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Encyclopedia > Management consulting

Management consulting refers to both the industry, and the practice of, helping organizations improve their performance, primarily through the thorough analysis of existing business problems and development of plans for improvement. Organizations hire the services of management consultants for a number of reasons, including, for example, to gain external, and presumably more objective advice and recommendations, to gain access the consultants' specialized expertise, or simply as temporary help during a one-time project, where the hiring of permanent employees is not required. Because of their exposure to and relationships with numerous organizations, consultancies are also said to be aware of industry 'best practices,' although the transferability of such practices from one organization to another is the subject of debate. 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 business tasks. There are many minor characters in the various versions of The Hitchhikers Guide to the Galaxy, by Douglas Adams. ... The term best practice generally refers to the best possible way of doing something; it is used in the fields of business management, software engineering, and medicine. ... Change management is a structured approach to change in individuals, teams, organizations and societies that enables the transition from a current state to a desired future state. ... A coach is a person who supports people (clients) to achieve their goals, with goal setting, encouragement and questions. ... Meethodology is defined as the analysis of the principles of methods, rules, and postulates employed by a discipline, the systematic study of methods that are, can be, or have been applied within a discipline or a particular procedure or set of procedures [1]. It should be noted that methodology is... Economic efficiency is a general term for the value assigned to a situation by some measure designed to capture the amount of waste or friction or other undesirable economic features present. ... In economics, a business is a legally-recognized organizational entity existing within an economically free country designed to sell goods and/or services to consumers, usually in an effort to generate profit. ...


Management consulting refers generally to the provision of business consulting services, but there are numerous specializations, such as information technology consulting, human resource consulting, and others, many of which overlap, and most of which are offered by the large diversified consultancies listed below. So-called 'boutique' consultancies, however, are smaller organizations specializing in one or a few of such specializations. Information technology consulting (IT consulting or business and technology services) is a field that focuses on advising businesses on how best to use information technology to meet their business objectives. ... It has been suggested that this article or section be merged with Management Consulting. ...


Management Consulting is becoming more prevalent in non-business related fields as well. As the need for professional and specialized advice grows, other industries such as government, quasi-government and not-for-profit agencies are turning to the same managerial principles that have helped the private sector for years.


One important and recent change in the industry has been the spin-off or separation of the consulting and the accounting units of the large diversified firms. For these firms, which began business as accounting firms, management consulting was a new extension to their business. But precipitated by a number of highly publicized scandals over accounting practices, such as the Enron scandal, accountancies began divestiture of their management consulting units, to more easily comply with tighter regulatory scrutiny that arose in the wake of the scandals. Enron Creditors Recovery Corporation (formerly Enron Corporation) (former NYSE ticker symbol: ENE) was an American energy company based in Houston, Texas. ...

Contents

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.[citation needed] 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 pure management and strategy consulting company was McKinsey & Company. McKinsey was founded in Chicago during 1926 by James O. McKinsey, a professor at the University of Chicago Graduate School of Business, but the modern McKinsey was shaped by Marvin Bower, who believed that management consultancies should adhere to the same high professional standards as lawyers and doctors. McKinsey is credited with being the first to hire newly minted MBAs from top schools to staff its projects vs. hiring older industry personnel. Andrew T. Kearney, an original McKinsey partner, broke off and started A.T. Kearney in 1937. During Britain's war effort, Personnel Administration (PA) was founded in 1943 by three Englishmen: Ernest E. Butten, Tom H. Kirkham and Dr. David Seymour. For other uses, see Management (disambiguation). ... Arthur D. Little, Inc. ... Booz Allen Hamilton, one of the oldest management consulting firms in the world,[1] is a private corporation with headquarters in McLean, Virginia and over 100 offices on 6 continents. ... Edwin G. Booz founded the management consulting firm Booz Allen Hamilton. ... The Kellogg School of Management (The Kellogg School or Kellogg) is the business school of Northwestern University located in Evanston, Illinois and downtown Chicago, Illinois. ... Northwestern University (NU) is a selective private, nonsectarian, coeducational research university with campuses located in Evanston, Illinois and downtown Chicago, Illinois. ... McKinsey & Company is a privately owned management consulting firm that focuses on solving issues of concern to senior management in large corporations and organizations. ... For other uses, see Chicago (disambiguation). ... James Oscar McKinsey (June 4, 1889-November 30, 1937) was the founder of McKinsey & Company. ... The University of Chicago Graduate School of Business, also known as Chicago GSB, is one of the world’s leading business schools and the second oldest in the United States. ... Marvin Bower (born August 1, 1903 in Cincinnati, Ohio - died January 22, 2003 in Delray Beach, Florida). ... For the fish called lawyer, see Burbot. ... A.T. Kearney is an international management consulting firm, dating its origins back to the early days of the management consulting profession. ... This article needs to be wikified. ...


