The Roles of a Management Consultant

One way to explain the advocate role of a management consultant is to divide the consultant’s role into content and process advocate. In content advocate role, the consultant influences the client to choose or accept particular goals, values or actions. In the process or methodological advocacy role, the consultant influences the client to become active as a problem solver and to use certain methods of problem solving, but is careful not to become an advocate for any particular solution.

2. Information Specialist

Another role of a consultant is that of the information specialist who, through his or her knowledge, skill and professional experience, is engaged as an internal or external consultant to provide special knowledge services. In general, the consultant initially gives information early to help meet the immediate needs of the client. Later the consultant may act as a catalyst and procedural helper in implementing the recommendations that have been made.

3. Trainer/Educator

This is one of the most important roles of a consultant. Consulting about innovations may require training and education within the client system. The consultant may be a creator of learning, experiences or a direct teacher, using the skills of a designer, leader and evaluator of the learning process.

The capacity of a consultant to train and educate is very important, particularly when a specific learning process is indicated in order for the client system to acquire competence in certain areas. If the propel in the organization are not skilled in one-to-one relationships, interviewing, and on-the-job observation, the procedures and forms of an innovation will not work.

4. Joint Problem Solver

The role of helper in problem solving involves collaborating with the client in all of the perceptual, cognitive, emotional, and action processes needed to solve a problem. While a problem is being clarified, the consultant helps to maintain objectivity while stimulating ideas and interpretations. In addition, the consultant can help to isolate and define the basic factors that cause a problem and perpetuate it, or that could be activated to solve it.

5. Identifier of Alternatives and Linker to Resources

In this role the consultant identifies alternative solutions to a problem, establishes criteria for evaluating each alternative, determining its cause and effect relationships, assesses the probable consequences of each alternative, and links the client with internal and/or external resources that may be able to provide additional help in solving the problem. However the consultant does not participate in the decision-making process when the final solution is selected.

6. Process Counselor

The consultant’s major focus is on the interpersonal and intergroup dynamics affecting the problem-solving process. The process consultant directly observes people in action and conducts interviews with management personnel in order to obtain facts. The process consultant must be able to effectively diagnose who and what is hindering the organizational effectiveness and to report these observations to the appropriate person or persons in the organization.

7. Objective Observer

The role of the objective observer consists of a series of consultant activities directed at stimulating the client toward some insights into growth, a discovery of more effective methods, a look at long-range change, and greater independence. This is the most nondirective of the consulting roles.

Discuss the reasons for the phenomenal growth of consultancy services in India?

Consulting as an industry in India has seen a phenomenal growth. The growth mainly took off post-independence and has not slowed down since. Here we analyze the main factors that have contributed to the growth.

Growth in India – The growth in India, especially the service sector, has lead to many players making rapid strides like never before. However a company needs to know whether the decisions it is making are the right ones. The external viewpoint of a consultant is imperative in this regard, and thus the demand for consultants is increasing.

Post-liberalization competition and entry of private players – As long as License Raj was present, the government and a few private firms had complete monopoly over the Indian markets. With liberalization and entry of private players, the competition increased and so did the need to be competitive and take the right decisions. This led to increase in demand for consultants.

Demand of Indian consultants in third world countries – The political and the socio-economic conditions of the developed world and third world countries are very different, hence consultants from developed countries are not an option. But since the conditions in India are similar to many other such countries, the Indian consultants are in demand in third world countries to give a different perspective. Many Indian consultants have also been asked to train and develop consultants in the native countries.

Entry of foreign companies and MNCs in India – Many MNCs are entering the Indian market, but do not know how to best use their assets and mould their model to suit the Indian market. This has led to demand for consultants who can assist them in this regard.

Growth of entrepreneurs – The government has consciously followed a policy of encouraging new entrepreneurs, seeking thereby to broaden the entrepreneurial base of the economy. The new entrepreneurs have needed specialized services to be able to plan and implement their projects. Another factor favoring the development of consulting services is that a project of even medium size now requires institutional finance. Institutions do not provide finances on the basis of the sales talk of the promoters, but require information and arrangements which show the long-term viability of the project to be financed. This has given rise to demand of consultants who have the expertise to amend and revise the business plan to have a better chance of getting institutional finance.

