Management consulting
Encyclopedia
Management consulting indicates both the industry and practice of helping organizations improve their performance primarily through the analysis of existing organizational problems and development of plans for improvement.
Organizations hire the services of management consultants for a number of reasons, including gaining external (and presumably objective) advice and access to the consultants' specialized expertise.
Because of their exposure to and relationships with numerous organizations, consulting firms are also said to be aware of industry "best practices", although the transferability of such practices from one organization to another may be problematic depending on the situation under consideration.
Consultancies may also provide organizational change management
assistance, development of coaching skills, technology implementation, strategy development, or operational improvement services. Management consultants generally bring their own, proprietary methodologies
or frameworks to guide the identification of problems, and to serve as the basis for recommendations for more effective or efficient
ways of performing work tasks.
as a unique field of study. The first management consulting firm was Arthur D. Little
, founded in 1886 by the MIT professor of the same name and was incorporated in 1909. Though Arthur D. Little later became a general management consultancy, it originally specialized in technical research. Booz Allen Hamilton
was founded by Edwin G. Booz
, a graduate of the Kellogg School of Management
at Northwestern University
, in 1914 as a management consultancy and the first to serve both industry and government clients.
The first wave of growth in the consulting industry was triggered by the Glass-Steagall Banking Act in the 1930s, and was driven by demand for advice on finance, strategy, and organisation. From the 1950s onwards consultancies not only expanded their activities considerably in the United States but also opened offices in Europe and later in Asia and South America. After World War II, a number of new management consulting firms formed, bringing a rigorous analytical approach to the study of management and strategy. Work done at McKinsey, Boston Consulting Group
, AT Kearney, Booz Allen Hamilton
, and the Harvard Business School
during the 1960s and 1970s developed the tools and approaches that would define the new field of strategic management
, setting the groundwork for many consulting firms to follow. In 1983, Harvard Business School's influence on the industry continued with the founding of Monitor Group
by six professors.
The industry experienced impressive growth in the 1980s and 1990s, gaining considerable importance in relation to national gross domestic product
. In 1980 there were only five consulting firms with more than 1,000 consultants worldwide, whereas by the 1990s there were more than thirty firms of this size.
An earlier wave of growth in the early 1980s was driven by demand for strategy and organisation consultancies. The wave of growth in the 1990s was driven by both strategy and information technology advice. In the second half of the 1980s the big accounting firms entered the IT consulting segment. The then Big Eight, now Big Four, accounting firms (PricewaterhouseCoopers
; KPMG
; Ernst and Young; Deloitte Touche Tohmatsu
) had always offered advice in addition to their traditional services, but from the late 1980s onwards these activities became increasingly important in relation to the maturing market of accounting and auditing. By the mid-1990s these firms had outgrown those service providers focusing on corporate strategy and organization. While three of the Big Four legally divided the different service lines after the Enron scandals and the ensuing breakdown of Arthur Andersen, they are now back in the consulting business.
The industry stagnated in 2001 before recovering after 2003.
The current trend in the market is towards a clear segmentation of management consulting firms.
Marvin Bower
, McKinsey's long-term director, has mentioned the benefits of a consultant's externality, that they have varied experience outside the client company.
Consultants have specialised on tasks that would involve high internal coordination costs for clients, such as organisation-wide changes or the implementation of information technology. In addition, because of economies of scale
, their focus and experience in gathering information worldwide and across industries renders their information search less costly than for clients.
being considered the most well-known practitioner. The consulting firms listed above are closer toward the expert approach of this continuum.
Many consulting firms are organized in a matrix structure, where one 'axis' describes a business function or type of consulting: for example, strategy, operations, technology, executive leadership, process improvement
, talent management, sales, etc. The second axis is an industry focus: for example, oil and gas, retail, automotive. Together, these form a matrix, with consultants occupying one or more 'cells' in the matrix. For example, one consultant may specialize in operations for the retail industry, and another may focus on process improvement in the downstream oil and gas industry.
, human resource consulting
, virtual management
consulting and others, many of which overlap, and most of which are offered by the larger diversified consultancies. So-called "boutique" consultancies, however, are smaller organisations focusing upon one, or just a few of, such specialisms.
The 1990s saw an increase in what has been termed a 'future-based' approach. This emphasised language and alignment of people within an organisation to a common vision of the future of the organisation, as set out in the book "Three Laws of Performance". The essential concept here was that the way people perform is seen to correlate to the way that world occurs for them, and that future-based language could alter the way the future actually occurs for them. These principles were increasingly employed in organisations which had experienced a market transition or a merger requiring the blending of two corporate cultures. However, towards the end of the 1990s the approach declined due to a perception that the concept outlined in this book did not in practice offer added value to organisations.
