Presentation on theme: "Management in Action Social, Economic & Ethical Issues"— Presentation transcript:
1 Management in Action Social, Economic & Ethical Issues
2 AimThe course aims at bringing the students closer to reality by developing their understanding of the professional prerequisites to practice of management in terms of required skills and attitude to respond proactively to rapid discontinuous change in business environment. Integrative in approach, this course aims at developing not theoreticians but practitioners who are expected to sense the ongoing conflict between environmental change and internal desire of management for stability.
3 ObjectiveAt the end of this course the students will understand:Various Issues Involved in practicing management particularly in the Indian contextPossible approaches to Ethical, Economic and socially acceptable Decision-making problem solving through examination of alternative paths.
4 Module I: Introduction Modern Management Practices and Issues Involved, Outsourcing Management Services and Evolution of Management Consultancy, Skills-set Required for Management Consultants. Consulting and performance counseling.
5 Module II:The Process of Management Consulting Consulting Proposals. Identification and Definition of Problem, Fact-Finding Leading to Solution Development and Implementation, Developing Strategic and Tactical Plans and Subcontracting, Pricing of Consultancy, Acquiring and Developing Talents for Consulting.
6 Module III: In-house Management versus Management Outsourced Why a Sense of Skepticism and Unease Towards Management Consultants. Cost versus Value of Advice, Separating Consulting Success from Consulting disaster. Some Revealing Situations.
7 Module IV:Cross Cultural Management Systems and Processes Types of organizational culture, Strength of organizational culture, Function of organizational culture, Importance of culture to the organization, Cultural Models, Cross- Cultural Perspectives, Geert Hofstede and Cross- Cultural Issues
8 Module V: Economic and Social Issues in Management Adaptation to Changing Environment in General and Economic Environment in Particular, Economic Growth and Change Areas, Emerging Opportunities in Various Sectors including Social Sector, Management Practice and Cultural Issues, The global Political Situation, The Global Competitive Environment and the internal scene in India, War Game.
9 Module VI:Ethical Issues in Management Relationship among Various Stakeholders, Reasons for Conflict of Interests Among Stakeholders, Corporate Governance and Ethics. Why Unethical Decisions Leading to Conflicts are Taken, Power and Politics, Initiatives on Corporate Governance by the Governments.
10 The Genesis Roots are in Management Consultancy Emergence from two concept based issues:1. Total Quality Management & Business Ethics and Corporate Governance2. Theoretical frameworks were drawn from Strategy, Finance & HR
11 Management Consultancy "The services provided by an independent and qualified person or persons in identifying and investigating problems concerned with policy, organization, procedures and methods, recommending appropriate action and assistance in implementation".
12 Management Consultants Known as Evolutionary rather than Revolutionary.Application must be Collaborative and Authoritarian.Doctors of Management.
13 Management Practices & Outsourcing What is Outsourcing?What is being Outsourced?Core Expertise need to be retained, nurtured and stretched.
14 Why to hire Management Consultants Client require the skills of the Management Consultants for two purposes:Identification of the “Problem”.Problem Identification(s), Achieving the objectives and effective performance.
15 Why to hire Management Consultants Need for fresh ideas from Entrepreneurial Perspective.Need for improved performance from the perspective of Operations, Distribution and Logistics, functional areas of Marketing, Finance, HR and IT.Need for Efficiency and Effectiveness.Need to evaluate performance.Need to train employees.Need for total turnaround.
16 Client’s Expectation(S) Independent ViewpointSpecial QualificationsRealistic Gains not just moving the wheels.
17 Attributes of Successful Consultants Powerful NegotiatorEffective CommunicatorReservoir of Self ControlUnderstanding of Individual PsychologyUnderstanding of Group PsychologyUnderstanding of Organizational PsychologyComplete mastery of the given “area”.
18 Barriers common to Consultants Know – it – all attitudeInability to understand technical languageInadequate background or knowledgePoor organization of ideasDifferences in perceptionPrejudice or biasPersonality conflictsTendency not to listenResistance to change
19 Barriers common to Consultants 10. Lack of credibility11. Inability to understand Non-Verbal Communication12. Hostile attitude13. Lack of feedback14. Differences in status or position15. Information Overload16. Too many Gatekeepers17. Overly Competitive Attitude
20 “As long as we have hope, we have direction, the energy to move and the map to move by, we have a hundred alternatives, a thousand paths, and an infinity of dreams."
