultants and a growing number echo Uzin Utz in voicing disappointment with major players in the field. For example, Ralf Schmid, manager and owner of Uniwheels, one of the largest producers of lightweight metal wheels in Europe, said that employees from large consulting firms will never set foot in his company again because they don’t share his business goals.

The firm, which has revenues of €400 million ($435 million), has no interest in becoming permanently dependent on a consulting firm, which he said is often the goal of larger players.

He’s not alone in his criticism. One business owner requesting anonymity said: “A consultant is transferred into the company and he is followed by more and more ex-consultants. It’s almost like a cult.”

No one at the company is forced to drastically change anything. At most, the estimated 1,000 employees are being encouraged to think a little.

Mr. Schmid has hired Horvath Management Consultants in Stuttgart. The structural fit between the company and consultant are a better match, he said, noting Horvath tackles clearly defined, limited tasks at Uniwheels.

Michael Winter, managing partner at Uvex, isn’t philosophically opposed to large consultancies, but the boss of the safety products company simply can’t afford them. Instead, he puts his trust in smaller consultancies.

Uzin Utz and Keylens began working together last summer on a program named “Ebit+.” Mr. Müllerschön wants more profits and growth, yet he also wants to cut costs throughout company and for each individual employee. Keylens experts studied workstations and work procedures, then created a "map" illustrating the potential of each employee. The idea? Where can more be gained for less?

No one at the company is forced to drastically change anything. At most, the estimated 1,000 employees are being encouraged to think a little. For example, the firm's drivers were recently instructed to avoid buying gas during rush hour and, whenever possible, to fill the tank when gas is cheap. Since the company uses 800,000 liters of fuel per year, those small adjustments will yield a considerable sum.

In addition, overnight stays in hotels are now allowed only when employees are far from home, and overseas appointments are better coordinated so that less flying is required. In fact, Mr. Müllerschön no longer flies to a company sales meeting in the United States every year, and instead produced a short film to present at the last meeting. He said it went down well with attendees.

So far, the results of the collaboration with Keylens are gratifying. According to Mr. Müllerschön, the return on sales of the publicly traded company has risen from 3.1 to 4.9 percent, but that doesn’t mean the project is finished. “We are now regularly two, three, sometimes four days on location,” said Keylens’ managing partner Stephan Schusser.

Mr. Müllerschön is enthusiastic and happily pays the profit sharing for Keylens, though neither he nor executives at the consultancy will provide details. “The more the consultants get, the happier we can be,” he said.

The deal has also been personally rewarding for Mr. Müllerschön. At the end of year, he will move from the management board to become chief executive officer. Keylens is also basking in its success. “We have just now won a contract over larger consultancies,” Mr. Schusser said. “Because we don’t just do the strategy, but we stay on for three years.”

 

Martin Buchenau and Joachim Hofer are reporters for Handelsblatt. To contact the authors [email protected] and [email protected]