Happenings on the Hill – How will the changes around the big four consulting firms impact my organisation?
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Welcome to Happenings on the Hill – Happenings on the Hill is a fortnightly column specifically for the Third Sector by government engagement expert Neil Pharaoh, Director & Co-Founder of Tanck.
I was speaking to a CEO at a not-for-profit the other day who wanted to understand the impact of the PWC scandal and Senate inquiries into consulting would have on their advocacy and policy work in government. She reflected on the benefits some of the small not-for-profit and social purpose organisations got from working with the big consulting firms – often things like pro-bono or low-bono services and access to specialist insights and skills. Most of our discussion was however focused on the disadvantages – the outsourcing of the public service, the huge conflicts of interest which arise, the access these firms have across decision-makers in departments to adjust and shift policy outcomes, and most tellingly the self-interest drive of many people involved in the firms.
Taking a step back, let’s look at how we got into this position. Prior to the Howard Government, consulting in the public service was a small business, with a few specialised firms doing niche-focused work. The first big acceleration of contracting occurred soon after Howard came to office. This, arguably, could be for a few reasons – a primary reason is that blunt instruments such as headcount freezes, hiring freezes, etc. meant that many government departments could not replace key and critical staff, meaning they had to look elsewhere to complete their work. This same reason caused the very rapid acceleration under the former LNP government – where headcount freezes meant consultants became the ‘go to’. A second reason is that consultants are often more ‘pliable’ than public servants – if you are paying their bill, as opposed to being an employee, you are more dependent on your masters and therefore more willing to adjust recommendations to suit. The “frank and fearless” public service has been in a near terminal decline for around twenty years, despite some great people fighting to retain these critical values.
So, the long history of consulting firms really goes back only a couple of decades, but already has become an insipid and somewhat insidious undermining of key democratic systems and checks and balances. You can look at recent news stories and articles talking about the lack of regulation, or the ‘money first’ philosophy of some of these firms to see this in action.
With multiple government comments about reducing the dependency of the public service on the big consulting firms, and bringing back skills in-house, coupled with the extreme implosion of PWC – it seems like logic will prevail and we may see substantial improvement in the public service capacity, and capabilities from within – as opposed to from outside. This can only be a good thing for public policy and policy outcomes.
So, what does this mean for your organisation? There are three main opportunities that come from this space for not-for-profit and social-purpose organisations.
Firstly, many not-for-profits have deep expertise, knowledge and insights about the field in which they operate—much more than a first- or second-year uni grad in a consulting firm being body shopped into a government department for hundreds of thousands of dollars per year. Think about what your key insights, skills, content knowledge and expertise are – and spend the time doing research to see which parts of the public service will value and benefit from your insights and skills. These areas may often be outside those who run your contract, or who are your key department contact, so dig deep as most departments have strategic policy, coordinating functions, insights divisions and research areas.
Secondly, be clear about the areas you work in, and the areas you do not. It is often much harder to say “we don’t have an opinion in that space” than to roll with an answer. But showing your depth and expertise will be critical. Once you have found your niche or point of difference when it comes to policy and public affairs, ensure all the stakeholders in that space know that it is you. Even little things like letting public servants know you have expertise in XX or presenting at a conference in YY may assist in building a profile and assisting in rebuilding the public service fully.
Thirdly, be cautious about the big four on your own organisation, whether for audit, risk work or pro-bono, while I am not advising you to stop all the pro-bono or low-bono (or even paid) work with consulting and advisory services, appreciate the fact that the government will be particularly wary of reports coming from big consultancies for a wee while, and you do not want to accidentally be utilised to provide a positive halo to a firm.
My final, and perhaps most important reflection is that not all big consulting firms are the same, and some are more inclined to public policy outcomes, and your values in a true sense. I have always been pleasantly surprised by the focus on the not-for-profit and social purpose sector in Deloitte for instance, who seems to be more engaged in big, interesting policy challenges for the public good. This contrasted to experiences in another big four firm where sexism, bullying and harassment were so common, and yet the Partners guilty of such activities kept getting promoted simply because they make the firm lots of money.
Neil Pharaoh has spent most of his voluntary and professional life in and around social purpose organisations, government, public policy, and advocacy. Neil has been behind many leading social policy and advocacy campaigns on gender rights, equality, medical research, and education, and ran for Parliament in Victoria in 2014 and 2018. Neil is co-founder and director of Tanck, which focuses on better engagement with government, and regularly runs workshops and advocacy sessions and advises leading social purpose organisations on their government engagement strategy and systems.