After World War II, a number of new management consulting firms formed, most notably Boston Consulting Group, founded in 1963, which brought a rigorous analytical approach to the study of management and strategy. Work done at Booz Allen, McKinsey, BCG, and the Harvard Business School during the 1960s and 70s developed the tools and approaches that would define the new field of strategic management, setting the groundwork for many consulting firms to follow. “BCG” redirects here. ... Harvard Business School, officially named the Harvard Business School: George F. Baker Foundation, and also known as HBS, is one of the graduate schools of Harvard University. ... Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives[1]. It is the process of specifying the organizations objectives, developing policies and plans to achieve these objectives, and allocating resources to implement the policies...


One of the reasons why management consulting grew first in the USA is because of deep cultural factors: it was accepted there, (contrary to say, Europe), that management and boards alike might not be competent in all circumstances; therefore, buying external competency was seen as a normal way to solve a business problem. This is referred to as a "contractual" relation to management. By contrast, in Europe, management is connected with emotional and cultural dimensions, where the manager is bound to be competent at all times. This is referred to as the "pater familias" pattern. Therefore seeking (and paying for) external advice was seen as inappropriate. However, it is sometimes argued that in those days the average level of education of the executives was significantly lower in the USA than in Europe, where managers were "Grandes Ecoles" graduates (France) or "Doktor" (Germany), though this is very difficult to quantify given the vastly differing management structures in American and European businesses.


It was only after World War II, in the wake of the development of the international trade led by the USA, that management consulting emerged in Europe. The current trend in the market is a clear segmentation of management consulting firms.[citation needed]


Another branch of management consulting is Human Resource consulting. Such firms provide advice to their clients regarding the financial and retirement security, health, productivity, and employment relationships of their global workforce.


Current state of the industry

Management consulting has grown quickly, with growth rates of the industry exceeding 20% in the 1980s and 1990s. As a business service, consulting remains highly cyclical and linked to overall economic conditions. The consulting industry shrank during the 2001-2003 period, but has been experiencing slowly increasing growth since. In 2007, total global revenues for management consulting are expected to exceed the $300 billion mark.[citation needed]


Currently, there are four main types of consulting firms. First, there are large, diversified organizations that offer a range of services, including information technology consulting, in addition to a strategy consulting practice. Second, are the medium-sized information technology consultancies, that blend boutique style with some of the same services and technologies bigger players offer their clients. Third, are the large management and strategic consulting specialists that offer primarily strategy consulting but are not specialized in any specific industry. Finally, there are boutique firms, often quite small, which have focused areas of consulting expertise in specific industries or technologies. For instance, Roland Berger is well-known in Europe for its skills in downsizing and cost-killing. Most of the boutiques were founded by famous business theorists. Information technology consulting (IT consulting or business and technology services) is a field that focuses on advising businesses on how best to use information technology to meet their business objectives. ... Roland Berger Strategy Consultants is a strategy consultancy firm based in Europe and founded in 1967. ...


A fifth type of global consulting firm is emerging. Sourcing Advisory services deal with choices between insourcing and outsourcing, vendor selection, and contract negotiations. The top 10 sourcing advisors (as ranked by the Black Book of Outsourcing) were Alsbridge, TPI, EquaTerra, NeoIT, Pace Harmon, PA Consulting, RampRate, Deloitte, Gartner, and Everest.[1] Although a fast growing sector, the largest sourcing advisory practices would likely be classified as boutiques when considering the management consulting industry as a whole - with one of the largest players, TPI, for example, citing 2006 revenues of less than US$150M during its acquisition by ISG.[2] This article needs to be wikified. ...


Government consultants

The use of management consulting in governments has increased significantly in recent times.


United Kingdom

Since from 1997 to 2006, New Labour have spent £20 billion for management consultants and at least another £50 billion for IT systems, up significantly from the £500 million a year spent by the previous Conservative government.[3] From 2003–2006 spending on consultants has risen by a third, from £2.1 billion in 2003–04 to £2.8 billion in 2005–06, largely due to increases in spending by the National Health Service. In the past three years £7.2 billion has been spent on consultancy services from large consultancy firms.[4] New Labour is an alternative name of the British political Labour Party. ... The Conservative Party (officially the Conservative and Unionist Party) is currently the second largest political party in the United Kingdom in terms of sitting Members of Parliament (MPs), the largest in terms of public membership, and the oldest political party in the United Kingdom. ... NHS redirects here. ...


The rise of internal corporate consulting groups

Added to these approaches are corporations that set up their own internal consulting groups, hiring internal management consultants either from within the corporation or from external firms whose employees have tired of the road warrior lifestyle. Many of these corporations have internal groups of as many as 25 to 30 full-time consultants.