Abolition of the managing agency system – Another factor which has acted as a stimulus to the spread of consulting services has been the abolition of the managing agency system. To an extent, the managing agency system permitted the internalization of the consultancy function since a managing agency, managing many companies, had acquired sufficient expertise to plan and implement projects on its own. However, curbs on the system placed after independence, and its abolition in the 1960s opened up many opportunities for independent consultants as well as for the erstwhile managing agencies to set up their own consulting firms, whose services, however, have also been made available to the general public.

Emergence of the public sector – The public sector has also emerged as both a buyer and a provider of consultancy services. Given the fact that the public sector is in complex technology-intensive industries and the scale of the plants being set up by it is large, it needed specialized services to set up these plants.

Due to these reasons, the consulting industry has grown tremendously since independence.

Trace the historical development of type of consultancy services, which were demanded and were developed?

The industry was founded in the late nineteenth century in USA. The industry moved into the UK from the 1920s.

Industrial Engineers – 1870 to 1914

The first management consultants came into being between 1870 and 1914 in the USA and their main role was to help the manufacturing companies become more productive and more efficient. Called industrial engineers, they were seen as time and motion men, and this picture prevailed until the early 1960s.

Among the early pioneers were the following. These were management researchers as much as they were management consultants.

Frederick Taylor: Frederick Taylor, the father of ‘scientific management’, was essentially concerned with what is later called organization and methods. His views on simplification of complicated manufacturing tasks, clear modes of managing and increasing of productivity were highly influential in the USA and Europe were popular until the 1970s.

Frank and Lillian Gilbreth: The Gilbreths were also fascinated by the man machine play. However their starting point was the human factor rather than the machinery. They were enthusiasts and their sheer exuberance had a profound effect on the development of management consultancy and had clients in the UK, USA and Germany.

After World War I, management consultants played a big part development and restructuring of American industry. General Motors hired Arthur D Little to set up its research and development center while the US government bought the services of Booz, Allen and Hamilton.

1920s

During the 1920s, management consulting began to be inspired by the early motivational, industrial and psychologists like Elton Mayo and Mary Parker Follet. The human factor at work began to be given importance and be taken more seriously. Also consultancy services began in Europe as well. The French born engineer Charles Bedeaux set up his own consultancy service in the US. During the 1920s he moved over to the UK and set up the British Bedeaux company. Bedeaux’s clients reported major productivity improvements of up to 40%.

1960s

The rapidly changing economic and industrial structure gave rise to a boom in consultancy. Many of these focused on labor productivity.

Marketing: This was the time when the first real, widely spread consumer society took shape. Also the importance of advertising and marketing began to be appreciated. Here management consultants helped companies take advantage of the new marketing techniques.

Impact of Behavioral Science: The traditional leadership view was challenged by thinkers such as Hertzberg and McGregor and the thinking became more democratic and open-minded. Therefore the behavioral sciences began to impact management consultancy.

MBO: The concept outlines by John Humble at Urwick – ‘Management by Objective’ – considered the relationship between parts of management processes and not just the parts themselves. This in turn led to concepts such as incentives, job evaluation and wage structure.

1970s

This was the period of the ‘oil crisis’ when the prices of world oil prices were twice raised to unheard heights. Therefore the three chief problems for any company became the financial performance, entry into new markets and labor relations.

Accountancy Consulting: The importance given to financial returns on capital during the 1970s gave birth to accountants entering the field of consulting. The accountancy firms began to take the consultancy market seriously. By the end of 1970, the accountancy firms had a part of the consultancy market pie.

Entry into new Markets: Decreasing demand in their home markets lead to globalization and companies needed expert advice in order to enter into the right market for their products. This led to consultancy services in strategic planning. For example, the Japanese and other European competition started to stifle the British car market.

Industrial Relations: The rise in issues related to the industrial workers during the oil crisis meant that companies needed specialists to take care of the work. Therefore consultancy in industrial relations grew. Concepts such as worker participation and productivity improvement gained importance.

1980s

The decade of 1980s saw a series of developments in management thinking that would affect the consultancy world.

