An Overview

Consultant
 One who is hired by an entity for an expert advice
regarding matters that may be beyond the entity’s
capacity to determine, or execute.
 A consultant possesses expertise in a specific area (s)
and provides a fair opinion or advice for a fee.
Management consulting
 Management consulting indicates both the industry and practice of helping
organizations improve their performance primarily through the analysis of
existing organizational problems and development of plans for improvement.
 Organizations hire the services of management consultants for a number of
reasons, including gaining external (and presumably objective) advice and
access to the consultants' specialized expertise.
 Because of their exposure to and relationships with numerous organizations,
consulting firms are also said to be aware of industry "best practices", although
the transferability of such practices from one organization to another may be
problematic depending on the situation under consideration.
 Consultancies may also provide organizational change management assistance,
development of coaching skills, technology implementation, strategy
development, or operational improvement services. Management consultants
generally bring their own, proprietary methodologies or frameworks to guide
the identification of problems, and to serve as the basis for recommendations
for more effective or efficient ways of performing work tasks.
History
 Management consulting grew with the rise of management as a unique field of
study. The first management consulting firm was Arthur D. Little, founded in
1886 by the MIT professor of the same name and was incorporated in
1909.[1] Though Arthur D. Little later became a general management
consultancy, it originally specialized in technical research. Booz Allen
Hamilton was founded by Edwin G. Booz, a graduate of the Kellogg School of
Management at Northwestern University, in 1914 as a management consultancy
and the first to serve both industry and government clients.
 The first wave of growth in the consulting industry was triggered by the Glass-
Steagall Banking Act in the 1930s, and was driven by demand for advice on
finance, strategy, and organisation.[2
 After World War II, a number of new management consulting firms formed,
bringing a rigorous analytical approach to the study of management and
strategy. Work done at McKinsey, Boston Consulting Group, Booz Allen
Hamilton, and the Harvard Business School during the 1960s and 1970s
developed the tools and approaches that would define the new field of strategic
management, setting the groundwork for many consulting firms to follow.
History
 An earlier wave of growth in the early 1980s was driven by demand for strategy
and organisation consultancies. The wave of growth in the 1990s was driven by
both strategy and information technology advice. In the second half of the
1980s the big accounting firms entered the IT consulting segment.
 The then Big Eight, now Big Four, accounting firms
(PricewaterhouseCoopers; KPMG; Ernst and Young; Deloitte Touche
Tohmatsu) had always offered advice in addition to their traditional services,
but from the late 1980s onwards these activities became increasingly important
in relation to the maturing market of accounting and auditing
 By the mid-1990s these firms had outgrown those service providers focusing
on corporate strategy and organization. While three of the Big Four legally
divided the different service lines after the Enron scandals and the ensuing
breakdown of Arthur Andersen, they are now back in the consulting business.
 The industry stagnated in 2001 before recovering after 2003.
Functions of an MC (8 Tasks)
 providing information to a client;
 solving a client's problem;
 making a diagnosis, which may necessitate redefinition of
the problem;
 making recommendations based on the diagnosis;
 assisting with the implementation of the recommended
actions;
 building a consensus and commitment around the
corrective actions;
 facilitating client learning;
 permanently improving organizational effectiveness.
Approaches
 Expert approach
 the consultant takes the role of expert, and provides expert advice or
assistance to the client.
 facilitative approach
 less input from, and fewer collaborations with the client(s)
 the consultant focuses less on specific or technical expert
knowledge, and more on the process of consultation itself.
 focus on process, a facilitative approach is also often referred to as
'process consulting’
 Consultancy firms may be organized in a matrix structure
 X axis may focus on business function or type of consulting: strategy, operations,
technology, executive leadership, process improvement, talent management, sales,
 Y Axis may focus on industry an: for example, oil and gas, retail, automotive.
Specialisms
 information technology consulting,
 is a field that focuses on advising businesses on how best to useinformation
technology to meet their business objectives. In addition to providing advice, IT
consultancies often estimate, manage,implement, deploy, and administer IT
systems on businesses' behalf, known as Outsourcing
 human resource consulting - core fields around which most HR consultancies are
based:
 Human Capital, including remuneration (also called total rewards), employee
rewards and incentive programs, and talent acquisition and management
 Health & Benefits; i.e., orchestrating optimal employee health plans with the
carriers themselves
 Mergers & Acquisitions, examining fit across culture, job-type, transaction
costs, etc.
 Communication, including surveying employee attitudes, satisfaction,
engagement, and other employee behaviors
 Retirement
 Outsourcing
 Outsourcing is the process of contracting a business function to someone
else.[
 Specialisms
 virtual management consulting:
 Due to developments in information technology within the workplace, along
with a need to compete globally and address competitive demands,
organisations have embraced virtual management structures [1].
 Virtual teams are typically composed of team members who are not located face-
to-face and their communication is mediated through information and
communication technologies (e.g. video conferencing, email and intranets).
 Virtual teams represent an important emerging organisational structure which
facilitates collaboration between team members located almost anywhere in the
world
 Virtual teams are also becoming increasingly popular with workers who want to
work at home, which can increase employee engagement
 a virtual team is not limited to members from the same physical location or
organisation.
 Can be assembled according to the skills and backgrounds required, from
anywhere in the world, enabling the organisation to become more flexible and
to compete globally.

