- •In praise of the fourth edition
- •CONTENTS
- •FOREWORD
- •The concept of consulting
- •Purpose of the book
- •Terminology
- •Plan of the book
- •ABBREVIATIONS AND ACRONYMS
- •1.1 What is consulting?
- •Box 1.1 On giving and receiving advice
- •1.2 Why are consultants used? Five generic purposes
- •Figure 1.1 Generic consulting purposes
- •Box 1.2 Define the purpose, not the problem
- •1.3 How are consultants used? Ten principal ways
- •Box 1.3 Should consultants justify management decisions?
- •1.4 The consulting process
- •Figure 1.2 Phases of the consulting process
- •1.5 Evolving concepts and scope of management consulting
- •2 THE CONSULTING INDUSTRY
- •2.1 A historical perspective
- •2.2 The current consulting scene
- •2.3 Range of services provided
- •2.4 Generalist and specialist services
- •2.5 Main types of consulting organization
- •2.6 Internal consultants
- •2.7 Management consulting and other professions
- •Figure 2.1 Professional service infrastructure
- •2.8 Management consulting, training and research
- •Box 2.1 Factors differentiating research and consulting
- •3.1 Defining expectations and roles
- •Box 3.1 What it feels like to be a buyer
- •3.2 The client and the consultant systems
- •Box 3.2 Various categories of clients within a client system
- •Box 3.3 Attributes of trusted advisers
- •3.4 Behavioural roles of the consultant
- •Box 3.4 Why process consultation must be a part of every consultation
- •3.5 Further refinement of the role concept
- •3.6 Methods of influencing the client system
- •3.7 Counselling and coaching as tools of consulting
- •Box 3.5 The ICF on coaching and consulting
- •4 CONSULTING AND CHANGE
- •4.1 Understanding the nature of change
- •Figure 4.1 Time span and level of difficulty involved for various levels of change
- •Box 4.1 Which change comes first?
- •Box 4.2 Reasons for resistance to change
- •4.2 How organizations approach change
- •Box 4.3 What is addressed in planning change?
- •Box 4.4 Ten overlapping management styles, from no participation to complete participation
- •4.3 Gaining support for change
- •4.4 Managing conflict
- •Box 4.5 How to manage conflict
- •4.5 Structural arrangements and interventions for assisting change
- •5 CONSULTING AND CULTURE
- •5.1 Understanding and respecting culture
- •Box 5.1 What do we mean by culture?
- •5.2 Levels of culture
- •Box 5.2 Cultural factors affecting management
- •Box 5.3 Japanese culture and management consulting
- •Box 5.4 Cultural values and norms in organizations
- •5.3 Facing culture in consulting assignments
- •Box 5.5 Characteristics of “high-tech” company cultures
- •6.1 Is management consulting a profession?
- •6.2 The professional approach
- •Box 6.1 The power of the professional adviser
- •Box 6.2 Is there conflict of interest? Test your value system.
- •Box 6.3 On audit and consulting
- •6.3 Professional associations and codes of conduct
- •6.4 Certification and licensing
- •Box 6.4 International model for consultant certification (CMC)
- •6.5 Legal liability and professional responsibility
- •7 ENTRY
- •7.1 Initial contacts
- •Box 7.1 What a buyer looks for
- •7.2 Preliminary problem diagnosis
- •Figure 7.1 The consultant’s approach to a management survey
- •Box 7.2 Information materials for preliminary surveys
- •7.3 Terms of reference
- •Box 7.3 Terms of reference – checklist
- •7.4 Assignment strategy and plan
- •Box 7.4 Concepts and terms used in international technical cooperation projects
- •7.5 Proposal to the client
- •7.6 The consulting contract
- •Box 7.5 Confidential information on the client organization
- •Box 7.6 What to cover in a contract – checklist
- •8 DIAGNOSIS
- •8.1 Conceptual framework of diagnosis
- •8.2 Diagnosing purposes and problems
- •Box 8.1 The focus purpose – an example
- •Box 8.2 Issues in problem identification
- •8.3 Defining necessary facts
- •8.4 Sources and ways of obtaining facts
- •Box 8.3 Principles of effective interviewing
- •8.5 Data analysis