Currently, there are three main types of consulting firms. Large, diversified organizations, Medium-sized management consultancies and Boutique firms which have focused areas of consulting expertise in specific industries, functional areas, technologies, or regions of the world.
basis, billing staff consultants out based solely on the hours worked plus out-of-pocket expenses such as travel costs. During the late 1990s and early 2000s, there was a shift to more results-based pricing, either with fixed bids for defined deliverables or some form of results-based pricing in which the firm would be paid a fraction of the value delivered. The current trend seems to favor a hybrid with components of fixed pricing and risk-sharing by both the consulting firm and client.
An industry structural trend which arose in the early part of the 21st century was the spin-off or separation of the consulting and accounting units of the large diversified professional advisory firms most notably Ernst & Young, PwC and KPMG. For these firms, which began operation as accounting and audit firms, management consulting was a new extension to their organisation. But after a number of highly publicised scandals over accounting practices, such as the Enron scandal
, these firms began divestiture of their management consulting units, to more easily comply with the tighter regulatory scrutiny that followed. In some parts of the world this trend is now being reversed where the firms are rapidly rebuilding their management consulting arms as their corporate websites clearly demonstrate.
Internal consulting groups are often formed around a number of practice areas, commonly including: organizational development, process management, information technology, design services, training, and development.
Note: Corporations need to be conscious of and consistent with how internal consultant costs are accounted for on both a project and organizational level to evaluate cost effectiveness.
A group of internal consultants can closely monitor and work with external consulting firms. This would ensure better delivery, quality, and overall operating relationships.
External firms providing consulting services have a dichotomy in priority. The health of the external firm is in aggregate more important than that of their client (though of course the health of their client can have a direct impact on their own health).
(now split from Booz & Company
) has become particularly known now as a consultant that primarily serves the US Federal Government. Deloitte Consulting LLP, amongst others, applies its industry expertise to helping government departments and agencies solve their problems.
The UK has also experimented with providing longer-term use of management consultancy techniques provided internally, particularly to the high-demand consultancy arenas of local government and the National Health Service
; the Local Government Association
's Improvement and Development Agency and the public health National Support Teams
; both generated positive feedback at cost levels considered a fraction of what external commercial consultancy input would have incurred.
, Agriculture Finance Corporation Limited provides consultancy mainly to governments and related institutions.
"Management consultants are often criticized for overuse of buzzword
s, reliance on and propagation of management fad
s, and a failure to develop plans that are executable by the client." A number of critical books about management consulting argue that the mismatch between management consulting advice and the ability of executives to actually create the change suggested results in substantial damages to existing businesses. In his book "Flawed Advice and the Management Trap," Chris Argyris
believes that much of the advice given today has much in it of real merit. However, a close examination shows that most advice given today contains gaps and inconsistencies that may prevent positive outcomes in the future.
Disreputable consulting firms are often accused of delivering empty promises, despite high fees. They are often charged with "stating the obvious" and with lacking the experience on which to base their advice. These consultants bring few innovations, instead offering generic and "prepackaged" strategies and plans that are irrelevant to the client’s particular issue. They may fail to prioritize their responsibilities, placing their own firm’s interests before the clients'.
Another concern is the promise of consulting firms to deliver on the sustainability of results. At the end of an engagement between the client and consulting firms, there is often an expectation that the consultants will audit the project results for a period of time to ensure that their efforts are sustainable. Although sustainability is promoted by some consulting firms, it is difficult to implement because of the disconnect between the client and consulting firms after the project closes.
Further criticisms include: disassembly of the business (by firing employees) in a drive to cut costs, only providing analysis reports, junior consultants charging senior rates, reselling similar reports to multiple clients as "custom work", lack of innovation, overbilling for days not worked, speed at the cost of quality, unresponsive large firms and lack of (small) client focus, lack of clarity of deliverables in contracts, and secrecy.
:Category:Management consulting firms
Organizations hire the services of management consultants for a number of reasons, including gaining external (and presumably objective) advice and access to the consultants' specialized expertise.
Because of their exposure to and relationships with numerous organizations, consulting firms are also said to be aware of industry "best practices", although the transferability of such practices from one organization to another may be problematic depending on the situation under consideration.
Consultancies may also provide organizational change management
Change management
Change management is a structured approach to shifting/transitioning individuals, teams, and organizations from a current state to a desired future state. It is an organizational process aimed at helping employees to accept and embrace changes in their current business environment....
assistance, development of coaching skills, technology implementation, strategy development, or operational improvement services. Management consultants generally bring their own, proprietary methodologies
Methodology
Methodology is generally a guideline for solving a problem, with specificcomponents such as phases, tasks, methods, techniques and tools . It can be defined also as follows:...
or frameworks to guide the identification of problems, and to serve as the basis for recommendations for more effective or efficient
Efficiency (economics)
In economics, the term economic efficiency refers to the use of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another if it can provide more goods and services for society without using more resources...
ways of performing work tasks.
