- •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 in human resource management
perceived to be taking sides or demonstrating partiality towards one group or another (even if this is not the case), both the consultancy itself and labour– management relations in the organization may be compromised.
The consultant is nevertheless well advised to recommend that every opportunity for constructive consultations between management and workers’ representatives be seized (whether or not there are legal requirements in this regard). This is almost always desirable, but is particularly so when new labour– management relations policies are being considered or introduced. The cooperation or acquiescence of trade union or other workers’ representatives resulting from such consultations can often be a crucial factor in the success or failure of the consultant’s efforts.
18.8 New areas and issues
International human resource management
One issue in human resource management that is attracting increasing attention
– and is a rapidly growing area of consultancy work – concerns international HRM. The growing internationalization of business and of HRM has already been noted. Increasing numbers of people are living and working outside their home country (expatriates). Traditionally these people were government representatives (civil and armed services), members of religious groups and charities, and staff of major multinational corporations (MNCs) sent from developed to developing countries. This pattern has changed, as the large MNCs have generally reduced the number of international transferees, while smaller companies have moved into the area. This process has been facilitated by the growth of international trade blocs such as the Association of South-East Asian Nations (ASEAN), the North American Free Trade Agreement (NAFTA) and the EU. Within the EU in particular, there are now Union-wide legislation and policies aimed at easing the movement of people seeking employment across national boundaries.
This is a field that has tended to be dominated by consultants from two broad areas. Accounting firms, financial consultancies and employee benefits consultants advise on pay, taxation and pension issues. Recruitment consultancies have gradually moved into international assignments as their clients have become more international. There are now a number of organizations specializing in international recruitment, particularly for the three main groups of internationally mobile employees: senior managers, technical specialists and, somewhat paradoxically, relatively unskilled people such as hotel workers, construction industry labourers and household servants. One criticism that may be levelled here is that, for the managerial jobs in particular, too much attention is paid to previous experience and not enough to intercultural adaptability. In other words, it is assumed that a manager who is successful in one country will also be successful in another country. However, there is now considerable evidence to show that the process of managing varies from country to country.
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Box 18.2 Current issues in Japanese human resource management
In Japan, consultants are finding a need for a bifocal approach to the management of human resource issues in their client organizations. For the immediate and near term, they must help the clients restructure their HR strategies, systems and practices to allow the transition from the traditional economy to the new economy. At the same time, for the longer term, they must assist clients in reorganizing their HR management to face the next generation of HR issues that is certain to be brought upon them by the accelerating demographic shift.
(1) Current and near-term issues
With the transformation of the national economy from a domestically oriented, regulated and manufacturing-based one to a globally driven, deregulated and knowledge-based one, industries and companies have found their traditional HR systems built on lifetime employment and the seniority principle increasingly rigid, costly and uncompetitive. These systems have saddled them with a constantly rising proportion of aged workers whose cost has been rising relentlessly with seniority. Their traditional revenue base, on the other hand, has been steadily eroding with the transformation of the national economy.
While companies have reduced their workforce costs through massive programmes of early retirement, layoff, plant and office closing, and business divestment, they have called upon management consultants to redesign and redevelop their HR management into merit-based systems linked more directly with performance. Consultants, playing a larger role than ever, have introduced compensation, performance management and career management systems that, in place of seniority, are based on jobs (shokumu), results or outcomes (seika), roles (yakuwari) or, alternatively, competency (kompitensi).
More importantly, their consulting level has moved up from functional management, where HR managers and specialists are their main clients, to the strategic planning level, with top management making key decisions on the consulting project. Frequently, projects arise from the decision of corporate management to change their business model. Even a project coming from HR executives more often has a strategic orientation, as they themselves respond to the challenge of business transformation and raise their sights above their conventional functional priorities.
(2) Longer-term issues
The demographic bomb, which is seen in developed societies all over the world, is ticking most loudly in Japan and promises to change the face of the national HR system possibly faster and more forcefully than in any other developed society. Already in 2000, the proportion of the population aged between 15 and 44 years fell below 40 per cent. By 2025, it is most likely to drop further to somewhere near 30 per cent. Japan will then have the highest proportion of elderly people (65 and older) and the lowest proportion of productive-age population (15–64) of all the developed countries.
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This “age shock” will first tear apart the pension system of the country unless it is revised soon with the expert assistance of HR and benefits consultants, incorporating the self-help principle and the defined contribution design. The new demographics will further alter the new HR management equation formulated in 2000, by driving companies and consultants to introduce new systems that entice retired and retiring employees to stay on the job and work much longer than they are allowed to work now.
Other HR management systems and practices that companies have developed to deal with the current and near-term issues are also likely to have severely limited life-spans if the new economy, as widely expected, generates a fast-rising, insatiable demand for workers with high knowledge skills. Consultants will then be recruited to help companies remodel their HR management systems to make them more diverse, flexible, friendly and attractive to a non-traditional workforce, inevitably composed of female and foreign workers as well as male workers, young and old.
To respond to this highly complex professional demand, consultants will need to remodel themselves into professionals with broader social competence in addition to greater technical expertise.