- •Box 8.4 Cultural factors in data-gathering – some examples
- •Box 8.5 Difficulties and pitfalls of causal analysis
- •Figure 8.1 Force-field analysis
- •Figure 8.2 Various bases for comparison
- •8.6 Feedback to the client
- •9 ACTION PLANNING
- •9.1 Searching for possible solutions
- •Box 9.1 Checklist of preliminary considerations
- •Box 9.2 Variables for developing new forms of transport
- •9.2 Developing and evaluating alternatives
- •Box 9.3 Searching for an ideal solution – three checklists
- •9.3 Presenting action proposals to the client
- •10 IMPLEMENTATION
- •10.1 The consultant’s role in implementation
- •10.2 Planning and monitoring implementation
- •10.3 Training and developing client staff
- •10.4 Some tactical guidelines for introducing changes in work methods
- •Figure 10.1 Comparison of the effects on eventual performance when using individualized versus conformed initial approaches
- •Figure 10.2 Comparison of spaced practice with a continuous or massed practice approach in terms of performance
- •Figure 10.3 Generalized illustration of the high points in attention level of a captive audience
- •10.5 Maintenance and control of the new practice
- •11.1 Time for withdrawal
- •11.2 Evaluation
- •11.3 Follow-up
- •11.4 Final reporting
- •12.1 Nature and scope of consulting in corporate strategy and general management
- •12.2 Corporate strategy
- •12.3 Processes, systems and structures
- •12.4 Corporate culture and management style
- •12.5 Corporate governance
- •13.1 The developing role of information technology
- •13.2 Scope and special features of IT consulting
- •13.3 An overall model of information systems consulting
- •Figure 13.1 A model of IT consulting
- •Figure 13.2 An IT systems portfolio
- •13.4 Quality of information systems
- •13.5 The providers of IT consulting services
- •Box 13.1 Choosing an IT consultant
- •13.6 Managing an IT consulting project
- •13.7 IT consulting to small businesses
- •13.8 Future perspectives
- •14.1 Creating value
- •14.2 The basic tools
- •14.3 Working capital and liquidity management
- •14.4 Capital structure and the financial markets
- •14.5 Mergers and acquisitions
- •14.6 Finance and operations: capital investment analysis
- •14.7 Accounting systems and budgetary control
- •14.8 Financial management under inflation
- •15.1 The marketing strategy level
- •15.2 Marketing operations
- •15.3 Consulting in commercial enterprises
- •15.4 International marketing
- •15.5 Physical distribution
- •15.6 Public relations
- •16 CONSULTING IN E-BUSINESS
- •16.1 The scope of e-business consulting
- •Figure 16.1 Classification of the connected relationship
- •Box 16.1 British Telecom entering new markets
- •Box 16.2 Pricing models
- •Box 16.3 EasyRentaCar.com breaks the industry rules
- •Box 16.4 The ThomasCook.com story
- •16.4 Dot.com organizations
- •16.5 Internet research
- •17.1 Developing an operations strategy
- •Box 17.1 Performance criteria of operations
- •Box 17.2 Major types of manufacturing choice
- •17.2 The product perspective
- •Box 17.3 Central themes in ineffective and effective development projects
- •17.3 The process perspective
- •17.4 The human aspects of operations
- •18.1 The changing nature of the personnel function
- •18.2 Policies, practices and the human resource audit
- •Box 18.1 The human resource audit (data for the past 12 months)
- •18.3 Human resource planning
- •18.4 Recruitment and selection
- •18.5 Motivation and remuneration
- •18.6 Human resource development
- •18.7 Labour–management relations
- •18.8 New areas and issues
- •Box 18.2 Current issues in Japanese human resource management
- •Box 18.3 Current issues in European HR management
- •19.1 Managing in the knowledge economy
- •Figure 19.1 Knowledge: a key resource of the post-industrial area
- •19.2 Knowledge-based value creation
- •Figure 19.2 The competence ladder
- •Figure 19.3 Four modes of knowledge transformation
- •Figure 19.4 Components of intellectual capital
- •Figure 19.5 What is your strategy to manage knowledge?