22 Financial Capability Factors Factors related to sources of funds: Capital structure, Procurement of capital, Financing pattern, Working capital availability, Borrowings, Capital and Credit availability, Reserves and Surplus, and relationship with lenders, banks and financial institutions.Factors related to usage of funds:Capital investment, fixed asset acquisitions, current assets, loans and advances, dividend distribution, and relationship with shareholders.Factors related to Management of funds: Financial, accounting, and budgeting systems, management control system, state of financial health, cash, inflation, credit, return and risk management, cost reduction and control, and tax planning and advantages.
23 Check Point: Financial Capability Access to financial resources.Relationship with financial institutions.Level of credit worthiness.Capital budgeting system.Cost of capital as compared to competitors.Level of shareholder’s confidence.Management control system.Tax benefits due to various government policies.
24 Marketing Capability Factors Product-related factors: variety, differentiation, mix quality, positioning, packaging and others.Price-related factors: pricing objectives, policies, changes, protection, advantages, among others.Place-related factors: distribution, transportation and logistics, marketing channels, marketing intermediaries, and so on.Promotion-related factors: promotional tools, sales promotion, advertising, public-relations, and so on.Integrative and systems factors: marketing mix, market standing, company image, marketing organizations, marketing management information systems and so on.
25 Check Point: Marketing Capability Variety of products.Quality of products.Positioning.Prices as compared to similar products in the market.Price protection due to Government policies.Quality customer services.Effective distribution system.Effective sales promotion.Profile advertising.Company and product image.Effectiveness marketing management information system.
26 Operations Capability Factors Factors related to production system: capacity, location, layout, product or service design, work systems, degree of automation, extent of vertical integration, and others.Factors related to the operations and control system: aggregate production planning, material supply, inventory, cost and quality control, maintenance system and procedures, and so on.Factors related to R & D system:personnel, facilities, product development, patent rights, level of technology used, technical collaboration and support, and so on.
27 Check Point: Operations Capability Level of capacity utilization.Plant location.Degree of vertical integration.Sources of supply.Effective control of operation costs.Inventory control system.Level of R & D personnel.Technical collaboration
28 Human Capability Factors Factors related to Systems & Processes: SOPs, System for manpower planning, selection, development, compensation, communication, appraisal, position of the HR development within the organization,Factors related to organization and employees: type of system, corporate image, quality of managers, staff and workers, perception about the image of the organization as an employer, availability of developmental opportunities for employees, and so on.Factors related to industrial relations & Salutary conditions for employees: Organizational Ergonomics, Union management relationships, collective bargaining, working condition, safety, welfare and security, morale, employee satisfaction and so on.
29 Check Point: Human Capability Genuine concern for HR and development or facade.Efficient and effective SOPs.The organization is perceived as a fair and model employer.Learning opportunities and facilities.Congenial working environment.Motivation level of workforce.Level of organizational commitment not loyalty.Level of absenteeism.Safe and salutary working conditions.
30 Information Management Capability Factors Factors related to acquisition and retention of information: Sources, quantity, quality, and timeliness of information, retention capacity, and security of informationFactors related to the processing and synthesis of information: Database management, systems, software capability,
31 General Management Factors Factors to the General Management System: Strategy Formulation, Implementation, Evaluation, Strategy evaluation system, management inf
32 THE ENVIRONMENTAL CHANGES * CHANGES IN TECHNOLOGY* PROLIFERATION OF NEW PRODUCTS* FASTER COMMERCIALIZATION OF NEW PRODUCT IDEAS AND PATENTS* BUSINESS BOUNDARIES BLURRED DUE TO THE OVERARCHING TECHNOLOGIES* SOCIO-POLITICAL CHANGES* GOVERNMENTS BECAME BARGAINERS IN THE CONDUCT OF BUSINESSES* EMERGENCE OF GLOBAL FIRMS & BRANDS* NEW AFFLUENCE OF CONSUMER, CHANGING TASTES & PREFERNCES OF CONSUMERS
33 NEW DEMANDS FIRMS HAVE TO FACE * TO BE STRATEGICALLY ALERT & FUTURE ORIENTED.* TO BE ABLE TO TAKE RISKS IN TAPPING OPPORTUNITIES.* TO BE INSULATED AGAINST ENVIRONMENTALTHREATS.* TO DEVELOP COMPETENCE FOR ASSIMILATING CHANGE FASTER.* TO RESPOND EFFECTIVELY AND ECONOMICALLY.* TO GROW BIG.* TO BE ABLE TO GENERATE LARGE RESOURCES.* TO GAIN EXPERTISE IN TECHNOLOGY, MARKETING AND DECISION SUPPORT SYSTEMS.