Influence of Japanese management thinking: During this decade, the Japanese companies took a bigger share of world markets in various domains such as automotive products, consumer electronics, semiconductors and computers. There the management thinking of Japan started being appreciated by the consulting firms.

Quality Management: Importance given to quality by the companies increased and so did the demand of consulting firms in this field. One of the hottest fields in UK for some time was the Total Quality Management.

Globalization: Liberalization of financial markets and lowering of international trade barriers created the need for global strategies. Also it led to the field of culture change management. Another field that globalization led to was human resource management HRM.

Beginning of I.T. Consultancy: Towards the end of the decade one factor that changed the face of management consultancy is the I.T. Concepts like Just-in-time to 24-hour customer care services have shown that I.T. is all-pervasive.

1990s

The 1990 saw I.T. further change the landscape of management consultancy. Also consultancy in non-traditional industries has also grown.

E-consultancy: The rise of e-commerce has led to new opportunities for management consultancies as their clients seek to exploit this new medium of business. The Management Consultancies Association has estimated that almost 17% of the revenues of its members are from e-business.

Consultancy in non-traditional sector: This decade has also seen growth of consultancy services in non-traditional sectors. For example, consultancy rose in the social sector where management principles began to be used. Also another such sector was the health sector.

2000s

The current status of consultancy sector is very heartening and the prospects appear rosy. This and the other expansions of the consulting industry are depicted below.

Sector Restructuring: Over the past decade, sector restructuring has been significant and impressive. Examples include mergers, acquisitions, etc. This has also given birth to the presence of large consulting firms, which can provide end-to-end consulting and can virtually respond to any demand by the clients.

E-business consulting: The spectacular development of e-commerce has also given rise to e-business consulting. By 2000, all leading management and IT consultancies were also active in e-business consulting and provided various means to promote business via the internet.

Commoditization: Many consulting firms offer more or less standardized product claiming that their brand is superior. This has also led to consulting firms invest in advertising.

New operating modes: Commoditization based on tested knowledge and experience reduces the need to use experienced consultants and modifies the structure of various consulting cycles. For example, the diagnostic phase may be eliminated or reduced to a few questions.

Growth of Management Consultancy

Time Areas Focus

Period

1950s * Time and Motion Study * Fix manpower requirements

1960s * Incentives * Improvement in labor

Job Evaluation productivity

Wage Structure

1970s * New project appraisal, * Careful analysis at the beginning

market study to overcome failure later

1980s * Strategic planning * SWOT analysis

* Organization development * Involvement of operating people

* Public utilities * Need for good management in

(transport, power etc.) Infrastructure areas

* Software development * Usage of computers

1990s * Information systems * Information technology

* Development projects in * Use of management

socially relevant areas principles

* Health sector * Health, rural development etc.

* Strategy * Growth

2000s * Mergers & acquisitions * Turnaround management

* Financial restructuring * Global strategies

* Joint ventures * Risk assessment studies

With globalization, what do you foresee the paradigm shift that is likely to take place in the field of management consultancy?

Globalization has changed the landscape of almost every aspect of business, and the domain of management consultancy cannot be immune to it. The 18th century was the agricultural century and the 19th century was the industrial century with the 20th century being the telecommunication century, but in the 21st century we find ourselves in the midst of an unprecedented volume of information.

With the challenges and issues becoming more diverse, the role of management consultancy is becoming more and more prominent and important. Previously, the consultant’s role was restricted to management of business, but now management consultancy is used even in marketing the U.S. president. In the near future, it appears that there will be paperless offices, and work units will operate from homes. There will be less time for and frequency of travel and personal meetings for negotiations and business dealings since it is expected the communication revolution will take over.

Therefore the first shift is that the management consultant will have to be more dynamic. He will have to be totally sensitive to the current world scenario. He will have to be conceptually clear about the role of management and consultancy, and redefine his role as a responsible change-agent in the society.

Second, he or she will have to develop a global outlook. The law of comparative advantage in international trade will receive economic sanction, leading to more exports all round. The management consultant will have to develop an international perspective for developing strategies in this regard.