- •19.3 Developing a knowledge organization
- •Figure 19.6 Implementation paths for knowledge management
- •Box 19.1 The Siemens Business Services knowledge management framework
- •20.1 Shifts in productivity concepts, factors and conditions
- •Figure 20.1 An integrated model of productivity factors
- •Figure 20.2 A results-oriented human resource development cycle
- •20.2 Productivity and performance measurement
- •Figure 20.3 The contribution of productivity to profits
- •20.3 Approaches and strategies to improve productivity
- •Figure 20.4 Kaizen building-blocks
- •Box 20.1 Green productivity practices
- •Figure 20.5 Nokia’s corporate fitness rating
- •Box 20.2 Benchmarking process
- •20.4 Designing and implementing productivity and performance improvement programmes
- •Figure 20.6 The performance improvement planning process
- •Figure 20.7 The “royal road” of productivity improvement
- •20.5 Tools and techniques for productivity improvement
- •Box 20.3 Some simple productivity tools
- •Box 20.4 Multipurpose productivity techniques
- •Box 20.5 Tools used by most successful companies
- •21.1 Understanding TQM
- •21.2 Cost of quality – quality is free
- •Figure 21.1 Typical quality cost reduction
- •Box 21.1 Cost items of non-conformance associated with internal and external failures
- •Box 21.2 The cost items of conformance
- •21.3 Principles and building-blocks of TQM
- •Figure 21.2 TQM business structures
- •21.4 Implementing TQM
- •Box 21.3 The road to TQM
- •Figure 21.3 TQM process blocks
- •21.5 Principal TQM tools
- •Box 21.4 Tools for simple tasks in quality improvement
- •Figure 21.4 Quality tools according to quality improvement steps
- •Box 21.5 Powerful tools for company-wide TQM
- •21.6 ISO 9000 as a vehicle to TQM
- •21.7 Pitfalls and problems of TQM
- •21.8 Impact on management
- •21.9 Consulting competencies for TQM
- •22.1 What is organizational transformation?
- •22.2 Preparing for transformation
- •Figure 22.1 The change-resistant organization
- •22.3 Strategies and processes of transformation
- •Figure 22.2 Linkage between transformation types and organizational conditions
- •Figure 22.3 Relationships between business performance and types of transformation
- •Box 22.1 Eight stages for transforming an organization
- •22.4 Company turnarounds
- •Box 22.2 Implementing a turnaround plan
- •22.5 Downsizing
- •22.6 Business process re-engineering (BPR)
- •22.7 Outsourcing and insourcing
- •22.8 Joint ventures for transformation
- •22.9 Mergers and acquisitions
- •Box 22.3 Restructuring through acquisitions: the case of Cisco Systems
- •22.10 Networking arrangements
- •22.11 Transforming organizational structures
- •22.12 Ownership restructuring
- •22.13 Privatization
- •22.14 Pitfalls and errors to avoid in transformation
- •23.1 The social dimension of business
- •23.2 Current concepts and trends
- •Box 23.1 International guidelines on socially responsible business
- •23.3 Consulting services
- •Box 23.2 Typology of corporate citizenship consulting
- •23.4 A strategic approach to corporate responsibility
- •Figure 23.1 The total responsibility management system
- •23.5 Consulting in specific functions and areas of business
- •23.6 Future perspectives
- •24.1 Characteristics of small enterprises
- •24.2 The role and profile of the consultant
- •24.4 Areas of special concern
- •24.5 An enabling environment
- •24.6 Innovations in small-business consulting
- •25.1 What is different about micro-enterprises?
- •Box 25.1 Consulting in the informal sector – a mini case study
- •25.3 The special skills of micro-enterprise consultants
- •Box 25.2 Private consulting services for micro-enterprises
- •26.1 The evolving role of government
- •Box 26.1 Reinventing government
- •26.2 Understanding the public sector environment
- •Figure 26.1 The public sector decision-making process
- •Box 26.2 The consultant–client relationship in support of decision-making
- •Box 26.3 “Shoulds” and “should nots” in consulting to government
- •26.3 Working with public sector clients throughout the consulting cycle
- •26.4 The service providers
- •26.5 Some current challenges
- •27.1 The management challenge of the professions
- •27.2 Managing a professional service
- •Box 27.1 Challenges in people management
- •27.3 Managing a professional business
- •Box 27.2 Leverage and profitability
- •Box 27.3 Hunters and farmers
- •27.4 Achieving excellence professionally and in business
- •28.1 The strategic approach
- •28.2 The scope of client services
- •Box 28.1 Could consultants live without fads?
