- •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
Professionalism and ethics in consulting
acceptance. There are various views and practices regarding required consultant competencies and the conditions of entry into consulting. The borders of consulting and its relationships to other professions are flexible, permeable and mobile and have recently undergone many important changes. Even now, and even in sophisticated business cultures, virtually anyone can call himself or herself a management or business consultant and offer services to business clients without any diploma, certificate, licence, credentials, recommendations or registration. This is the reality of the business and some observers feel that this loose and liberal framework has actually been beneficial to the growth of consulting and has enabled its flexible and fast adaptation to changing environments and client needs.
We can call management consulting an emerging profession, a profession in the making, or an industry with significant professional characteristics and ambitions, provided that we are aware of the gaps that need to be filled and improvements that need to be made. After all, it may not be so important to decide whether consulting is a profession. Consulting has demonstrated that it can exist and prosper without any such decision. More important are the quality and other standards applied by consulting firms and individual consultants, who can demonstrate their professional values and behaviour without waiting for the sector to achieve recognition as a fully fledged profession.
We will comment on these issues in the following sections, showing how the professional level and quality of management consulting can be increased.
6.2The professional approach
What then are the salient characteristics of a professional approach in management consulting? Some of them can be found, in succinct form, in the codes of ethics or conduct adopted by the membership organizations of management consultants; others are set out in information pamphlets of consulting firms. These are the norms held collectively, i.e. by the members of a consultants’ association or of a consulting firm that has formally declared what its ethical rules are. However, in many situations it is not possible to refer to a formal declaration of norms defining professional and ethical behaviour. In such cases the consultant has to be guided by a personal code of professional ethics and behaviour – his or her own conception of what is proper and improper practice, and what is beneficial to the client and the community and what is not.
The consultant is in a position of trust; the client probably believes that certain behavioural norms will be respected without their even being mentioned. Many clients believe that consultants would never use false credentials, and some clients are even unable to evaluate the consultant’s technical competence. The consultant may be in a position of technical superiority and possess knowledge and information that the client does not have. The client may then be in a position of weakness, uncertainty, and even distress (box 6.1).
Any consultant who seeks to act in a professional manner must clarify his or her own conception of ethics and the norms to be observed in working for
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Box 6.1 The power of the professional adviser
The “technical superiority” of the management consultant, and his or her “power” over clients, are often different from what can be observed in some other professions, e.g. in medicine. There are two main reasons for this. First, if there is a knowledge and experience gap between management consultants and their clients, this gap can be quite small. To many clients, management consulting is not a “black box”. Both the consultant and the client may have the same educational background and similar practical experience. The client may be quite well prepared for deciding to use or not to use a consultant and to accept or reject the consultant’s advice, and for controlling the consultant’s work during an assignment. Clearly, this is not the normal position of a patient who turns to a physician, or of a layperson who seeks legal counsel and in certain situations must retain a lawyer even if he or she would prefer not to. Second, management consulting is not a closed and highly protected profession. In most countries there are no jobs that are reserved to management consultants. The consultant’s and the client’s roles can even be interchangeable. Someone who is client today can be consultant tomorrow, and vice versa.
There are two typical situations where the consultant’s ethics are clearly put to the test: first, if the consultant does enjoy technical superiority because he or she works for an uninformed or technically weak client; and second, if he or she works for a client whose judgement has been impaired by distress and difficulties and who desperately needs help. Such clients may be very vulnerable and easy to manipulate, and the choice of the terms of the consulting contract, the intervention methods and the changes proposed can be very much in the hands of the consultant. Even if a participative consulting method is applied, the client may be subdued, not self-confident and a weak participant.
clients. This applies equally to external and internal consultants, as well as to anyone who intervenes in a consulting capacity.
Technical competence
The consultant’s technical competence is the basis of his or her professional approach. Above all, consultants must possess the knowledge and skills needed by particular clients. As a general rule, they must be able and willing to assess critically their own knowledge and skills when considering a new assignment or when reaching a point in a current assignment where different competencies are required. A professional consultant will never misrepresent himself, pretending that he can do a job that is beyond his competence, even if he is short of work and keen to get any assignment. The consultant who wants to tackle a new sort of problem (experience cannot be increased except by trying out something new) will discuss this openly with the client.