History
Management consulting grew with the rise of managementManagement
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
as a unique field of study. The first management consulting firm was Arthur D. Little
Arthur D. Little
Arthur D. Little is an international management consulting firm originally headquartered in Boston, Massachusetts, United States, and formally incorporated by that name in 1909 by Arthur Dehon Little, an MIT chemist who had discovered acetate. Arthur D. Little pioneered the concept of contracted...
, founded in 1886 by the MIT professor of the same name and was incorporated in 1909. Though Arthur D. Little later became a general management consultancy, it originally specialized in technical research. Booz Allen Hamilton
Booz Allen Hamilton
Booz Allen Hamilton Inc. , or more commonly Booz Allen, is an American public consulting firm headquartered in McLean, Fairfax County, Virginia, with 80 other offices throughout the United States. Ralph Shrader is its Chairman and Chief Executive Officer. The firm was founded by Edwin Booz in...
was founded by Edwin G. Booz
Edwin G. Booz
Edwin G. Booz founded the consulting firm Booz Allen & Hamilton, the predecessor of both Booz Allen Hamilton - which focuses on government contracting - and Booz & Company, a commercial management-consulting firm....
, a graduate of the Kellogg School of Management
Kellogg School of Management
The Kellogg School of Management is the business school of Northwestern University in Evanston, Illinois, downtown Chicago, Illinois and Miami, Florida. Kellogg offers full-time, part-time, and executive programs, as well as partnering programs with schools in China, India, Hong Kong, Israel,...
at Northwestern University
Northwestern University
Northwestern University is a private research university in Evanston and Chicago, Illinois, USA. Northwestern has eleven undergraduate, graduate, and professional schools offering 124 undergraduate degrees and 145 graduate and professional degrees....
, in 1914 as a management consultancy and the first to serve both industry and government clients.
The first wave of growth in the consulting industry was triggered by the Glass-Steagall Banking Act in the 1930s, and was driven by demand for advice on finance, strategy, and organisation. From the 1950s onwards consultancies not only expanded their activities considerably in the United States but also opened offices in Europe and later in Asia and South America. After World War II, a number of new management consulting firms formed, bringing a rigorous analytical approach to the study of management and strategy. Work done at McKinsey, Boston Consulting Group
Boston Consulting Group
The Boston Consulting Group is a global management consulting firm with offices in 42 countries. It is recognized as one of the most prestigious management consulting firms in the world. It is one of only three companies to appear in the top 15 of Fortunes "Best Companies to Work For" report for...
, AT Kearney, Booz Allen Hamilton
Booz Allen Hamilton
Booz Allen Hamilton Inc. , or more commonly Booz Allen, is an American public consulting firm headquartered in McLean, Fairfax County, Virginia, with 80 other offices throughout the United States. Ralph Shrader is its Chairman and Chief Executive Officer. The firm was founded by Edwin Booz in...
, and the Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
during the 1960s and 1970s developed the tools and approaches that would define the new field of strategic management
Strategic management
Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments...
, setting the groundwork for many consulting firms to follow. In 1983, Harvard Business School's influence on the industry continued with the founding of Monitor Group
Monitor Group
Monitor Group is a global management consulting firm headquartered in Cambridge, Massachusetts, United States and with 27 offices in 26 major cities around the world. It provides strategy consultation services to the senior management of organizations and governments...
by six professors.
The industry experienced impressive growth in the 1980s and 1990s, gaining considerable importance in relation to national gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
. In 1980 there were only five consulting firms with more than 1,000 consultants worldwide, whereas by the 1990s there were more than thirty firms of this size.
An earlier wave of growth in the early 1980s was driven by demand for strategy and organisation consultancies. The wave of growth in the 1990s was driven by both strategy and information technology advice. In the second half of the 1980s the big accounting firms entered the IT consulting segment. The then Big Eight, now Big Four, accounting firms (PricewaterhouseCoopers
PricewaterhouseCoopers
PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....
; KPMG
KPMG
KPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
; Ernst and Young; Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu Limited , commonly referred to as Deloitte, is one of the Big Four accountancy firms along with PricewaterhouseCoopers , Ernst & Young, and KPMG....
) had always offered advice in addition to their traditional services, but from the late 1980s onwards these activities became increasingly important in relation to the maturing market of accounting and auditing. By the mid-1990s these firms had outgrown those service providers focusing on corporate strategy and organization. While three of the Big Four legally divided the different service lines after the Enron scandals and the ensuing breakdown of Arthur Andersen, they are now back in the consulting business.