Third, the management consultant has to have a mixed bag of expertise. If he is a human resource consultant, his human resource experience and knowledge will have to be backed up with six sigma implementation ability and computer application down the line in the human resource solutions.

Fourth, the management consultant will be more than a mere advisor. He has to be a doer, a pragmatist. He will have to lead the client team in implementing change. Report writing will be supplemented by implementation by the team.

Fifth, in the information age, networking, partnering and team accountability will develop. Management consulting associations will have to play the role of bringing management consultants from different geographies closer for sharing of knowledge and expertise.

Sixth, in times when corporate social responsibility is no longer just in books but instead looked at as a duty of the corporate, the management consultant will also need to consider the social impact of any of his recommendations. In other words, he needs to be an individual with genuine social concerns.

Seventh, the domain of a management consultant is moving from only business to social issues as well. Today management consultants are required in areas such as poverty alleviation, how to convert Mumbai to Shanghai, how to implement national ID card schemes etc. Therefore a management consultant needs to be able to use his management knowhow in such non-business related issues as well.

Eighth, with environmental considerations becoming important considerations in every major corporation’s decisions, the management consultant will have to be able to appreciate the environmental effects of any of his decisions. Therefore he would also have to orient his ideas to suit such concerns.

Ninth, consultants, especially those from the developing countries will need to carry out major research in their home countries to assess the impact of different previous initiatives. Not all the schemes successful in the developed world will be as effective in the developing world, and not every designs unsuccessful in the developed world will meet the same fate in the developing world or the undeveloped world. Therefore consultants need to find out what works best in their own country or geographical region, that this means that research is paramount.

In summary, globalization leads to the increased challenges to the domain of management consultancy, but I also believe that the management consultant fraternity will rise up to that challenge.

Do you foresee any role for the association of management consultants? What specific role should the association play?

The role that should be played by the association of management consultants is very important. These not only serve as a common platform for consultants but also ensuring a certification for the consultants.

Specifically, the role that the association of the management consultants should play can be divided as follows –

Concern for quality

Concern for ethics

Concern for the profession

These are explained below –

Concern for Quality –

This refers to the association role to improve the knowledge and skill. This concern motivates the association to improve the quality of consulting among its members in particular and the industry in general and take steps to weed out the ineffective members that may tarnish the reputation of this industry.

The specific contributions can be

Certification – certifications are one of the main ways to ensure that the content value of the profession is maintained. As an example, the CMC or Certified Management Consultant certifies that the consultant is very proficient in his field and can be trusted to provide good value for money. This also ensures that clients have a way to know whether a consultant can be called upon when necessary.

Training – Training is another area by which the association can increase the quality of the consultants and improve the overall image of the industry. In this case IMCI can have more training by senior experienced practitioners to coach and mentor the juniors on the latest methods followed in the industry as well as share some interesting experiences which may have wide application.

Mentorship – This is another area in which the association can play a prominent role. By having mentors for the younger consultants, the overall output of the industry can be increased and this will have huge implications for the industry.

Concern for Ethics –

The second area in which the associations can play a role is in ensuring that ethical values are followed in the course of consulting. In absence of ethics, the clients may not be able to place faith on the advices and recommendations of consultants. Friedson suggests, “Clients of professionals must place more trust in them than they do in others… Professionals are expected to honour the trust that clients have no alternative but to place in them.” The value of ethics and trust cannot be overestimated in an industry where credibility is imperative.

It is not easy to determine and quantify the achievement of the association in this aspect. However the fact that the association consists of consultants who know each other very well, ethics will be a self-affirming necessity. This will definitely ensure more ethical orientation of the consultants.

Concern for Profession –

Concern for the profession is always a fundamental role of any association. This means that the association is acting to convey the need and demands of the industry to other stakeholders and will protect and promote the profession.

The association could try to bring various stakeholders of the consulting industry on a common platform to ensure that the various concerns and grievances of the stakeholders could be addressed by the body. It can also address the various issues pertaining to the consulting industry, for example, the issue of belief that consulting does help.

What can IMCI do?