- •28.3 The client base
- •28.4 Growth and expansion
- •28.5 Going international
- •28.6 Profile and image of the firm
- •Box 28.2 Five prototypes of consulting firms
- •28.7 Strategic management in practice
- •Box 28.3 Strategic audit of a consulting firm: checklist of questions
- •Box 28.4 What do we want to know about competitors?
- •Box 28.5 Environmental factors affecting strategy
- •29.1 The marketing approach in consulting
- •Box 29.1 Marketing of consulting: seven fundamental principles
- •29.2 A client’s perspective
- •29.3 Techniques for marketing the consulting firm
- •Box 29.2 Criteria for selecting consultants
- •Box 29.3 Branding – the new myth of marketing?
- •29.4 Techniques for marketing consulting assignments
- •29.5 Marketing to existing clients
- •Box 29.4 The cost of marketing efforts: an example
- •29.6 Managing the marketing process
- •Box 29.5 Information about clients
- •30 COSTS AND FEES
- •30.1 Income-generating activities
- •Table 30.1 Chargeable time
- •30.2 Costing chargeable services
- •30.3 Marketing-policy considerations
- •30.4 Principal fee-setting methods
- •30.5 Fair play in fee-setting and billing
- •30.6 Towards value billing
- •30.7 Costing and pricing an assignment
- •30.8 Billing clients and collecting fees
- •Box 30.1 Information to be provided in a bill
- •31 ASSIGNMENT MANAGEMENT
- •31.1 Structuring and scheduling an assignment
- •31.2 Preparing for an assignment
- •Box 31.1 Checklist of points for briefing
- •31.3 Managing assignment execution
- •31.4 Controlling costs and budgets
- •31.5 Assignment records and reports
- •Figure 31.1 Notification of assignment
- •Box 31.2 Assignment reference report – a checklist
- •31.6 Closing an assignment
- •32.1 What is quality management in consulting?
- •Box 32.1 Primary stakeholders’ needs
- •Box 32.2 Responsibility for quality
- •32.2 Key elements of a quality assurance programme
- •Box 32.3 Introducing a quality assurance programme
- •Box 32.4 Assuring quality during assignments
- •32.3 Quality certification
- •32.4 Sustaining quality
- •33.1 Operating workplan and budget
- •Box 33.1 Ways of improving efficiency and raising profits
- •Table 33.2 Typical structure of expenses and income
- •33.2 Performance monitoring
- •Box 33.2 Monthly controls: a checklist
- •Figure 33.1 Expanded profit model for consulting firms
- •33.3 Bookkeeping and accounting
- •34.1 Drivers for knowledge management in consulting
- •34.2 Factors inherent in the consulting process
- •34.3 A knowledge management programme
- •34.4 Sharing knowledge with clients
- •Box 34.1 Checklist for applying knowledge management in a small or medium-sized consulting firm
- •35.1 Legal forms of business
- •35.2 Management and operations structure
- •Figure 35.1 Possible organizational structure of a consulting company
- •Figure 35.2 Professional core of a consulting unit
- •35.3 IT support and outsourcing
- •35.4 Office facilities
- •36.1 Personal characteristics of consultants
- •36.2 Recruitment and selection
- •Box 36.1 Qualities of a consultant
- •36.3 Career development
- •Box 36.2 Career structure in a consulting firm
- •36.4 Compensation policies and practices
- •Box 36.3 Criteria for partners’ compensation
- •Box 36.4 Ideas for improving compensation policies
- •37.1 What should consultants learn?
- •Box 37.1 Areas of consultant knowledge and skills
- •37.2 Training of new consultants
- •Figure 37.1 Consultant development matrix
- •37.3 Training methods
- •Box 37.2 Training in process consulting
- •37.4 Further training and development of consultants
- •37.5 Motivation for consultant development
- •37.6 Learning options available to sole practitioners
- •38 PREPARING FOR THE FUTURE
- •38.1 Your market
- •Box 38.1 Change in the consulting business
- •38.2 Your profession
- •38.3 Your self-development
- •38.4 Conclusion
- •APPENDICES
- •4 TERMS OF A CONSULTING CONTRACT
- •5 CONSULTING AND INTELLECTUAL PROPERTY
- •7 WRITING REPORTS
- •SUBJECT INDEX
Consulting and change
Box 4.2 Reasons for resistance to change
Lack of conviction that change is needed. If people are not properly informed and the purpose of change is not explained to them, they are likely to view the present situation as satisfactory and an effort to change as useless and upsetting.