The industry stagnated in 2001 before recovering after 2003.
The current trend in the market is towards a clear segmentation of management consulting firms.
Function
The functions of consulting services are commonly broken down into eight task categories. Consultants can function as bridges for information and knowledge, and that external consults can provide these bridging services more economically than client firms themselves.Marvin Bower
Marvin Bower
Marvin Bower was the son of the deputy recorder at Cuyahoga County. He grew up in Cleveland, Ohio and attended public schools there. He earned his bachelor's degree from Brown University in 1925. His father advised him to study law, and Bower graduated from Harvard Law School in 1928...
, McKinsey's long-term director, has mentioned the benefits of a consultant's externality, that they have varied experience outside the client company.
Consultants have specialised on tasks that would involve high internal coordination costs for clients, such as organisation-wide changes or the implementation of information technology. In addition, because of economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
, their focus and experience in gathering information worldwide and across industries renders their information search less costly than for clients.
Approaches
In general, various approaches to consulting can be thought of as lying somewhere along a continuum, with an 'expert' or prescriptive approach at one end, and a facilitative approach at the other. In the expert approach, the consultant takes the role of expert, and provides expert advice or assistance to the client, with, compared to the facilitative approach, less input from, and fewer collaborations with the client(s). With a facilitative approach, the consultant focuses less on specific or technical expert knowledge, and more on the process of consultation itself. Because of this focus on process, a facilitative approach is also often referred to as 'process consulting,' with Edgar ScheinEdgar Schein
Edgar Henry Schein , a former professor at the MIT Sloan School of Management, has made a notable mark on the field of organizational development in many areas, including career development, group process consultation, and organizational culture. He is generally credited with inventing the term...
being considered the most well-known practitioner. The consulting firms listed above are closer toward the expert approach of this continuum.
Many consulting firms are organized in a matrix structure, where one 'axis' describes a business function or type of consulting: for example, strategy, operations, technology, executive leadership, process improvement
Process improvement
In organizational development , process improvement is a series of actions taken by a process owner to identify, analyze and improve existing business processes within an organization to meet new goals and objectives. These actions often follow a specific methodology or strategy to create...
, talent management, sales, etc. The second axis is an industry focus: for example, oil and gas, retail, automotive. Together, these form a matrix, with consultants occupying one or more 'cells' in the matrix. For example, one consultant may specialize in operations for the retail industry, and another may focus on process improvement in the downstream oil and gas industry.
Specialization
Management consulting refers generally to the provision of business services, but there are numerous specialisms, such as information technology consultingInformation technology consulting
Information technology consulting is a field that focuses on advising businesses on how best to use information technology to meet their business objectives...
, human resource consulting
Human resource consulting
Human resource consulting is an $18.4 billion industry that has emerged from management consulting, asclients' needs have become more complex and specialized, widening the gap between HR needs and work force capabilities, and thus accentuating the ability of HR management consulting firms to fill...
, virtual management
Virtual management
Virtual management, brought about by the rise of the Internet, globalization, outsourcing, telecommuting, and virtual teams, is management of frequently widely dispersed groups and individuals with rarely, if ever, meeting them face to face....
consulting and others, many of which overlap, and most of which are offered by the larger diversified consultancies. So-called "boutique" consultancies, however, are smaller organisations focusing upon one, or just a few of, such specialisms.
The 1990s saw an increase in what has been termed a 'future-based' approach. This emphasised language and alignment of people within an organisation to a common vision of the future of the organisation, as set out in the book "Three Laws of Performance". The essential concept here was that the way people perform is seen to correlate to the way that world occurs for them, and that future-based language could alter the way the future actually occurs for them. These principles were increasingly employed in organisations which had experienced a market transition or a merger requiring the blending of two corporate cultures. However, towards the end of the 1990s the approach declined due to a perception that the concept outlined in this book did not in practice offer added value to organisations.
Current state of the industry
Management consulting has grown quickly, with growth rates of the industry exceeding 20% in the 1980s and 1990s. As a business service, consulting remains highly cyclical and linked to overall economic conditions. The consulting industry shrank during the 2001-2003 period, but grew steadily until the recent economic downturn in 2009. Since then the market has stabilized.Currently, there are three main types of consulting firms. Large, diversified organizations, Medium-sized management consultancies and Boutique firms which have focused areas of consulting expertise in specific industries, functional areas, technologies, or regions of the world.