 Many of which overlap, and most of which are offered by the larger diversified
consultancies.
 “Boutique" consultancies, however, are smaller organisations focusing upon one, or
just a few of, such specialism.
Types of Consulting Firms
 Large, diversified organizations,
 Medium-sized management consultancies and
 Boutique firms which have focused areas of consulting
expertise in specific industries, functional areas,
technologies, or regions of the world.
Revenue model

 Traditionally, the consulting industry charged on

a time and materials basis, billing staff consultants out
based solely on the hours worked plus out-of-pocket
expenses such as travel costs.
 During the late 1990s and early 2000s, there was a shift
to more results-based pricing, either with fixed bids
for defined deliverables or some form of results-based
pricing in which the firm would be paid a fraction of
the value delivered.
Trends
 Becoming more prevalent in non-business fields including the
public sector; as the need for professional and specialist support grows,
other industries such as government, quasi-government and not-for-profit
agencies are turning to the same managerial principles which have helped
the private sector for years.
 An industry structural trend which arose in the early part of the 21st
century was the spin-off or separation of the consulting and accounting
units of the large diversified professional advisory firms most notably Ernst
& Young, PwC and KPMG. For these firms, which began operation as
accounting and audit firms, management consulting was a new extension
to their organisation.
 But after a number of highly publicised scandals over accounting
practices, such as the Enron scandal, these firms began divestiture of their
management consulting units, to more easily comply with the tighter
regulatory scrutiny that followed.
 In some parts of the world this trend is now being reversed where the firms
are rapidly rebuilding their management consulting arms.
Trends -
Rise of internal corporate consulting groups

 Set up their own internal consulting groups,

 hiring internal management consultants either from
within the corporation or from external firms
employees. Many corporations have internal groups of
as many as 25 to 30 full-time consultants.
 Practice areas commonly including: organizational
development, process management, information
technology, training, and development.
Advantages of internal corporate
consulting groups
 If properly managed and empowered, internal consulting
groups evaluate engagement on projects in light of the
corporation's strategic and tactical objectives.
 Often, the internal consultant requires less ramp up time
on a project due to familiarity with the corporation, and is
able to guide a project through to implementation — a step
that would often be too costly if an external consultant
were used.
 Internal relationship provides opportunities to keep
certain corporate information private.
 It is likely that the time and materials cost of internal
consultants is significantly less than external consultants
operating in the same capacity.
 Internal consulting positions can be used to recruit and
develop potential senior managers of the organization.
Disadvantages of
internal corporate consulting groups

