v · 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 .[ 6 ]
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 .
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 Schein 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 .
Specialization
Management consulting refers generally to the provision of business services , but there are numerous specialisms , such as information technology consulting , 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 .
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 materials 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 .[citation needed ]
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 , 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 Hamilton (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 .
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 [ 7 ] , raising questions in the UK House of Commons as to the returns upon such investment [ 8 ]
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 .
India
In India , 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 buzzwords , reliance on and propagation of management fads , 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 .[ 9 ] 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 .[ 10 ]
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 '. [ 11 ]
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 ,[ 12 ] and secrecy .[ 13 ]
Professional qualifications
There are several qualifications that can lead to becoming a management consultant ; they include:
The internationally recognized Certified Management Consultant (CMC ) professional designation
Accountancy qualifications: Chartered Management Accountant (CIMA ), Chartered Certified Accountant (ACCA ), Chartered Accountant (CA ), Certified Public Accountant (CPA ), Certified Practicing Accountant (CPA ), Certified Management Accountant (CMA ) Chartered Cost Accountant CCA Designation from AAFM
Engineering qualifications: Chartered Engineer (C .Eng - UK ) Professional Engineer (P .E ./P .Eng . - USA and Canada ), Engineer Diploma Grande Ecole (France )
Actuarial qualifications: Casualty Actuarial Society (FCAS ) - US , Society of Actuaries (FSA ) - US , Institute of Actuaries (FIA ) - UK , Faculty of Actuaries (FFA ) - Scotland
Finance qualifications: Chartered Financial Analyst (CFA ), Certified Treasury Professional (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 Sciences , Germany /Master of Business Administration in International Business Consulting (MBA ) Hochschule Offenburg University of Applied Sciences , Germany
Business Administration qualifications: Master of Science in Management -Europe - (MSc .in Management ), Master in Management at Grande Ecole - France , Master of Business Administration (MBA ) -USA Canada Doctor of Management ( Ph .D .), Doctor of Business Administration -USA /Canada - (DBA )
Public Administration qualifications: Master of Public Administration (MPA ) -USA /Canada /Europe , Doctor of Public Administration
Project Management qualifications: Project Management Professional (PMP ) recognized globally , Master of Project Management (MPM )- USA /Canada /Europe
Advanced Professional Degrees such as PhDs or Master 's degrees in Engineering , Economics and Science , MDs , JDs etc . are specifically targeted by firms like McKinsey , Bain & Company , Arthur D . Little and the Boston Consulting Group . 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 Canada assuring the credentials of Environmental Professionals in core disciplines .
See also
Areas of action of consulting
Related culture
References
^ "Scatter Acorns That Oaks May Grow " . MIT Institute Archives & Special Collections . http: //libraries .mit .edu /archives /exhibits /adlittle /history .html . Retrieved 9 March 2011 .
^ Kipping , M . 2002 . "Trapped in their wave: the evolution of management consultancies ," in T . Clark and R . Fincham (eds .). Critical Consulting: New Perspectives on the Management Advice Industry . Oxford: Blackwell , 28 -49 .
^ Canback , S . 1998a . Transaction Cost Theory and Management Consulting: Why do Management Consultants Exist ?, Working Paper 9810002 . Henley Management College , Henley -on -Thames .
^ Turner , A . N . 1982 . "Consulting is more than giving advice ," Harvard Business Review 60 /5: 120 -9 .
^ Bessant , J ., and H . Rush 1995 . "Building bridges for innovation: the role of consultants in technology transfer ," Research Policy 24: 97 -114 .
^ Bower , M . 1982 . The Will to Manage . New York: McGraw -Hill .
^ Consultants are costing us billions - and for what ?
^ "Central government 's " (PDF ). British House of Commons . http: //www .publications .parliament .uk /pa /cm200607 /cmselect /cmpubacc /309 /309 .pdf . Retrieved 2007 -10 -19 .
^ http: //www .spiritus -temporis .com /management -consulting /criticism .html
^ Argyris , Chris . Flawed Advice and the Management Trap . New York: Oxford University Press , USA , 2000 . Print .
^ "Management Consulting '?" . http: //www .articleworld .org /index .php /Management _consulting .
^ Sturdy , A et al (2009 ) Management Consultancy , Oxford University Press .
^ Johann Hari: The management consultancy scam
Further reading
Christopher D . McKenna (2006 ). The World 's Newest Profession: Management Consulting in the Twentieth Century . Cambridge University Press .
External links
Wikimedia Foundation .
2010 .
Look at other dictionaries:
management consulting — noun a service industry that provides advice to those in charge of running a business • Hypernyms: ↑service industry * * * management consulting or management consultancy noun • • • Main Entry: ↑manage … Useful english dictionary
Management Consulting Group — PLC Type Public London Stock Exchange (LSE ) under symbol MMC Industry Management consulting services Founded Chicago , USA , 1946 Headquarters London Key people Alan Barber … Wikipedia
management consulting — See consulting … Auditor 's dictionary
Mercer Management Consulting — Oliver Wyman Unternehmensform Konzerngesellschaft Gründung 1970 als Temple , Barker Sloane , Inc . Unt … Deutsch Wikipedia
Mercer Management Consulting — Oliver Wyman Mercer , LLC Création 1975 Personnages clés John Drzik … Wikipédia en Français
Logica Management Consulting — Logica Logo de Logica Dates clés 1964 Création de CMG 1968 Création de Unilog 1969 Création de Logica … Wikipédia en Français
Mc2 Management Consulting — A U .S . internal auditing and *risk management consulting practice . Founded in 1991 by *David McNamee as Management Control Concepts , the practice adopted its current name in 2000 . It undertakes consulting and training in internal auditing ,… … Auditor 's dictionary
List of management consulting firms — List of Management Consulting Firms = 1 . McKinsey Company 2 . Marakon Associates (now called Trinsum ) 3 . Boston Consulting Group (BCG ) 4 . A .T . Kearney 5 . Booz Allen Hamilton (BAH ) 6 . Monitor Group 7 . Bain Company 8 . Roland Berger Strategy … … Wikipedia
International Council of Management Consulting Institutes — Der International Council of Management Consulting Institutes (ICMCI ) ist der Welt Dachverband der nationalen Unternehmensberaterverbände . 2007 gehören dem ICMCI 44 Länder an . Der ICMCI sieht seine Aufgabe im Informationsaustausch zwischen den … … Deutsch Wikipedia
Consulting — is providing advice in a particular area of expertise . This is not the same as customer service . Specific types of consulting include: Professional Engineering Various Disciplines Management consulting Medical practice consulting cf . Medical … … Wikipedia