Revenue model
Traditionally, the consulting industry charged on a time and materialsCost-plus pricing
Cost-plus pricing is a pricing method used by companies to maximize their profits.The firms accomplish their objective of profit maximization by increasing their production until marginal revenue equals marginal cost, and then charging a price which is determined by the demand curve. However, in...
basis, billing staff consultants out based solely on the hours worked plus out-of-pocket expenses such as travel costs. During the late 1990s and early 2000s, there was a shift to more results-based pricing, either with fixed bids for defined deliverables or some form of results-based pricing in which the firm would be paid a fraction of the value delivered. The current trend seems to favor a hybrid with components of fixed pricing and risk-sharing by both the consulting firm and client.
Trends
The use of management consultancy is becoming more prevalent in non-business fields including the public sector; as the need for professional and specialist support grows, other industries such as government, quasi-government and not-for-profit agencies are turning to the same managerial principles which have helped the private sector for years.An industry structural trend which arose in the early part of the 21st century was the spin-off or separation of the consulting and accounting units of the large diversified professional advisory firms most notably Ernst & Young, PwC and KPMG. For these firms, which began operation as accounting and audit firms, management consulting was a new extension to their organisation. But after a number of highly publicised scandals over accounting practices, such as the Enron scandal
Enron scandal
The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world...
, these firms began divestiture of their management consulting units, to more easily comply with the tighter regulatory scrutiny that followed. In some parts of the world this trend is now being reversed where the firms are rapidly rebuilding their management consulting arms as their corporate websites clearly demonstrate.
Rise of internal corporate consulting groups
Added to these approaches are corporations that set up their own internal consulting groups, hiring internal management consultants either from within the corporation or from external firms employees. Many corporations have internal groups of as many as 25 to 30 full-time consultants.Internal consulting groups are often formed around a number of practice areas, commonly including: organizational development, process management, information technology, design services, training, and development.
Advantages
There are several potential benefits of internal consultants to those who employ them:- If properly managed and empowered, internal consulting groups evaluate engagement on projects in light of the corporation's strategic and tactical objectives.
- Often, the internal consultant requires less ramp up time on a project due to familiarity with the corporation, and is able to guide a project through to implementation — a step that would often be too costly if an external consultant were used.
- Internal relationship provides opportunities to keep certain corporate information private.
- It is likely that the time and materials cost of internal consultants is significantly less than external consultants operating in the same capacity.
- Internal consulting positions can be used to recruit and develop potential senior managers of the organization.
Note: Corporations need to be conscious of and consistent with how internal consultant costs are accounted for on both a project and organizational level to evaluate cost effectiveness.
- Internal consultants are often uniquely suited to either
- Lead external consulting project teams, or
- Act as organizational subject matter experts ‘embedded’ with external consulting teams under the direction of organizational management.
A group of internal consultants can closely monitor and work with external consulting firms. This would ensure better delivery, quality, and overall operating relationships.
External firms providing consulting services have a dichotomy in priority. The health of the external firm is in aggregate more important than that of their client (though of course the health of their client can have a direct impact on their own health).
Disadvantages
- The internal consultant may not bring the objectivity to the consulting relationship that an external firm can.
- An internal consultant also may not bring to the table best practices from other corporations. A way to mitigate this issue is to recruit experience into the group and/or proactively provide diverse training to internal consultants.
- Where the consulting industry is strong and consulting compensation high, it can be difficult to recruit candidates.
- It is often difficult to accurately measure the true costs and benefits of an internal consulting group.
- When financial times get tough, internal consulting groups that have not effectively demonstrated economic value (costs vs. benefits) are likely to face size reductions or reassignment.
Government consultants
The use of management consulting in governments is widespread in many countries but can be subject to misunderstandings and resultant controversy.United States
In the US, Booz Allen HamiltonBooz Allen Hamilton
Booz Allen Hamilton Inc. , or more commonly Booz Allen, is an American public consulting firm headquartered in McLean, Fairfax County, Virginia, with 80 other offices throughout the United States. Ralph Shrader is its Chairman and Chief Executive Officer. The firm was founded by Edwin Booz in...
(now split from Booz & Company
Booz & Company
Booz & Company is a global management consulting firm established in the United States in 1914. It is recognized as one of the most prestigious management consulting firms in the world and one of the best consulting firms to work for by Consulting Magazine...
) has become particularly known now as a consultant that primarily serves the US Federal Government. Deloitte Consulting LLP, amongst others, applies its industry expertise to helping government departments and agencies solve their problems.