34 MYTHS ABOUT QUALITATIVE ANALYSIS Just a set of specific methods such as case studies, interviews etc.Qualitative research is done by researchers who are poor in statisticsOnly concerned with aspects of selfAnything that uses the word ‘subjective’ becomes qualitative inquiryUsed only in the backdrop & against quantitative researchIs fictional work and is not scientific
35 WHY CLIENTS HIRE CONSULTANTS? To learnTo save moneyTo avoid lossesTo solve problemsTo improve safetyTo improve imageTo improve efficiencyTo hire new employeesTo improve performanceTo increase sales and profits
36 To help through busy periods To introduce, facilitate and sustain changeTo open up new markets and opportunitiesTo comply with laws, standards and regulationsTo put new systems, methods and practices into useTo confirm their ideas, concepts, plans and strategiesTo facilitate transitions, mergers, takeovers and downsizing
37 There’s no business like consulting business… They [Management Consultants] are people who borrow your watch to tell you what time it is and then walk off with it.-R. Townsend, Up the Organization
38 The Advantages of Using Consultants Getting a second opinionMore flexibility in hiringFresh perspective and viewsExpertise that is lacking in the organizationOpportunity to learn and train employeesWork is performed faster and is of better quality
39 Public Perception of Consultants A consultant is a person who takes your money and annoys your employees while tirelessly searching for the best way to extend the consulting contract.Consultants will hold a seemingly endless series of meeting to test various hypotheses and assumptions. These exercises are a vital step toward tricking managers into revealing the recommendation that is most likely to generate repeating consulting business.After the correct recommendation is discovered, it must be justified by a lengthy analysis. Analysis is designed to be as confusing as possible, thus discouraging any second guessing by staff members who are afraid of appearing dense.
40 Public Perception of Consultants Consultants use a standard set of decision tools that involve creating alternative scenarios based on different assumptions. Any pesky assumption that does not fit that does not fit the predetermined recommendation is quickly discounted as being uneconomical by the consultants.Consultants will often recommend that you do whatever you are not doing now.Consultants do not need much experience in industry in order to be experts; they learn quickly.
41 Public Perception of Consultants Consultants eventually leave, which makes them excellent scapegoats for major management blunders.Consultants can schedule time in your boss’s calendar because they don’t have your reputation as a troublemaker who constantly brings up unsolvable issues.Consultants often are more trusted than your regular employees.Consultants will return phone calls because it is all billable time to them.Consultants work preposterously long hours, thus making the regular staff feel worthless for only working 60 hours a week.
42 PARADIGMS IN ANALYSIS LOGICAL POSITIVISM INTERPRETIVIST CRITICAL THEORYSystematically contest creation of knowledge about the social worldEach paradigm/world view guides inquiryAscribe to different “ontology”, “epistemology” & “methodology”Define what falls within & outside the limits of legitimate researchQuestion of methods are secondary to question of paradigmsDebate between quantitative & qualitative refers to paradigmatic forcesParadigms are ‘human constructions’: No construction is incontrovertiblyright
43 UNDERSTANDING OPERATIONS DIFFER WITH EACH PARADIGM AssumptionsMethods/ProceduresData collection &analysisSystematization &comparison ofinformationObservation ofreactionsInterpretation123456AREA OF THEORYAREA OF METHODSoperationalisationexplanationverification
44 3 important questions unique to each paradigm … ONTOLOGICALWhat is the nature of reality & what can be known about it?‘How things really are’ & ‘how things really work’?EPISTEMOLOGICALWhat is the nature of relationship b/w the knower & the known?What can be known?METHODOLOGICALHow can inquirer go about finding out whatever can be known?What rules & procedures would help us understand reality?