The difficulty is that in management and business consulting there is a lack of reliable and objective benchmarks for assessing competence to do a
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particular job to the client’s satisfaction. Consulting associations have attempted to define a common body of knowledge of professional consultants, and the type and minimum duration of experience which is a condition of association or institute membership or certification (see section 6.4). These, however, are general and rather elementary criteria of admission or certification, which cannot show whether a consultant is competent for a given task. They are not applied to consultants who are not members of associations or who do not seek certification. In addition, the work on developing a generally recognized body of knowledge for the consulting profession is far from being completed. The documents that are available from various consulting associations are useful, but cannot be regarded as normative texts establishing the knowledge base of the profession (see also Chapters 36 and 37 dealing with the careers and development of consultants).
Avoiding conflict of interest
During an assignment and within the limits of a consulting contract, the consultant’s competence and time are made available to the client, with the objective of achieving the best possible results in the client’s interest. Unfortunately, it is not always obvious what “client’s interest” means or what the client really expects from the assignment. There is often a conflict between the client’s short-term and long-term interests, or between interests of various groups within a client organization, but the client may not see this until the consultant brings it to his or her attention. In agreeing to serve a client, the consultant must be sure that his or her interests do not conflict with those of the client.
Avoiding a conflict of interest is one of the most delicate and critical issues of professionalism and ethics in consulting. There may be many reasons for this, including the complexity of business ventures and transactions in which consultants become involved as advisers or intermediaries, the multidisciplinary structure of many larger professional firms and the rather liberal interpretation of the meaning of conflict of interest in some cultures and countries.
Box 6.2 lists some situations where conflict of interest may not be obvious at first glance. Conversely, certain instances of conflict of interest are blatant and may be explicitly mentioned in codes of conduct. Thus, consultants may be required to disclose, prior to assignments, all relevant personal, financial and other business interests which could not be inferred from the description of the services offered. In particular this relates to:
●any directorship or controlling interests in any business in competition with the client;
●any financial interest in goods or services recommended or supplied to the client;
●any personal relationship with any individual employed by the client;
●any personal investment in the client organization or in its parent or any subsidiary companies.
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Box 6.2 Is there conflict of interest? Test your value system.
●An international consulting firm is an adviser to a government on a privatization project, although it has long-standing work relationships with a potential foreign buyer of the public enterprise to be privatized, and is actually executing, through another branch office and a different team of consultants, an assignment for this potential buyer.
●An auditor suggests that a client should turn to the consulting division of his professional firm with a specific problem that surfaced during the audit, although there may be other consultants who could do the same job better or for a lower fee.
●A consultant keeps an eye on a client’s staff and does not miss an opportunity to offer a job to the most talented among the client’s people, especially if there is dissatisfaction in the client organization and the consultant can offer a better salary. Another consultant pursues the same objective but waits several months after the end of the contract before approaching any candidate.
●A client does the same in respect of the consultant working for him.
●A consultant is pursuing an assignment step by step, rigorously respecting the work plan defined in the contract, although it is almost certain that she will get nowhere and the proposals will never be implemented.
●A consultant is a leading professional expert in a particular sector – textiles, automotive industry, machine tools, etc. This implies working simultaneously or successively for competing firms, which may or may not know about it. What is the difference between providing the best sector-related expertise to every client, and leaking information from one competitor to another?
●A consultant who has been adviser to a number of public sector companies to be privatized participates in establishing an investment fund, or becomes adviser to an investment fund which takes a financial interest in these companies during the privatization process.
It should be noted that other professions and their public regulators are also concerned about issues of conflict of interest. In the accounting profession, relationships and activities that can impair auditor independence and generate conflict of interest between auditors and their clients have been debated for years. The debate has been difficult and definitive solutions that would be regarded as fully satisfactory by all interested parties have yet to be found (see box 6.3).
The question whether to “empower” a client by sharing expertise, transmitting know-how, and providing training in conjunction with advice, is another complex issue in which conflict of interest may arise. In the previous chapters we have said that a professional consulting approach has a strong learning dimension. To “help clients to learn to help themselves” is a fundamental objective. However, a general declaration of a noble principle is not enough. The consultant must be sure that the assignment is so designed, and the client so involved, that the consultant will pass on to the client knowledge and expertise.
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