United Kingdom
In the UK, the use of external management consultants within government has sometimes been contentious due to perceptions of variable value for money. From 1997 to 2006, for instance, the UK government reportedly spent £20 billion on management consultants, raising questions in the UK House of Commons as to the returns upon such investmentThe UK has also experimented with providing longer-term use of management consultancy techniques provided internally, particularly to the high-demand consultancy arenas of local government and the National Health Service
National Health Service
The National Health Service is the shared name of three of the four publicly funded healthcare systems in the United Kingdom. They provide a comprehensive range of health services, the vast majority of which are free at the point of use to residents of the United Kingdom...
; the Local Government Association
Local Government Association
The Local Government Association is a voluntary lobbying organisation acting as the voice of the local government sector in England and Wales, which seeks to be an authoritative and effective advocate on its behalf....
's Improvement and Development Agency and the public health National Support Teams
National Support Teams
The public health National Support Teams or NSTs constituted a consultancy-style organisational development and change management service provided by the UK Government Department of Health.-History and role:...
; both generated positive feedback at cost levels considered a fraction of what external commercial consultancy input would have incurred.
India
In IndiaIndia
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, Agriculture Finance Corporation Limited provides consultancy mainly to governments and related institutions.
Criticism
Despite consistently growing revenues, management consultancy also consistently attracts a significant amount of criticism, both from clients as well as from management scholars."Management consultants are often criticized for overuse of buzzword
Buzzword
A buzzword is a term of art, salesmanship, politics, or technical jargon that is used in the media and wider society outside of its originally narrow technical context....
s, reliance on and propagation of management fad
Management fad
The term management fad is used to characterize a change in philosophy or operations that sweeps through businesses and institutions. Some fads may become established aspects of business, sustaining themselves over several years...
s, and a failure to develop plans that are executable by the client." A number of critical books about management consulting argue that the mismatch between management consulting advice and the ability of executives to actually create the change suggested results in substantial damages to existing businesses. In his book "Flawed Advice and the Management Trap," Chris Argyris
Chris Argyris
-Bibliography:* Chris Argyris: Personality and Organization, 1957* Chris Argyris: Some Limitations of the Case Method: Experiences in a Management Development Program.” Academy of Management Review 5: 291–298, 1980...
believes that much of the advice given today has much in it of real merit. However, a close examination shows that most advice given today contains gaps and inconsistencies that may prevent positive outcomes in the future.
Disreputable consulting firms are often accused of delivering empty promises, despite high fees. They are often charged with "stating the obvious" and with lacking the experience on which to base their advice. These consultants bring few innovations, instead offering generic and "prepackaged" strategies and plans that are irrelevant to the client’s particular issue. They may fail to prioritize their responsibilities, placing their own firm’s interests before the clients'.
Another concern is the promise of consulting firms to deliver on the sustainability of results. At the end of an engagement between the client and consulting firms, there is often an expectation that the consultants will audit the project results for a period of time to ensure that their efforts are sustainable. Although sustainability is promoted by some consulting firms, it is difficult to implement because of the disconnect between the client and consulting firms after the project closes.
Further criticisms include: disassembly of the business (by firing employees) in a drive to cut costs, only providing analysis reports, junior consultants charging senior rates, reselling similar reports to multiple clients as "custom work", lack of innovation, overbilling for days not worked, speed at the cost of quality, unresponsive large firms and lack of (small) client focus, lack of clarity of deliverables in contracts, and secrecy.
Professional qualifications
There are several qualifications that can lead to becoming a management consultant; they include:- The internationally recognized Certified Management ConsultantCertified Management ConsultantCertified management consultant is an international professional certification for management consulting professionals, awarded by institutes in 46 countries . The CMC enjoys global reciprocity; consultants certified in one country are recognized in most other countries...
(CMC) professional designation - AccountancyAccountancyAccountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in...
qualifications: Chartered Management Accountant (CIMA), Chartered Certified AccountantChartered Certified AccountantChartered Certified Accountant was historically seen as a British qualified accountant designation awarded by the Association of Chartered Certified Accountants . However, although ACCA is UK based, it is a global body for professional accountants with 147,000 qualified members and 424,000...
(ACCA), Chartered AccountantChartered AccountantChartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
(CA), Certified Public AccountantCertified Public AccountantCertified Public Accountant is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA...
(CPA), Certified Practicing Accountant (CPA), Certified Management AccountantCertified Management AccountantThe title Certified Management Accountant is used by various professional bodies around the world to designate their different professional certifications....
(CMA) Chartered Cost AccountantChartered Cost AccountantChartered Cost Accountant is a cost accounting or cost control professional designation offered by the American Academy of Financial Management. The CCA is a Graduate Post Nominal that is only available for accountants with an accredited degree, MBA, CPA, Chartered Accountant License, law degree,...