Dislike of imposed change. In general, people do not like to be treated as passive objects. They resent changes that are imposed on them and about which they cannot express any views.
Dislike of surprises. People do not want to be kept in the dark about any change that is being prepared; organizational changes tend to be resented if they come as a surprise.
Fear of the unknown. Basically, people do not like to live in uncertainty and may prefer an imperfect present to an unknown and uncertain future.
Reluctance to deal with unpopular issues. Managers and other people often try to avoid unpleasant reality and unpopular actions, even if they realize that they will not be able to avoid them for ever.
Fear of inadequacy and failure. Many people worry about their ability to adjust to change, and maintain and improve their performance in a new work situation. Some of them may feel insecure, and doubt their ability to make a special effort to learn new skills and attain new performance levels.
Disturbed practices, habits and relations. Following organizational change, well-established and fully mastered practices and work habits may become obsolete, and familiar relationships may be altered or totally destroyed. This can lead to considerable frustration and unhappiness.
Lack of respect for and trust in the person promoting change. People are suspicious about change proposed by a manager whom they do not trust and respect, or by an external person whose competence and motives are not known or understood.
In a world where technological, social and other changes are occurring at an unprecedented pace and frequency, people and organizations are in need not only of change, but also of relative stability and continuity. Striking the right balance between change and stability, and helping the client to maintain this balance throughout the organization, is one of the vital tasks of the consultant.3
4.2How organizations approach change
Unplanned or planned change?
It is common knowledge that in every organization a great deal of evolutionary, natural change occurs. A typical example is the ageing of equipment and people, which has both problematic aspects (e.g. the need to repair and replace equipment, or to replace managers who have lost their dynamism and drive),
91
Management consulting
Box 4.3 What is addressed in planning change?
Some typical questions addressed in planning change and choosing strategies of organizational change are:
●What changes are occurring in the environment? What will be their implications for our organization?
●What changes should we foresee in order to achieve our development objectives, improve our performance, increase our share of the market, etc.?
●What undesirable changes will occur in the organization if we do not take timely steps to prevent them?
●What sort of and how much change are we able to manage?
●What sort of and how much change will our people be able to absorb and support? How should we help them to cope with change?
●Should we implement change in stages?
●What will be the relations between various changes that we intend to make? How will they be coordinated?
●Where and how should the change process be initiated?
●How should we manage change? Do we need a consultant? What would be this consultant’s role?
●What should be our time horizon and timetable for implementing change?
and positive aspects (technical and managerial competence acquired by years of experience). While most of these changes cannot be kept under full control, it is possible to take preventive measures for avoiding and/or mitigating the negative consequences of evolutionary change.
A great deal of unplanned change is not of an evolutionary nature, but is a fast reaction to a new situation. A manufacturing firm may be compelled by competition to cut its prices, or a strike may force an organization to increase wages. Such changes are adaptive or reactive. The organization has not planned the change and, quite often, has not foreseen its necessity until very late. The organization makes the change to avoid a crisis, or in order not to lose an unexpected new opportunity that has just emerged.
It is a sign of poor management if the only changes that occur in an organization are inevitable and unplanned changes. Where this happens, it is a demonstration of reluctance or inability to look ahead and prepare the organization to react to future opportunities and constraints. While planning cannot completely eliminate the need for unplanned changes, it helps the organization to prepare itself for changes that can be anticipated, and minimizes the number of situations where hasty (and costly) changes have to be made in an atmosphere of panic.
More than that, the planning of change enables the organization to be proactive and “create the future”, e.g. to shape its environment and its own profile and outperform competition by creating new products and services,
92
Consulting and change
influencing consumer taste and demand, restructuring the key organizational processes before competition does so, and pushing for changes in the regulatory environment.