Projects in Africa/Asia/Latin America – These countries have issues and problems very similar to ours. Therefore it will be easier for a consultant in India to understand and solve them compared to consultants in Europe and U.S.A. Therefore IMCI could leverage its network and ensure more projects to Indian consultants.

Training and Developing consulting capabilities in other countries – Many countries, including those mentioned above have not developed their consulting capabilities to the optimum levels. IMCI can utilize the consulting capabilities of Indian consultants and train and develop the consultants in other countries.

IMCI can strengthen public relations in other countries, tie-ups with renowned consultants abroad and thus win liaisons and contracts with world bodies like UN, ADB

IMCI can also make efforts to ensure more joint inter-cultural and transnational researches and studies.

IMCI can also put efforts to get the field of management consulting recognized as an industry and try to get top priority for this industry just like the IT/ITES industry.

IMCI can utilize management consultants to prepare, maintain and update a data bank that could provide latest figures like production, turnover, employment and capacity utilization

IMCI can provide suitable forum for management consultants to share success stories and experiences.

IMCI can carry out periodic surveys of management consultancy profession and publish results to benefit management consultants

IMCI can investigate complaints regarding code of conduct and take disciplinary action

CASE ANALYSIS

What do you make out from this case study? Why is it that there is somewhat skepticism about consultants and the services they provide? How to overcome it?

The Case –

The case demonstrates the view held by clients and prospective clients about consultants. The retired General has a problem which he is not able to solve, and Dr. Dilip Raju has been recommended to him. In spite of this when he comes to meet Dr. Raju, he is skeptical about what he can do and is not ready to trust him.

It is obvious that the General, who has never been in business before and would have never interacted with a consultant prior to meeting Dr. Raju, would have got this message from others.

Therefore it indicates that even though consulting as a profession may be respected within the management domain, most people are still cynical about the effectiveness of the assistance. The people still believe that a consultant will rig reports, present irrelevant data and then finally solve the consultant’s own problems instead of the client’s problems. This explains why many people are still uncertain about the value-add of a consultant.

The skepticism can be attributed for the following reasons –

First, there are a lot of incompetent consultants who claim to solve all problems but many not have the required proficiency to do so. When they do not meet their lofty goals, the client gets a negative image about consultants. This negative personal experience with consultants perforates down to all the friends and acquaintances of the organization. This leads to clients stereotyping the entire consultancy industry based on a few negative experiences. It is easy to understand that after spending a huge sum of money on a consultant, if the desired result is not achieved the client would be appalled and thus may not trust any consultant in the future. Such cases bring a bad name to the entire domain of consulting. This is one of the biggest reasons for skepticism of consultants.

Second, the General seems to have given all hope. The fact remains that most people come to a consultant only when they think that they have done everything possible without succeeding in it. So he finds it hard to believe that someone who may not have his level of knowledge of the business and experience could suddenly come and turnaround the company. The very fact that an inexperienced person (the consultant may not have worked before in the poultry business) could come and uplift the company seems unreasonable and irrational to many, and this is one of the reasons for the skepticism.

Thirdly, the high fees that are charged are another reason people are uncertain about consultants. The people are not sure if the Return on Investment will justify the high fees that are charged by the consultants.

How to overcome the skepticism –

There are various ways to overcome it. The following steps by the client and/or the consultant will go long way in reducing the skepticism.

Ensure that the consultant is competent enough

There are a lot of me-too consultants who may not have the required skills or competency. Therefore one way to be sure about the competency of the consultant is to refer to the previous clients. This will also ensure that incompetent consultants are weeded out of the system.

Past performance is definitely an indication of the future. Therefore a consultant with a good prior track record can be expected to perform well in the future.

Decide how to measure success

One of the foremost ways to ensure that the consulting assignment is successful is to clearly define success and how it will be measured by both parties. Says John Ziegelbauer, managing partner for the financial institutions practice at Grant Thornton, “it is important for both banker and consultant to be clear and in agreement up front what the goal is and how it will be evaluated.”

“To get the metrics right, a bank must do its homework prior to engaging the consultant. Also sharpen the pencil and make it clear what your expectations will be,” says Dave Kuhl, chairman and CEO at $1.5 billion-assets Busey Bank, Urbana, Ill.