Authors: Eiji Mizutani and Osamu Ida.
Expatriate managers are expensive and crucial people in their organization, under pressure to establish themselves and their families in the new country and having to adapt to different cultural requirements. Often they fail to make the transition successfully – at great personal and organizational cost.
A growing number of organizations specialize in the full range of expatriate HRM consultancy: recruitment, training, briefing, transfer, adaptation, pay and benefits, evaluation and return. Before addressing the technical issues of recruitment or pay and benefits, consultants in this area should press the client to answer key strategic questions: “Why send expensive expatriates when there are talented and well-educated locals?”, “Why not use more (or fewer) expatriates?”, “How do you know that the expatriates are adding more value than they cost?” and “What role will the expatriate undertake at the end of the assignment?”
New forms of work
New forms of work outside the standard full-time, long-term employment package (called contingent work, atypical work or flexibility) have become established in developed countries, at least, as a key aspect of the management of human resources. Flexible ways and times of working are traditionally more common in less developed economies. As economies advance they create established patterns of doing things: job descriptions, normal working hours, legal constraints on employment contracts, and so on. However, in some of the
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Box 18.3 Current issues in European HR management
A major HRM research programme, the Cranet survey, now has over 25,000 responses from employers in 22 European and a dozen other countries. It provides hard evidence on the roles and functions of human resource departments, recruitment, compensation, training, industrial relations, communication with employees and flexible working practices.
The evidence from the survey confirms differences in HRM policies between different sizes of organization and different sectors of the economy (in particular between the public and the private sectors). The central finding of the research, however, is that while there are common trends throughout Europe there are also significant national differences.
Five key areas of common development can be identified:
(1)Pay. Pay determination is being increasingly decentralized from the national industry collective bargaining level to individual organizations or even to units within organizations. Furthermore, pay is becoming an area for increased variability, with individuals having their pay and rewards determined outside national or sector-level bargaining arrangements. Performance-related pay, however, seems to have stopped spreading as organizations are now more likely to pay for competence, leaving it to managers to ensure the best use of that competence.
(2)Flexibility. There has been widespread growth in “atypical” work (temporary, casual, fixed-term, part-time, etc.). This extension of different forms of employment varies by country, and countries are at different levels in their use of these new employment relationships – but growth is the norm in all countries.
(3)Equal opportunities. Policies for providing equal opportunities for women are widespread throughout Europe, but are frequently not translated into action. Despite recent tensions, action against discrimination on grounds of race or ethnic origin is still rare.
(4)Training. Training is seen as the key issue for HRM in most European countries. Spending on training continues to increase even during periods of lower economic growth. The manner in which training is assessed, organized and evaluated varies markedly between countries.
(5)Trade unions. Trade unions are entrenched and influential bodies throughout Europe, although membership figures vary considerably. In most, but not all, countries, unions have declining memberships.
Although the evidence shows common trends, there is also considerable variation across countries, and noticeably in the way these common issues are handled. The role and influence of human resource departments differ from country to country. Consultants need to be knowledgeable about the common trends in issues – but aware of the national variations in human resource departments and the way they manage these issues.
Author: Chris Brewster.
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more developed economies these have come to seem restrictive. The increasingly difficult, and often internationally competitive, environment is leading the most sophisticated organizations to stress flexibility of human resource practices to meet the requirements of the business more exactly.
The growth in flexibility can be seen in various forms. Numerical flexibility – the ability to employ different numbers of people – is now widespread. Even the famous lifetime employment in the major Japanese companies or companies such as IBM or Daimler Benz has been overtaken by economic pressures and production requirements, and these companies have started reducing numbers. Working-time flexibility – working outside the usual morning to evening hours – is spreading as organizations find that they have to use their equipment for longer hours to cover their costs, or to be available to customers early or late in the day.
A wide variety of innovative arrangements involving part-time working, varying shift patterns, minimum/maximum hours and annual hours contracts are now common in North America and Europe. Contractual flexibility – appointing people to share jobs, or accept short-term jobs or a less-committed relationship with the organization – is now quite usual. Finally, financial flexibility – varying pay in accordance with the individual’s performance or the organization’s ability to pay – is also growing.
One important result of flexibility for workers is that it opens up new job possibilities for many people, both women and men, who would not otherwise be able to go to work. Work that offers flexible hours or that is limited to certain periods of the year may allow people to choose jobs that suit their personal needs and preferences regarding family responsibilities (care of children or elderly relatives), educational requirements, or lifestyle. Parents of school-age children, for example, could well be available for work on a part-time basis for a few hours in the middle of each day or in the evening, or at particular times of the year (e.g. outside school holidays). Thus, flexible working not only attempts to match the available work much more closely to the employer’s work requirements, it also opens up the labour market to a wider group of employees and hence improves the employer’s ability to select the best people.
In dealing with issues of work and employment flexibility, the consultant should not overlook the wider social implications. There may be a need for improved social services, changes in public transport scheduling, and so on. The HR consultant may be well placed to suggest to the client what new services could facilitate work flexibility, or what new arrangements should be proposed to local government or transport authorities.