The last question in box 4.3 is crucial. Both organizations and individuals can absorb only a limited amount of change over a certain period of time, and this absorptive capacity is different in different countries, organizations and individuals. Conversely, delaying urgent changes can lead to crises and hopeless situations. The pacing of change is therefore one of the main skills needed in planning and implementing change.
Imposed or participative change?
In business practice, a great deal of change is decided and imposed on the organization by management. After all, by acting in this way management assumes its basic responsibility. However, change imposed from a position of authority may cause unhappiness and resentment, in particular if the people affected by such changes believe that they should have been consulted, or at least informed well in advance and in a proper way.
If change is initiated from a position of power and imposed upon people, it could be inherently volatile; it could disappear with removal of the power source, or in the absence of appropriate punishments and sanctions. Yet we cannot say that every imposed change is bad. There are emergency situations where discussion is impossible and delaying a decision would be detrimental. There are regulatory and administrative measures that will affect many people, but that are of minor importance and do not justify long discussion and consultation. Imposed change is considered to be more effective when dealing with dependent rather than independent people. In general, the attitude to imposed change is very much influenced by culture, education, access to information, and the existence of alternatives.
A manager should think twice before deciding to impose a change. He or she should do it only if firmly convinced that there is no alternative – if, for example, he or she has been unable to gain the support of the group, yet feels that change is inevitable. Still the manager should always take the trouble to explain the reasons for choosing to impose a change.
People in different national and organizational cultures do not feel the same way about change that is presented to them as an accomplished fact, and imposed on them without prior discussion or consultation. However, the trend towards participative change is ever more pronounced in most parts of the world. People want to know what changes are being prepared, and to be able to influence changes that concern them. Managers and administrators are increasingly aware of this fundamental demand and react to it by adopting a more participative approach to change.
A participative change process may be slower and more time-consuming and costly than imposed change, but it is considered to be long lasting. It helps to prevent resistance and generates commitment to change. In addition,
93
Management consulting
participative change helps management to draw on people’s experience and creativity, which is difficult to do if change is imposed.
There are different levels and forms of participation in the change process, depending on the nature and complexity of the change itself, on the maturity, coherence and motivation of the group, and on the relationship between management and employees (see box 4.4). At the first level, the manager or the consultant informs the staff concerned about the need for change and explains the specific measures that are being prepared. At the second level, consultation and discussion about change take place in the course of the change process – in identifying the need for change, proposing the specific changes to be made and checking whether people would react negatively to the measures proposed. Suggestions and criticism are solicited and management may reconsider its plan for change on the basis of these. At the third level, management seeks the active involvement of the staff in planning and implementing change by inviting them to participate in defining what to change and how to do it, and in putting the agreed changes into effect. This is normally done through workshops, task forces, special committees and projects, staff meetings and other methods reviewed in section 4.5.
In many situations change requires negotiation. This takes place when two or more individuals or groups discuss together the changes to be made and the benefits and costs to the parties involved. This may lead to a compromise that neither party considers to be an ideal solution by its own standards. However, the probability of support by those concerned, and hence the probability of implementing the agreement reached, will be much higher.
There are changes that require negotiation between management and the representatives of employees, who may be trade union or other representatives. Issues requiring nogotiation may be determined by law, through collective bargaining, or by any other joint agreement, formal or informal. Managers and consultants should be particularly alert to the desirability of a dialogue with employees’ representatives, not only in cases explicitly stipulated by laws or formal agreements, but also in preparing any changes that may affect the interests of people in the organization and where employee support may be essential.
Frequent and sincere dialogue with employees and their representatives is the best means for preventing organized large-scale resistance to change, expressed through strikes and similar forms of protest against decisions taken or planned by management. Clearly, resistance to change is not the only reason for strikes. It is, however, a frequent reason, and it can often be traced back to management’s failure to consult and inform people, explain why change cannot be avoided, seek alternative solutions, and implement change in ways that minimize hardship to the people concerned.
Finally, in thinking of participative approaches, the perspective is often limited to employee participation, direct or through their representatives. This perspective may prove to be narrow and may miss important inputs. It is useful to think of a wider circle of “stakeholders”, i.e. organizations and people having various stakes in the organization in question. Customers are important stakeholders, and learning from them in preparing important changes is essential. Other
94