This is of utmost importance, before if this is not done properly, the client may perceive the output as inadequate, but the consultant may feel that he has delivered what he has promised. Therefore it is imperative that both the client and the consultant agree on mutually decided parameters to measure success.

Clear upfront who will be doing the work

There are firms out there whose heavy hitters give the speeches and the interviews that keep the firm in the limelight and play “rainmaker.” But the actual firm-to-client relationships may be turned over to folks the client has never heard of. This is not to say that these people aren’t qualified. But a client needs to clearly know the actual people with whom they will work with. This may not be an issue in a one man consulting firm like the one in the case, however it could be very important in a big consulting firm.

Again this is important because the client may expect a partner to work with them, but it may be the associate who is entrusted with the client.

The issue of confidentiality

Since consultants are free agents and may work with competitors, many clients are apprehensive about their safety. The truth is that consultants may work for competitors after completing one project. Therefore, having a signed letter of confidentiality is important.

The importance of confidentiality cannot be overestimated, as no organization would want their information to be leaked to a competitor.

Ensure that the client has a good previous record

There are a lot of me-too consultants who may not have the required skills or competency. Therefore one way to be sure about the competency of the consultant is to refer to the previous clients. This will also ensure that incompetent consultants are weeded out of the system.

Past performance is definitely an indication of the future. Therefore a consultant with a good prior track record can be expected to perform well in the future.

Include objectively measurable parameters

This is especially important while paying a result based fees. It is not enough to just define success. The various parameters which are used to measure success should be objectively measurable. This will ensure that the client and the consultant are able to quantify the result.

The impact of a consultant’s work should be measured using certain pre-decided parameters. If there are no objective parameters, then there is very little chance that the observations of the client and the consultant will be the same.

Use periodic reviews to ensure that consultants are on the right track

In many cases where the duty of the consultant is not clearly specified, the consultant may more in a direction and find conclusions that the firm may not need. Therefore it is important to periodically review the progress made by the consultants and the direction in which they are proceeding to ensure that they are on the right track.

Again this is very important, as most clients pay consultants on an hourly basis, and a consultant on the wrong track will cost loss of money and time for the firm.

Allow your consultant to talk to everybody within the organization

A consultant may start his work using certain generic models. However in order to modify it to suit the organization, he or she needs to know about the organization. Too often, the management may not have all the answers. Therefore it is important to let the consultant speak with various people in the organization. This enables the consultant to get various perspectives on the issue and recommend an optimum action plan.

When the company is spending a large sum of money on the consultant, it makes sense to get the maximum from the consultant and get a more holistic perspective from the consultant.

Check your consultant’s commitment to make sure that they are not overworked

Too often, one of the prime reasons why good consultants produce bad output is because they are handling more projects at a time than they can handle. This not only leads the consultant to burn out but also reduces the trust between the client and the consultant. Therefore the client should ensure that the client who is engaged with them is not overworked and is able to give proper attention to the particular client.

This will not only help the consultant to give their maximum but also ensure that the output will be of expected quality, leading to increase in trust between the client and the consultant.

Conclusion –

The case demonstrates the cynical view that many people in the industry have about the consultants. There are various reasons for such a negative view of consultants. However if the clients and the consultants work together according to the above recommendations, the negative view of consultants can be eliminated.

References and Bibliography –

Management Consultancy : A guide to the profession by Milan Kubr

Monogram Module 1

Seminar on consultancy services in India, November 11 and 12, 1972 Summary proceedings

The handbook of management consultancy – Philip Sadler

Paper from Delegates and Speakers, National Convention, November 24-25, 1995, Vadodara, IMCI

Management consulting capabilities in India

Con Tricks – Martin Ashford

The International guide to Management Consultancy, Barry Curnow and Jonathan Reuvid

Consultancy Services in India – CDC

Consultancy Services in India Perspective and export prospects

Status Report on Consultancy Services in India

Report on Survey on Management Consultancy in India

Consultancy Services in India: Critical Study

Consulting 2000, Background Literature, IMCI, National Convention, Nov 24-25, 1995, Vadodara

Management consultancy, by Clive Rasam and David Oates