The internal consultant approach is chosen for three reasons. First, the corporation does not want to pay the large fees typically associated with external consulting firms. Second, they want to keep certain corporate information private. Finally, they want a group that more closely works with, and monitors, consulting firm relationships. Often, the internal consultant has 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 be too costly if an external consultant were used.


Internal consulting groups are often formed around a number of practice areas. The more common areas are: organizational development, process management, information technology, design services, training, and development.


There are several potential problems facing internal consultants, and those who employ them. The internal consultant may not bring the objectivity to the consulting relationship that an external firm can. An internal consultant also does not bring to the table best practices from other corporations. When the consulting industry is strong, it can be difficult to recruit candidates who are of the same high calibre as those working for outside consulting firms. Lastly, when financial times get tough, often the internal consulting group is the first to face layoffs. The term best practice generally refers to the best possible way of doing something; it is used in the fields of business management, software engineering, and medicine. ...


Approaches

In general, various approaches to consulting can be thought of as lying somewhere along a continuum, with an 'expert' or prescriptive approach at one end, and a facilitative approach at the other. In the expert approach, the consultant takes the role of expert, and provides expert advice or assistance to the client, with, compared to the facilitative approach, less input from, and fewer collaborations with, the client(s). With a facilitative approach, the consultant focuses less on specific or technical expert knowledge, and more on the process of consultation itself. Because of this focus on process, a facilitative approach is also often referred to as 'process consulting,' with Edgar Schein being considered the most well-known practitioner. The consulting firms listed above are closer toward the expert approach of this continuum. Edgar H. Schein (born 1928), a professor at the MIT Sloan School of Management has had a notable mark on the field of organizational development in many areas, including career development, group process consultation, and organizational culture. ...


Many consulting firms are organized in a matrix structure, where one 'axis' describes a business function or type of consulting: for example, strategy, operations, technology, process improvement, HR, sales, etc. The second axis is an industry focus: for example, oil and gas, retail, automotive. Together, these form a matrix, with consultants occupying one or more 'cells' in the matrix. For example, one consultant may specialize in operations for the retail industry, and another may focus on process improvement in the downstream oil and gas industry. Process Improvement Process Improvement is a series of actions taken to identify, analyze and improve existing processes within an organization to meet new goals and objectives. ...


Criticism

Despite consistently high and growing revenues, management consultancy also consistently attracts a significant amount of criticism, both from clients, and also from management scholars.


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 highly critical books about management consulting argue that the mismatch between management consulting advice and the ability of business executives to actually create the change suggested results in substantial damages to existing businesses. A consultant (from the Latin consultare meaning to discuss from which we also derive words such as consul and counsel) is a professional who provides expert advice in a particular area of expertise such as accountancy, the environment, technology, the law, human resources, marketing, medicine, finance, public affairs, communication, engineering... This article does not cite any references or sources. ... A management fad is a derisive term use to characterize a change in philosophy or operations that sweeps through businesses and institutions, and then disappears when enthusiasm for it wanes. ...


Irreputable consulting firms are often accused of delivering empty promises, despite high fees. They are often charged with “stating the obvious” and lacking the experience on which to base their advice. These consultants bring few innovations, and instead offer generic and "prepackaged" strategies and plans that are irrelevant to the client’s particular issue. They may fail to prioritize their responsibilities, placing their own firm’s interests before the clients'. [5]


Further criticisms include: analysis reports only, 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 & lack of (small) client focus, lack of clarity of deliverables in contracts, and more.


More reputable firms, in contrast, adhere to and internalize specific codes of ethics to fortify client relationships by offering fair advice and accepting transactions only if they benefit their clients. In other words, if the consultancy cannot provide effective services to their clients, it will pass on the opportunity, even if the client is willing to pay the fee.


Professional qualifications

There are several qualifications that can lead to becoming a management consultant; they include:

Certified Management Consultant (CMC) is an international certification for consultants. ... The Institute of Management Consultancy (IMC) is a Professional Body for Management consultants in the United Kingdom. ... Accountancy (profession)[1] or accounting (methodology) is the measurement, statement or provision of assurance about financial information primarily used by managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies, organizations, and public agencies. ... Chartered Certified Accountant (Designatory letters ACCA or FCCA) is a United Kingdom chartered accounting designation awarded by the Association of Chartered Certified Accountants (ACCA) The term Chartered Certified Accountant was introduced in 1996. ... Chartered Accountant (CA) is the title used by members of certain professional accountancy associations in the British Commonwealth countries and Ireland. ... Certified Accountant redirects here. ... The title Certified Management Accountant is a professional designation awarded by various professional bodies around the world. ... Cost accounting or cost control professional designation offered by the AAFM ™ American Academy of Financial Management™ The CCA ™ is a Graduate Post Nominal (GPN) that is only available for accountants with an accredited degree, MBA, Chartered Accountant License, law degree, CPA, PhD or specialized executive training. ... The American Academy of Financial Management ™, or AAFM ™ as it is known, is a professional association dedicated to the finance sector and finance professionals. ... Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. ... Chartered Financial Analyst (CFA) is a professional designation offered by the CFA Institute (formerly known as AIMR) to financial analysts who complete a series of three examinations and work for at least four years in the investment decision making process. ... The Certified Treasury Professional (CTP) certification is offered by the Association for Financial Professionals (AFP). ... For other uses, see Consultant (disambiguation). ... Master of Business Administration (MBA) is a tertiary degree in business management. ... MBA redirects here. ... Doctor of Management (D. M.) is an academic degree awarded on the basis of advanced study and research in management. ... The degree of Doctor of Business Administration (D.B.A.) is a research doctorate that focuses upon business practice. ... Public Administration can be broadly described as the development, implementation and study of government policy. ... The Master of Public Administration (MPA) degree is one of several master level professional public affairs degrees that provides training in public policy and project/program implementation (more recently known as public management). ... The Doctor of Public Administration (DPA) is the terminal professional degree in the field of government and non-profit management. ... Project Management is the discipline of organizing and managing resources (e. ... The Master of Science in Project Management (MSPM), also known as Master in Project Management (MPM) is a professional advanced degree in project management. ... Doctor of Philosophy (Ph. ... Master of Business Administration (MBA) is a tertiary degree in business management. ... This article does not cite any references or sources. ... Engineering is the discipline of acquiring and applying knowledge of design, analysis, and/or construction of works for practical purposes. ... A magnet levitating above a high-temperature superconductor demonstrates the Meissner effect. ... McKinsey & Company is a privately owned management consulting firm. ... “BCG” redirects here. ...

See also

Areas of action of Consulting

The creator of or main contributor to this page may have a conflict of interest with the subject of this article. ... Certified Management Consultant (CMC) is an international certification for consultants. ... Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives[1]. It is the process of specifying the organizations objectives, developing policies and plans to achieve these objectives, and allocating resources to implement the policies... Operations management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. ... This article needs additional references or sources to facilitate its verification. ...

Related Culture

Motivational speakers are persons engaged in public speaking who help motivate others with their knowledge and real-life stories in public setting such as sales seminars and corporate meetings. ... This article does not cite any references or sources. ... A management fad is a derisive term use to characterize a change in philosophy or operations that sweeps through businesses and institutions, and then disappears when enthusiasm for it wanes. ... A business philosophy or popular management theory is any of a range of accounting, marketing, public relations, operations, training, labor relations, time manent, investment, and corporate governance approaches claimed (by their proponents, and sometimes only by their proponents and selected clients) to improve business performance in some measurable or otherwise...

Institutes

The Institute of Management Consultancy (IMC) is a Professional Body for Management consultants in the United Kingdom. ... The Institute of Management Consultants USA (IMC USA)[1] is a professional association and the sole certifying body for individual management consultants in the US. It awards the designation Certified Management Consultant (CMC), recognized by and accorded reciprocity in 44 countries and accredited by the International Council of Management Consulting... The Phillips Graduate Institute is a graduate school based in Encino, California. ...

External links

References

  1. ^ The Black Book of Outsourcing Top 10 Outsourcing Advisory Firms.
  2. ^ ISG to Acquire TPI for $280Mn.
  3. ^ Consultants are costing us billions - and for what?
  4. ^ "Central government's", British House of Commons. Retrieved on 2007-10-19. 
  5. ^ Management Consulting'?.
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  Results from FactBites:
 
Management consulting - Wikipedia, the free encyclopedia (1323 words)
Management consulting may involve the identification and cross-fertilization of best practices, analytical techniques, change management and coaching skills, technology implementations, strategy development or even the simple advantage of an outsider's perspective.
Management consulting grew with the rise of management as a unique field of study.
Management consultants are often criticized for overuse of buzzwords, reliance on management fads, and a failure to develop executable plans that can be followed through.
Management, Scientific, and Technical Consulting Services (5832 words)
Lawyers are employed in virtually all management, scientific, and technical consulting industries to represent their consulting firms in case of a lawsuit and to advise the firms, as well as clients, on changes in laws and regulations pertaining to their areas of expertise.
Consultants also must possess high ethical standards, because most consulting firms and clients will contact references and former clients to make sure that the quality of their work was of the highest standard.
Management consulting firms help clients implement new accounting and payroll software, whereas environmental and safety consulting firms advise clients on the use of computer technology in monitoring harmful substances in the environment or workplace.
  More results at FactBites »

 
 

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