Organizational

Consulting

MA Program

2

Unit 1-

The Evolution and Practice of

Management Consultancy

3 Learning Objectives

By the end of the unit, you should understand:

• Management Consultancy

• Management Consultancy and Mgt. Consulting

• Management Consultancy and Outsourcing

• Elements of Management Consultancy

• Reasons for Consulting

• Types of Consultants

• E-Business

• Multi national Management Consultancy

Background and History

• Management consulting is of a younger vintage than

either management practice or management theory.

It is a high-pressure, high-level practice, but it is

striving hard now to be viewed also as a profession.

• Some put the origin of consultancy in general, and

management consulting in particular, in the middle

of the nineteenth century when Samuel Price, Foster

Higgins, and James Sedgwick each began operating

a business that included “advisory practice” in

England or the United States.

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Background and History

• According to business historians, the first pure

consultancy was that of Arthur Little in the United

States, who started out in 1886 with a focus on

technology and “engineering economics.”

• It was not until 1904, however, that he and his firm

moved beyond chemical testing and engineering

into administrative advisory services.

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• In offering astute advice, management consultants

are being asked to cover a range of topics, as well

as coaching, implementation, and matching goals

with results.

• In doing this, the perishable facets of the service

must be made tangible and lasting. To succeed,

teams of generalists and specialists plus country or

local experts are assembled.

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• Management Consulting got its start in the late

1880's when Frederick W. Taylor began to perform

studies of the time required to complete processes in

manufacturing. The practice developed over time

and eventually, James O. McKinsey formed

McKinsey & Company with Tom Kearney -in the mist

of the great depression, when companies needed

consultancies most. McKinsey's group set out to help

troubled businesses grow and recover from

economic crisis. Shortly after that, Management

Consulting grew as a field and other firms began to

take shape.

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What is Management Consultancy

• The Institute of Consulting has defined management

consultancy as:

• „the provision to management of objective advice

and assistance relating to the strategy, structure,

management and operations of an organisation in

pursuit of its long-term purposes and objectives.

Such assistance may include the identification of

options with recommendations; the provision of an

additional resource; and/or the implementation of

solutions.‟

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• Management Consulting is the practice of offering

business executives third party advice, expertise, and

support with the aim of enhancing the business's

performance resulting in an overall increase in the

value of the business for its shareholders - and other

stakeholders.

• Management consulting refers to both the industry and

the practice of helping organisations to improve their

performance, primarily through the analysis of existing

organisational problems and development of plans for

improvement. Organisations may draw upon the

services of management consultants for a number of

reasons, including gaining external (and presumably

objective) advice and access to the consultants'

specialised expertise.

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Management Consultancy

• Consultant provides external advice for

organisations that require specialist expertise or an

objective outside perspective on their business.

Consultancy usually involves the identification and

assessment of a problem or the analysis of a specific

area of an organisation, the reporting of findings

and the formulation of recommendations for

improvement.

• Consultants are commonly called in for business

improvement, change of management, information

technology and long-term planning projects.

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Distinction between Management Consulting

and Management Consultancy

• The two terms- Management Consulting and

Management Consultancy- are often used

interchangeably. It is, however, useful to keep in

mind the distinction between them. Consultancy is a

profession or a professional practice; consulting is

what a consultant does, it is an instance of

consultancy.

• In management consulting, consulting is a specific

act of giving advice; in management consultancy,

consultancy is the professional practice of giving

advice

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Distinction between Management Consulting

and Outsourcing

• These two terms- management consultancy and

outsourcing- are also often used interchangeably.

While the host organization- also called the client

organization- is rather closely involved in

management consultancy, such involvement is

minimal in case of outsourcing. In fact, it is possible

to view outsourcing as an abdication of

responsibility.

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13 Elements of Management Consultancy

• Competencies – How they go about their work.

• Attitude – How they prepare for work.

• Skills – What they can do.

• Knowledge – What they know.

• Differentiation – What unique benefits they bring.

Organizational Consulting

• Organizational consulting is a professional

service that assists businesses in evaluating

and possibly restructuring the current internal

layout of the company.

• A consultant of this type may also work with

new business ventures that wish to design and

establish a corporate working structure that is

likely to support the goals of the company.

• The idea behind organizational consulting is to

make the best use of all resources available by

organizing them in the most logical and

advantageous structural organization.

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Organizational Consulting

• The process of organizational consulting can

address the overall operations of the company or

focus on specific aspects.

For example, consultants may address the policies and

procedures that govern the customer relations and support

functions of the organization. Evaluations of the senior

management team and its effectiveness may take place. The

organizational consultant may take a close look at the

manufacturing process, including how raw materials are

moved through the process in order to produce finished goods.

• In all cases, the consultant will attempt to identify

strengths within the system while also uncovering

any inherent weaknesses in the current operation

of the corporation.

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16 Reasons for Consultancy

• Professional approach with adherence to ethics and

standards.

• Self-discipline and self-control.

• Trust and confidentiality.

• Impartiality and objectivity.

• Flexibility, quality and “value for money”.