CCA Designation from AAFMAmerican Academy of Financial ManagementThe American Academy of Financial Management is a USA-based board of standards, certifying body, and accreditation council dedicated to the finance sector and management professionals.... - EngineeringEngineeringEngineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of...
qualifications: Chartered Engineer (C.Eng - UK) Professional EngineerProfessional EngineerRegulation of the engineering profession is established by various jurisdictions of the world to protect the safety, well-being and other interests of the general public, and to define the licensure process through which an engineer becomes authorized to provide professional services to the...
(P.E./P.Eng. - USA and Canada), Engineer Diploma Grande Ecole (France) - Actuarial qualifications: Casualty Actuarial SocietyCasualty Actuarial SocietyThe Casualty Actuarial Society is a professional society of actuaries whose goal is "the advancement of the body of knowledge of actuarial science applied to property, casualty, and similar risk exposures." Its members are mainly involved in the property and casualty areas of the actuarial...
(FCAS) - US, Society of ActuariesSociety of ActuariesThe Society of Actuaries is a professional organization for actuaries based in North America. It was founded in 1949 as the merger of two major actuarial organizations in the United States: the Actuarial Society of America and the American Institute of Actuaries...
(FSA) - US, Institute of ActuariesInstitute of ActuariesThe Institute of Actuaries was one of the two professional which represented actuaries in the United Kingdom . The Institute was based in England, while the other body, the Faculty of Actuaries, was based in Scotland...
(FIA) - UK, Faculty of ActuariesFaculty of ActuariesThe Faculty of Actuaries in Scotland was the professional body representing actuaries in Scotland. The Faculty of Actuaries was one of two actuarial bodies in the UK, the other was the Institute of Actuaries, which was a separate body in England, Wales and Northern Ireland...
(FFA) - Scotland - FinanceFinance"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
qualifications: Chartered Financial AnalystChartered Financial AnalystThe Chartered Financial Analyst Program is a graduate level self-study program offered by the CFA Institute to investment and financial professionals...
(CFA), Certified Treasury ProfessionalCertified Treasury ProfessionalThe Certified Treasury Professional is a certification awarded by the Association for Financial Professionals of Bethesda, Maryland to individuals who meet eligibility criteria and demonstrate current competency standards measured through the CTP examination.Once a CTP, certificants must abide by...
(CTP) - Consulting qualifications: MSc Business Analytics and Consulting Practice, Hull University Business School, UK, Master of Science in Business Consulting (MSc), Furtwangen University of Applied SciencesFurtwangen University of Applied SciencesThe Hochschule Furtwangen University , formerly the Fachhochschule Furtwangen is a German university based in Furtwangen im Schwarzwald, Baden-Württemberg, Germany. As of 2005 it has 3556 students....
, Germany/Master of Business Administration in International Business Consulting (MBA) Hochschule Offenburg University of Applied SciencesThe Graduate School of Offenburg University of Applied SciencesThe Graduate School of the University of Applied Sciences Offenburg is a public university located in the town of Offenburg, Baden-Württemberg, Germany...
, Germany - Business Administration qualifications: Master of Science in ManagementMaster of Science in ManagementMaster of Science in Management, abbreviated MSc or MSM, is a Master of Science academic degree that is common throughout the United States and Europe. It is similar to the MBA degree, and often requires a dissertation before a graduate is admitted to it. The MSc is a research-oriented program...
-Europe- (MSc.in Management), Master in Management at Grande Ecole - France, Master of Business AdministrationMaster of Business AdministrationThe Master of Business Administration is a :master's degree in business administration, which attracts people from a wide range of academic disciplines. The MBA designation originated in the United States, emerging from the late 19th century as the country industrialized and companies sought out...
(MBA) -USA CanadaCanadaCanada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
Doctor of ManagementDoctor of ManagementDoctor of Management is an academic degree awarded on the basis of advanced study and research in management.The D.M. degree is awarded by some American and international universities, and is similar to a PhD degree in management and business-related sciences...
( Ph.D.), Doctor of Business AdministrationDoctor of Business AdministrationThe degree of Doctor of Business Administration, abbreviated, or and equivalent to , is a research doctorate in business administration. The D.B.A...
-USA/Canada- (DBA) - Public AdministrationPublic administrationPublic Administration houses the implementation of government policy and an academic discipline that studies this implementation and that prepares civil servants for this work. As a "field of inquiry with a diverse scope" its "fundamental goal.....
qualifications: Master of Public AdministrationMaster of Public AdministrationThe Master of Public Administration is a professional post-graduate degree in Public Administration. The MPA program prepares individuals to serve as managers in the executive arm of local, state/provincial, and federal/national government, and increasingly in nongovernmental organization and...