Human asset (human capital) accounting
A growing area of consultancy, particularly for the major companies, is in measuring and controlling the costs and benefits of employment. In most organizations, the people employed account for the largest single operating cost. Consultants should be able to help organizations manage this resource in the same way as they do others – to assess its costs and show its value. Of course,
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this is more complicated for people than it is for, say, electricity, but an attempt should be made. Employers often do not realize the total costs of employment: not just wages, but benefits, accommodation, recruitment, administration etc. Equally, they often find it hard to identify the added value of each employee. The major consultancies now have differently titled approaches aimed at reducing the complexity of humans to financial numbers. This is still a very inexact science, but one that seems likely to be an increasing source of work for management consultants.5
The role of the personnel/HR department
Personnel and human resource departments have come under increasing pressure to prove their own added value to the organization: they are expensive overhead costs. So there has grown up a specialized form of consultancy aimed at assisting these departments to clarify their objectives, their ways of working and their outputs (as opposed to the obvious inputs of resources). This can involve benchmarking other organizations and can raise some hard issues if, for example, the HR department seems to be significantly larger than that of a relevant competitor. The important point for the consultants to focus on is the measurement of outputs: what is it that the department is adding to the organization? Is it worth the costs involved? It is often the case that there is a substantial gap between the administrative and system-controlling role that the department performs and the strategic, knowledge management role that the department would like to undertake. Identifying this and helping the specialists to develop action plans to bridge the gap is a growing role for HR consultancies.
Human resource information systems
A relevant aspect of the assessment of the HR function concerns the degree of sophistication of the information and communication systems used: the human resource information systems. The technology is now available for every line manager to be able to access, in real time, the complete records of every member of their staff, including all details of their competencies, skills and training. With this kind of information availability many of the other aspects of HR work (training and development, assessment systems, human resource planning, careers and succession planning, etc.) become both easier and more powerful. Few HR departments take full advantage of such systems and many are still caught in the vice of administration and paper-shifting. There is now an extensive range of consultancy work to help HR departments select the most appropriate and cost-effective system.
Unfortunately, work is often done by IT consultants, who may sell the organization a system that is, perhaps, more sophisticated, and usually more expensive, than is needed. Since it is rarely possible to spend another large sum of money to replace such a system, the organization becomes stuck with a computerized facility that may be almost unused. It is generally better to obtain
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advice from specialist HR consultants able to ensure that the key questions of what the organization wants to use the system for, and how much use will be made of it, are asked first, and that the system selected has maximum credibility and use rather than being the “latest thing”.
Subcontracting (outsourcing) of HRM
The focus on the role of the HR department and the growth of HR information systems has led some consultancies to offer to undertake all, or key elements of, the HR task on behalf of clients. They can often provide expertise and depth of knowledge that is lacking in the organization. Some elements of HRM (compensation, insurance) have traditionally been outsourced in some countries. In many cases individual issues, such as training, have been outsourced to experienced training consultants or to the education system, but the notion of taking over the whole task, or key elements of it, is new. There have been some highly visible decisions by some well-known companies to outsource all aspects of their HR systems, but whether this will become a trend or turn out to be just a fad is still a matter of debate. There are cost and efficiency advantages, and loss of expertise and strategic control disadvantages. Consultants are already helping organizations compare the two sides of the coin so that they can reach sensible decisions.
The logic of subcontracting or outsourcing the administration of the HR system is clear, even if it goes against the modern tendency to view the implicit knowledge that resides in an organization’s people as a key competitive asset. A more widespread phenomenon, and one that often has a different purpose, is the outsourcing of the human resources themselves: moving the work from people employed within the organization to others working elsewhere – sometimes even in different countries. The purpose of such outsourcing is usually cost reduction: work can be allocated to people who are paid significantly less or, where the work is undertaken in another country, where social protection is poorer.
There are arguments that such developments are inevitable, given the nature of global capitalism, and even that they have a benefit in spreading at least some kinds of work to poorer countries. There is also, however, a developing backlash whereby NGOs and other social groups are highlighting bad practices in the subcontractors and creating significant difficulties for the outsourcing organization. Consultants who are asked to advise on such matters should do so cautiously, emphasizing both the advantages and the disadvantages of various arrangements, and the long-term financial benefits of ethical behaviour.6
1 E. Poutsma, A. Pendleton, J. van Omerren and C. Brewster: Financial participation in Europe, Report to the European Foundation for the Improvement of Living and Working Conditions (Dublin, January 2000).
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2W. F. Glueck: Personnel: A diagnostic approach (Plano, TX, Business Publications, 1982), p. 296.
3See also selected guides to management and human resource development in Appendix 3.
4See e.g. M. Pedler, J. Burgoyne and T. Boydell: The learning company: A strategy for sustainable development (Maidenhead, Berkshire, UK, McGraw-Hill, 1997).
5See e.g. U. Johanson and H. H. Larsen: “Human resource costing and accounting”, in C. J. Brewster and H. H. Larsen (eds): Human resource management in Northern Europe (Oxford, Blackwell, 2000).
6See also P. Drucker: “They’re not employees, they’re people”, in Harvard Business Review, Feb. 2002, pp. 70–77.
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