Types of Management Consultancy

• Strategy consultants

• Human resource consultants

• Information technology consultants

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Strategy consultants

• These consultancies are much smaller than the

generalist firms and the majority of them are American.

As the term suggests, they primarily offer strategic

advice to companies on a project-by-project basis. This

involves long-range planning, the reorganisation of a

company‟s structure, rationalisation of services and

products and a general business appraisal of the

company.

• Strategy Consulting – offers services aimed at

improving the long‐term growth prospects of a

company and the capabilities to enable that growth.

These services include, but are not limited to, strategic

planning, organisational strategy, marketing, sales and

branding strategy, and financial strategy.

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Human resource consultants

• These are organisations offering specialist advice

ranging from personnel policy, manpower planning,

job enrichment, job evaluation and industrial

relations.

• Human Resources Consulting (HR) – aims at

managing the employee lifecycle consulting around

the people component of change management and

improving the effectiveness of the HR function.

These services include, but are not limited to,

advising on human capital strategy; providing HR

financial guidance; HR technology and

transformation advisory; and consulting on benefits,

compensation and talent management.

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Information technology consultants

• These firms give specialist advice ranging from

defining information needs, the provision of

software, systems analysis and design, computer

feasibility studies, implementing computer

applications and making computer hardware

evaluations.

• Information Technology Consulting (IT) . includes

design and construction of IT•]related business

functions; construction, installation and testing of

enterprise application that support those business

functions; and infrastructure services that support

enterprise applications.

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Financial consultants

• The specialist advice offered by financial

consultancies ranges from the installation of

budgetary control systems, profit planning or capital

and revenue budgeting, office reorganisation and

administrative arrangements.

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Operations Management Consulting (OM)

• offers services that improve the effectiveness of the

value chain, including major processes such as

researching and designing products and services;

sourcing raw materials or product or service

components; taking the actual services to the

marketplace; and interacting with the customers and

clients.

• OM consulting projects create more effective client

operations by advising on and aiding in the

implementation of changes to the client‟s global

operational footprint, management systems,

processes and employee behavior.

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Business Advisory Services (BAS)

• results in business recommendations based on

financial analysis and alternative decision scenarios.

BAS services require a unique identity because of

their core connection to quantitative accounting and

financial analysis and their growing importance for

supporting key corporate decisions.

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Developing Consultancy through Networking

• Some groups provide opportunities to interact with

prospective employers and clients,

• Some groups enable their members to keep abreast of

the latest developments, such as technical products or

managerial processes.

• Some groups provide opportunities for career skills

development that will enable attendees to learn more

about self-marketing, interviewing and making a

successful transition, an example of this is alumni

associations.

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What does e-business Encompass?

• Electronic business (e-business) is any process that a

business organization conducts over a computer-

mediated network. It includes buying and selling, as

well as a wide range of customer-, production-, and

management-focused processes carried out by for-

profit, government, or nonprofit entities.

• E-business is based upon the processing and

transmission of digitized information, including text,

sound, and visual images, from one computer or

some other electronic device to another.

• Most e-business processes are self-service, and

some are or may soon become fully automated.

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• Electronic-commerce (e-commerce) is that part of e-

business which involves buying and selling goods

and services. E-commerce may be classified into

three groups:

• Business to consumer (B2C) includes retail

transactions of goods, such as books and computers,

and services, such as insurance, banking, and travel

and ticket reservations.

• Business to business (B2B) includes transactions

between manufacturers, wholesalers, retailers,

construction firms, farms, service industries,

governments, and nonprofit organizations.3

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• Completely separating the impact of B2C and B2B is

difficult, because online business establishments

may use the same resources to deal with both

consumers and businesses.

• Consumer to consumer (C2C) consists primarily of

individuals buying and selling through auctions.

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Management- or production-focused e-business activities

involve the following functions or tasks:

• Procurement, including ordering, automated stock

replenishment, payment processing, and other

electronic B2Brelated activities.

• Personnel-related activities, including online job

postings, applications, and candidate screening;

education, training, and testing; and employee self-

processing of changes in benefits, travel arrangements,

expense reports, supply orders, and the like.

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• The use of networks for sharing information and

databases, internally and with selected outside

organizations, including suppliers, distributors,

logistics partners, and customers; these links

broaden and speed up the flow of information.

• The expansion of communication and collaboration

through discussion forums, video- and audio

conferencing, global calendaring, and team and

project management.

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Multinational management Consultancies

• The Institute of Business Consulting (IBC) is the

professional body for business consultancy, responsible

for the standards to which professional business

consultants work. These standards are set in

consultation with practitioners in business consulting

and academics researching the profession and other

interested professionals. They specify what is expected

from professional practising business consultants and it

is IBC‟s job to make sure the professional standards are

adhered to.

• Membership, therefore, clearly demonstrates that you

will work professionally and your clients can be assured

that you will put professional standards first in all that

you do with them.

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• Management Consultancies Association (MCA), the

industry‟s trade association. Established in 1956, we

are the voice of this important industry.

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