45 LOGICAL POSITIVISM ONTOLOGY REALISM Reality is assumed to ‘exist’ out thereDriven by immutable natural lawsKnowledge of “the way things are” reflected by context free generalizationsGoal of inquiry is to form cause-effect laws: PREDICTION & CONTROLResearch can converge on the ‘true’ state of affairs
46 LOGICAL POSITIVISM ONTOLOGY REALISM Reductionist & deterministic postureSocial relationships are regarded as “facts” to be investigated ‘objectively’Something that can be known outside oneselfPrimary aim of social science research is ‘discovery’ of law of behaviourAssociated with empirical-analytical “hard” paradigm of research
47 LOGICAL POSITIVISM EPISTEMOLOGY DUALIST & OBJECTIVIST METHODOLOGY Researcher & the researched “object” are independent entitiesResearcher is the “expert”“Neutrality” of researcher is desired & emphasisedInquiry takes place as through a one-way-mirrorValues, beliefs, emotions, or anything “subjective” is preventedMETHODOLOGYEXPERIMENTAL & MANIPULATIVEQuestions/Hypothesis stated in propositional formSubjected to empirical test to verify theoriesPossible confounding conditions are carefully controlledReplication of results
48 DISENCHANTMENT WITH POSITIVISM Shattering of the ‘objectivist’ ideal of positivismPluralisation of life worldsResearch conducted in the real worldKnowledge needs to be ‘locally’, ‘temporally’ & ‘situationally’ relevant“Sensitizing Concepts” required to approach social contextsRecognition of central role of language & discourseConcern with process & individual rather than statistics & variables‘Human face’ is lost in statistical manipulations
49 DISENCHANTMENT WITH POSITIVISM Knowledge production is relative to frames of referenceTruth is not absolute and is decided by human judgmentPositivism: Context stripping, Exclusion of meaning, Theory ladennessCrisis of representationExclusion of ‘discovery’ dimension in positivismEtic/Emic dilemma: Inability of general data to individual casesReceived view of natural science followed blindly by positivistsHuman science should study web of meanings that people live in
50 INTERPRETIVIST PERSPECTIVE ONTOLOGYRELATIVISTReality is in the form of multiple, intangible mental constructionsSocially & experientially based, local & specific in natureConstructions are alterable as are their associated ‘realities’Systematic analysis of socially meaningful actionUnderstanding & interpretation of how people create & maintain their world
51 INTERPRETIVIST PERSPECTIVE ONTOLOGYRELATIVISTPurpose of research is to discover how people construct meaningsMeaning is maintained by interactionGeneralizations emerge from specific details of observations of social lifeEmphasizes everyday knowledgeMerely suggest “directions along which to look” rather than prescriptions of“what to see”
52 INTERPRETIVIST SOCIAL SCIENCE EPISTEMOLOGYTRANSACTIONAL & SUBJECTIVEResearcher and the researched are interactively linkedCo-construction of knowledge by the researcher & the researchedSubjectivities of the researcher & the researched are integral partResearchers’, reflections, impressions, feelings become dataMETHODOLOGYHERMENEUTICAL & DIALECTICALInteractions between researcher & the researched elicit & refine dataResearcher is central to the process of researchThick descriptions, stories, narratives
53 INTERPRETIVIST MAJOR INFLUENCES Verstehen “Empathic Understanding” The world of “lived experiences”Situation-specific meanings constitute the general object of investigationAll of us our particular actors, in particular places, at particular timesUniqueness of human inquiryMeaning of social phenomenaCelebrate the permanence & priority of the real world of first-personUseful in the context of discovery but not in the context of justification
54 INTERPRETIVIST SOCIAL SCIENCE MAJOR INFLUENCESHERMENEUTICSSubjective experience and interpretation of textText as representations of reality & versions of the worldProcessing experiences of social environments into textsTransformation of texts in understanding occurs through interpretationCONSTRUCTIONEXPERIENCEINTERPRETATION
55 INTERPRETIVIST SOCIAL SCIENCE MAJOR INFLUENCESSYMBOLIC INTERACTIONISMSee humans as purposive agents who engage in self-reflexive behaviourHuman beings act towards their environments on the basis of their meaningsMeanings derive from communication that is symbolic for creating knowledgeMeanings are established & modified through an interpretive processBuilds on the concept of self, language, social setting, culture, joint actHumans ‘act’, they do not merely ‘respond’