 The internal consultant may not bring the objectivity to the

consulting relationship that an external firm can.
 An internal consultant also may not bring to the table best
practices from other corporations. A way to mitigate this issue is
to recruit experience into the group and/or proactively provide
diverse training to internal consultants.
 Where the consulting industry is strong and consulting
compensation high, it can be difficult to recruit candidates.
 It is often difficult to accurately measure the true costs and
benefits of an internal consulting group.
 When financial times get tough, internal consulting groups that
have not effectively demonstrated economic value (costs vs.
benefits) are likely to face size reductions or reassignment.
Criticisms
 "Management consultants are often criticized for overuse
of buzzwords, reliance on and propagation of management fads, and a
failure to develop plans that are executable by the client.“
 A number of critical books about management consulting argue that
the mismatch between management consulting advice and the ability
of executives to actually create the change suggested results in
substantial damages to existing businesses
 "Flawed Advice and the Management Trap," Chris Argyris said that
most advice given today contains gaps and inconsistencies that may
prevent positive outcomes in the future
 Disreputable consulting firms are often accused of delivering empty
promises, despite high fees. They are often charged with "stating the
obvious" and with lacking the experience on which to base their advice.
These consultants bring few innovations, instead offering generic and
"pre-packaged" strategies and plans that are irrelevant to the client’s
particular issue.
Criticisms (continued)
 Another concern is the promise of consulting firms to deliver on
the sustainability of results. At the end of an engagement
between the client and consulting firms, there is often an
expectation that the consultants will audit the project results for
a period of time to ensure that their efforts are sustainable.
Although sustainability is promoted by some consulting firms, it
is difficult to implement because of the disconnect between the
client and consulting firms after the project closes.
 Further criticisms include: disassembly of the business (by firing
employees) in a drive to cut costs, only providing analysis
reports, junior consultants charging senior rates, reselling
similar reports to multiple clients as "custom work", lack of
innovation, overbilling for days not worked, speed at the cost of
quality, unresponsive large firms and lack of (small) client focus,
lack of clarity of deliverables in contracts,[12] and secrecy.[13]
Professional Qualifications of MCs
 The internationally recognized Certified Management Consultant (CMC)
professional designation
 Accountancy qualifications: Chartered Management
Accountant (CIMA), Chartered Certified Accountant (ACCA), Chartered
Accountant (CA), Certified Public Accountant (CPA), Certified Practicing
Accountant (CPA), Certified Management Accountant(CMA) Chartered Cost
Accountant CCA Designation from AAFM
 Engineering qualifications: Chartered Engineer (C.Eng - UK) Professional
Engineer (P.E./P.Eng. - USA and Canada), Engineer Diploma Grande Ecole
(France)
 Actuarial qualifications: Casualty Actuarial Society (FCAS) - US, Society of
Actuaries (FSA) - US, Institute of Actuaries (FIA) - UK,Faculty of
Actuaries (FFA) - Scotland
 Finance qualifications: Chartered Financial Analyst (CFA), Certified Treasury
Professional (CTP)
Professional Qualifications of MCs
 Consulting qualifications: MSc Business Analytics and Consulting Practice, Hull
University Business School, UK, Master of Science in Business
Consulting (MSc), Furtwangen University of Applied Sciences, Germany/Master of
Business Administration in International Business Consulting (MBA) Hochschule
Offenburg University of Applied Sciences, Germany
 Business Administration qualifications: Master of Science in Management -Europe-
(MSc.in Management), Master in Management at Grande Ecole - France, Master of
Business Administration (MBA) -USA Canada Doctor of Management ( Ph.D.), Doctor of
Business Administration-USA/Canada- (DBA)
 Public Administration qualifications: Master of Public Administration (MPA) -
USA/Canada/Europe, Doctor of Public Administration
 Project Management qualifications: Project Management Professional (PMP) recognized
globally, Master of Project Management(MPM)- USA/Canada/Europe
 Advanced Professional Degrees such as PhDs or Master's
degrees in Engineering, Economics and Science, MDs, JDs etc. are specifically targeted by
firms like McKinsey, Bain & Company, Arthur D. Little and the Boston Consulting Group.
These degrees may also have concentrations in management consulting, international
management, or other relevant focus
Professional Qualifications of MCs
 Akademischer Unternehmensberater (Academic Management
Consultant) - Austria - incite -institute for management
consultants and information technology experts, Vienna
 Marketing qualification: Chartered Postgraduate Diploma in
Marketing, which can lead to Chartered Marketer status from
The Chartered Institute of Marketing (CIM)
 Consulting qualifications: Multidimensional Human Factor
Management Consulting (MDHFM) Multidimensional Human
Factor Management School Germany by Luis Daniel Maldonado
Fonken-
 Environmental Professional (EP) Certification: An ISO/IEC
17024:2003 accredited program managed through ECO
Canadaassuring the credentials of Environmental Professionals
in core disciplines.
 REFERENCES
 Catter Acorns That Oaks May Grow". MIT Institute Archives & Special Collections. Retrieved 9 March
2011.
 ^ Kipping, M. 2002. "Trapped in their wave: the evolution of management consultancies," in T. Clark
and R. Fincham (eds.). Critical Consulting: New Perspectives on the Management Advice Industry.
Oxford: Blackwell, 28-49.
 ^ Canback, S. 1998a. Transaction Cost Theory and Management Consulting: Why do Management
Consultants Exist?, Working Paper 9810002. Henley Management College, Henley-on-Thames.
 ^ Turner, A. N. 1982. "Consulting is more than giving advice," Harvard Business Review 60/5: 120-9.
 ^ Bessant, J., and H. Rush 1995. "Building bridges for innovation: the role of consultants in technology
transfer," Research Policy 24: 97-114.
 ^ Bower, M. 1982. The Will to Manage. New York: McGraw-Hill.
 ^ Consultants are costing us billions - and for what?
 ^ "Central government's" (PDF). British House of Commons. Retrieved 2007-10-19.
 ^ http://www.spiritus-temporis.com/management-consulting/criticism.html
 ^ Argyris, Chris. Flawed Advice and the Management Trap. New York: Oxford University Press, USA,
2000. Print.
 ^ "Management Consulting'?".
 ^ Sturdy, A et al (2009) Management Consultancy, Oxford University Press.
 ^ Johann Hari: The management consultancy scam
 [edit]Further reading
 Christopher D. McKenna (2006). The World's Newest Profession: Management Consulting in the
Twentieth Century. Cambridge University Press.