(MPA) -USA/Canada/Europe, Doctor of Public AdministrationDoctor of Public AdministrationThe Doctor of Public Administration is a terminal applied-research doctoral degree in the field of public administration , which is a sub-discipline of political science. The D.P.A. requires significant coursework beyond the masters level and a dissertation that contributes to theory or practice... - Project ManagementProject managementProject management is the discipline of planning, organizing, securing, and managing resources to achieve specific goals. A project is a temporary endeavor with a defined beginning and end , undertaken to meet unique goals and objectives, typically to bring about beneficial change or added value...
qualifications: Project Management ProfessionalProject Management ProfessionalProject Management Professional is a credential offered by the Project Management Institute . , there were 393,413 active PMP certified individuals worldwide...
(PMP) recognized globally, Master of Project Management (MPM)- USA/Canada/Europe - Advanced Professional Degrees such as PhDPHDPHD may refer to:*Ph.D., a doctorate of philosophy*Ph.D. , a 1980s British group*PHD finger, a protein sequence*PHD Mountain Software, an outdoor clothing and equipment company*PhD Docbook renderer, an XML renderer...
s or Master's degreeMaster's degreeA master's is an academic degree granted to individuals who have undergone study demonstrating a mastery or high-order overview of a specific field of study or area of professional practice...
s in EngineeringEngineeringEngineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of...
, EconomicsEconomicsEconomics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
and ScienceScienceScience is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe...
, MDDoctor of MedicineDoctor of Medicine is a doctoral degree for physicians. The degree is granted by medical schools...
s, JDJuris DoctorJuris Doctor is a professional doctorate and first professional graduate degree in law.The degree was first awarded by Harvard University in the United States in the late 19th century and was created as a modern version of the old European doctor of law degree Juris Doctor (see etymology and...
s etc. are specifically targeted by firms like McKinsey, Bain & CompanyBain & CompanyBain & Company is a global management consulting firm headquartered in Boston, Massachusetts. Bain is considered one of the most prestigious consulting firms in the world, with 47 offices in 30 countries and over 5,500 professionals on staff globally...
, Arthur D. LittleArthur D. LittleArthur D. Little is an international management consulting firm originally headquartered in Boston, Massachusetts, United States, and formally incorporated by that name in 1909 by Arthur Dehon Little, an MIT chemist who had discovered acetate. Arthur D. Little pioneered the concept of contracted...
and the Boston Consulting GroupBoston Consulting GroupThe Boston Consulting Group is a global management consulting firm with offices in 42 countries. It is recognized as one of the most prestigious management consulting firms in the world. It is one of only three companies to appear in the top 15 of Fortunes "Best Companies to Work For" report for...
. These degrees may also have concentrations in management consulting, international management, or other relevant focus - Akademischer Unternehmensberater (Academic Management Consultant) - Austria - incite -institute for management consultants and information technology experts, Vienna
- Marketing qualification: Chartered Postgraduate Diploma in Marketing, which can lead to Chartered Marketer status from The Chartered Institute of Marketing (CIM)
- Consulting qualifications: Multidimensional Human Factor Management Consulting (MDHFM) Multidimensional Human Factor Management School Germany by Luis Daniel Maldonado Fonken-
- Environmental Professional (EP) Certification: An ISO/IEC 17024:2003 accredited program managed through ECO CanadaECO CanadaECO Canada was established in 1992 as part of Canada's sector council initiative. Sector councils are organizations that address human resource challenges facing the Canadian economy...
assuring the credentials of Environmental Professionals in core disciplines.
See also
:Category:Management consulting firms
- Institute of Consulting
Areas of action of consulting
- Strategic managementStrategic managementStrategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments...
- Operations managementOperations managementOperations management is an area of management concerned with overseeing, designing, and redesigning business operations in the production of goods and/or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as little resources as needed, and...
- Industrial engineeringIndustrial engineeringIndustrial engineering is a branch of engineering dealing with the optimization of complex processes or systems. It is concerned with the development, improvement, implementation and evaluation of integrated systems of people, money, knowledge, information, equipment, energy, materials, analysis...
Related culture
- Case interviewCase interviewA case interview is a job interview in which the applicant is given a question, situation, problem or challenge and asked to resolve the situation...
- Motivational speakingMotivational speakingA motivational speaker or inspirational speaker is a speaker who makes speeches intended to motivate or inspire an audience. In a business context, they are employed to communicate company strategy with clarity and help employees to see the future in a positive light and inspire workers to pull...
- Business coaching
- Management fadManagement fadThe term management fad is used to characterize a change in philosophy or operations that sweeps through businesses and institutions. Some fads may become established aspects of business, sustaining themselves over several years...
- Business philosophies and popular management theories sub system organisation and effect on the entire managemental culture