56 CRITICAL THEORY ONTOLOGY HISTORICAL REALISM Reality is assumed to be constantly evolving over time & is apprehendableReality shaped by social, political, cultural, economic, gender, ethnic forcesThese forces crystallize into series of structures that are ‘real’Assumes: change is rooted in conflict/tensions/contradictions/paradoxesCritique conditions & implies a plan of change & provide vision of futureAim is to smash myth & empower people to change societyAdvocacy & activism are key conceptsCriterion for progress is that emancipation should occur
57 CRITICAL THEORY EPISTEMOLOGY TRANSACTIONAL & SUBJECTIVIST METHODOLOGY Researcher and the researched are interactively linkedValues of researcher & situated ‘others’ influence inquiryFindings are value mediatedMETHODOLOGYDIALOGIC & DIALECTICALDialogue b/w researcher & participantDialogue must be dialectical in nature to transform ignorance
58 QUANTITATIVE RESEARCH A DEBATEQUANTITATIVE RESEARCHQUALITATIVE RESEARCHLogical PositivismNatural science world viewHypo-deductiveParticularisticObjective/ Outsider centeredOutcome orientedAttempt to control variablesGoal: find facts & causesStatic realityVerification orientedConfirmatoryInquiry is value free/neutralInterpretive/PhenomenologicalNaturalistic world viewInductiveHolisticSubjective/ Insider centeredProcess orientedRelative lack of controlGoal: understand actor’s viewDynamic realityDiscovery orientedExploratoryInquiry is value bound
60 Consultant's DILEMMASHow does the Consultant make a difference in the production of data?What does the Consultant do to retain the “voices of participants”?What role should the Consultant' take? ONLOOKER, PARTICIPANT, OBSERVERDoes he need to keep a check on his/her biases?Will the Consultant be able to represent the ‘true’ version of accounts?How does one ensure validity and reliability of the investigation?Can Consultant unmask his emotions while interacting with participants?Are there any established standards of data processing?Can this study persuade the readers of its worthiness?
61 “GENRE” OF QUALITATIVE METHODS DATA COLLECTION TECHNIQUESDATA ANALYSIS APPROACHES
62 DATA COLLECTION TECHNIQUES PARTICIPANT OBSERVATIONINTERVIEWFOCUS GROUP DISCUSSIONSCASE STUDIESTEXTUAL MATERIAL: Autobiographical accounts, document analysis
64 ROLE OF QUALITATIVE RESEARCHER DATAGENERATIONENTERING FIELDDATA ANALYSISREPRESENTING
65 ROLE OF QUALITATIVE RESEARCHER Researcher an integral part of the research processRequires sustained contact & immersion in the ‘lived life’ of participants“Get close” or insider to the participants worldOnlooker Vs Being an actorExpert Vs Learner:“I WANT TO KNOW WHAT YOU KNOW, IN THE WAY YOU KNOW IT”Detachment Vs InvolvementRapport Vs EmpathyCo-constructor of knowledge
66 JUDGING QUALITATIVE RESEARCH TRADITIONAL TERMSNATURALISTIC TERMSInternal ValidityExternal ValidityReliabilityObjectivityCredibilityTransferabilityDependabilityConfirmability
67 FEW ANSWERS… ART OF REFLEXIVITY “Disciplined self-reflection” Making the process of data production & analysis explicitExperience of doing research is critically evaluated throughoutMaintaining reflexive journal/memo takingKnowing who you areYour individuality as a researcherInfluence of personal interests/biases on researchPersonalReflexivityFunctionalReflexivityContinuous examination of the practice/process ofresearch to reveal assumptions, values & biasesReflecting on larger issues that include researchmethodology & questioning psychology itselfDisciplinaryReflexivity
68 FEW ANSWERS… REPRESENTATION Representation doesn’t mean ‘writing up’ the findings after the studyDifficulties inherent in representing the “other”Acknowledgement that self & other are entangledResearcher’s struggles/crisis is also a part of data2 views: (a) Researcher can directly capture lived experience(b) Experience is created in the text written by researcherHow does a researcher understand & communicate participant’s realityPresentation of data say as much about the researcher as the participant
69 FEW ANSWERS… TRUSTWORTHINESS Encompass efforts to reduce or make explicit sources of biasIncrease the investigators’ & readers’ exposure to the phenomenonProvide thick descriptionsDisclosure of the researcher’s orientationIntensive & prolonged engagement with the materialPersistent observationTriangulationDiscussion of findings with othersIterative cycling b/w observation & interpretation or b/w “dialogue & text”Responsible search for negative instancesSeeking consensus through peer briefing
70 FEW ANSWERS… THEORETICAL SENSITIVITY An awareness of the subtleties of meaning of dataHaving an insight, ability to give meaning to data, capacity to understandBeing sensitive to data and making appropriate decisions in the fieldComes from thorough study of literature, professional & personal experience
71 ORGANIZATIONAL PARADIGMS 21st CenturyDiscontinuous change, continuous improvementSpeed and responsivenessEmpowerment; leadership from everybody“Virtual” organizations, permanent flexibility20TH CenturyStability, predictabilitySize and scaleTop-down “command & control” Organizational rigidity
72 Control by rules & hierarchy Information closely guarded 20TH CenturyControl by rules & hierarchyInformation closely guarded“Rational,” quantitative analyticsNeed for certainty Reactive; risk-averseProcess drivenCorporate independence and autonomyVertical integration21st CenturyControl by vision and valuesInformation sharedCreativity, intuitionTolerance of ambiguityProactive;entrepreneurialResults drivenInterdependence; strategic alliances“Virtual” integration
73 20TH Century 21st Century Internal organizational focus Consensus Domestic market orientationCompetitive advantage Sustainable competitive advantage Competing for today’s markets 21st CenturyFocus on compétitive environ mentConstructive contentionInternational focusCollaborative advantageHyper-compétition, constant re-invention of advantageCreating tomorrow’s markets
74 Iceberg Corporate Value Potential Only 10% of the value of any firm we are able to study 90% is hidden days of financial analysis are over.Today we need to study the “Iceberg Balance Sheet”.This has 3 kinds of capital:Human CapitalStakeholder CapitalShareholders Capital
76 The Disadvantages of Using Consultants It is expensiveDesired results are not guaranteedIt may create bad vibes amongst employeesProjects and issues may blow up out of all proportions
77 How do Consultants charge for their services? Per Hour or Per Day basisRetainer basisFixed-price assignmentsPerformance-based fee (Contingency Fee)
78 Contingency feesA client complained that he couldn’t afford a consultant’s hourly fee.‘Instead of doing the job on a time and material basis, I’m willing to do it for a contingency fee,’ responded the consultant.‘What is contingency fee?’ asked the client.‘It’s very simple. If I don’t deliver what I promised, I’ll be left with no money at all,’ explained the consultant‘What if you do deliver what you promised?’ persisted the client.‘Then you’ll be left with no money at all,’ said the consultant.
79 How consultants market their services? Membership of community organizations and professional institutionsPublishing books and articlesNetworking with other consultantsSpeaking at seminars, conferences and other gatherings attended by both clients and consultantsWord of mouth advertising – recommendations from satisfied clients
80 Paradigm Shift in Consulting Accountability Activity–Based ConsultingNo business need for the consulting interventionNo assessment of performance issuesNo specific, measurable objectives for implementation and business impactNo effort to prepare stakeholders/participants to achieve resultsNo effort to prepare the work environment to support implementationResult-Based ConsultingIntervention linked to specific business needsAssessment of performance effectivenessSpecific objectives for implementation and business impactResults/expectations communicated to stakeholders/participantsEnvironment prepared to support implementation
81 Activity–Based Consulting No efforts to build partnerships with key managersNo measurement of results or cost benefit analysisPlanning and reporting on consulting intervention is focused on inputResult-Based ConsultingPartnerships established with key managers and clientsMeasurement of results and cost-benefit analysisPlanning and reporting on consulting interventions are focused on output
82 Methods of Data Collection Follow-up surveys measure satisfaction from stakeholders.Follow-up questionnaires measure reaction and uncover specific application issues with consulting interventions.On-the-Job observation captures actual application and use.Tests and assessment are used to measure the extent of learning (knowledge gained or skills enhanced).
83 Interviews measure reaction and determine the extent to which the consulting intervention has been implemented.Focus groups determine the degree of application of the consulting solution in job situations.Action plans show progress with implementation of the job and the impact obtained.Performance contracts detail specific outcomes expected or obtained from the consulting intervention.Business Performance monitoring shows improvement in various performance records and operational data.
84 Methods for Isolating the Effects of Consulting A Pilot group with consulting is compared to a control group without consulting to isolate consulting intervention impact.Trend lines are used to project the values of specific output variables, and projection are compared to the actual data after a consulting intervention.A forecasting is used to isolate the effects of a consulting intervention when mathematical relationships between input and output variables are known.Participants/stakeholders estimate the amount of improvement related to a consulting intervention.
85 Supervisors and manages estimate the impact of a consulting intervention on the output measures. External studies provide input on the impact of a consulting intervention.Independent experts provide estimates of the impact of a consulting intervention on the performance variable.When feasible, other influencing factors are identified and the impact is estimated or calculated, leaving the remaining unexplained improvement attributable to the consulting intervention.Customers provide input on the extent to which the consulting intervention has influenced their decision to use a product or service.
86 The Score Card Perspective : Six Balanced Measures Reaction to and satisfaction with the consulting intervention from a variety of different stakeholders within different time frames.The extent of learning that has taken place as those involved in the consulting intervention learn new skills, processes, procedures, and tasks.The success of the actual application and implementation of the consulting intervention as the process is utilized in the work environment.
87 4. The actual business impact changes in the work unit where the consulting project has been initiated. These values include hard data as well as soft data.5. The actual return on investment reported as a ratio or in a percentage format. The measure shows the monetary return on the cost of the project.6. Intangible measures, which are usually soft data items that are not converted to monetary values for use in the ROI formula.
88 Methods for Converting Data to Money Output data are converted to profit contribution or cost savings and reported as a standard value.The cost of a quality measure, such as a reject, is calculated and reported as a standard value.Employee time saved is converted to wages and benefits.Historical costs of preventing a measure, such as customer complaint, are used when they are available.
89 Internal and External experts estimate a value of a measure. External database contain an approximate value or cost of a data item.Participants estimate the cost or value of the data item.Supervisors or managers provide estimates of costs or value when they are both willing and capable of assigning values.The consulting of staff estimates a value of a data item.The measure is linked to other measures for which the costs are easily developed.
90 Recommended Consulting Costs The Cost of initial analysis and assessment, possibly prorated over the expected life of the intervention.The cost of developing solutions.The cost of acquiring solutions.The cost of application and implementation of the intervention.The cost of maintenance and monitoringThe cost of evaluation and reportingThe costs of administration and overhead for the consulting intervention, allocated in some convenient way
91 Consulting BenefitsBCR = _______________Consulting CostsSometimes the ratio is stated as a cost-benefit ratio, although the formula is the same as BCR. The return on investment uses the net benefits divided by consulting costs. The net benefits are the consulting benefits minus the costs. In formula form, the ROI becomes.
92 Net Consulting benefits ROI% = _________________ X 100Consulting CostsThis is the same basic formula used in evaluating other investments where the ROI is traditionally reported as earnings divided by investment.
93 The BCR and the ROI present the same general information, but from slightly different perspectives. An example will illustrate the use of these formulas: a consulting intervention produces benefits of Rs. 581,000 at a cost of Rs. 229,000. Therefore, the benefit-cost ratio is:Rs. 581,000BCR = ______ = (2.5:1) Rs. 229,000
94 As this calculation shows, for every Rs. 1 invested, Rs. 2 As this calculation shows, for every Rs.1 invested, Rs.2.50 in benefits are returned. In this example, net benefits are Rs.581, Rs.229,000 = Rs. 352,000. Thus, The ROI is:Rs.352,000ROI% = _______ X100 = 154%Rs.229,000