Management in Action Social, Economic & Ethical Issues

The Genesis Roots are in Management Consultancy Emergence from two concept based issues: Total Quality Management & Business Ethics and Corporate Governance Theoretical frameworks were drawn from Strategy, Finance & HR

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".

Management Consultants Known as Evolutionary rather than Revolutionary. Application must be Collaborative and Authoritarian. Doctors of Management.

Management Practices & Outsourcing What is Outsourcing? What is being Outsourced? Core Expertise need to be retained, nurtured and stretched.

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.

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.

Client’s Expectation(S) Independent Viewpoint Special Qualifications Realistic Gains not just moving the wheels.

Attributes of Successful Consultants Powerful Negotiator Effective Communicator Reservoir of Self Control Understanding of Individual Psychology Understanding of Group Psychology Understanding of Organizational Psychology Complete mastery of the given “area”.

Barriers common to Consultants 1.Know – it – all attitude 2.Inability to understand technical language 3.Inadequate background or knowledge 4.Poor organization of ideas 5.Differences in perception 6.Prejudice or bias 7.Personality conflicts 8.Tendency not to listen 9.Resistance to change

Barriers common to Consultants 10. Lack of credibility 11. Inability to understand Non-Verbal Communication 12. Hostile attitude 13. Lack of feedback 14. Differences in status or position 15. Information Overload 16. Too many Gatekeepers 17. Overly Competitive Attitude

“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."

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

WHY CLIENTS HIRE CONSULTANTS? To learn To save money To avoid losses To solve problems To improve safety To improve image To improve efficiency To hire new employees To improve performance To increase sales and profits

To help through busy periods To introduce, facilitate and sustain change To open up new markets and opportunities To comply with laws, standards and regulations To put new systems, methods and practices into use To confirm their ideas, concepts, plans and strategies To facilitate transitions, mergers, takeovers and downsizing

The Advantages of Using Consultants Getting a second opinion More flexibility in hiring Fresh perspective and views Expertise that is lacking in the organization Opportunity to learn and train employees Work is performed faster and is of better quality

The Disadvantages of Using Consultants It is expensive Desired results are not guaranteed It may create bad vibes amongst employees Projects and issues may blow up out of all proportions

How do Consultants charge for their services?  Per Hour or Per Day basis  Retainer basis  Fixed-price assignments  Performance-based fee (Contingency Fee)

Contingency fees A 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.

How consultants market their services?  Membership of community organizations and professional institutions  Publishing books and articles  Networking with other consultants  Speaking at seminars, conferences and other gatherings attended by both clients and consultants  Word of mouth advertising – recommendations from satisfied clients

Paradigm Shift in Consulting Accountability Activity–Based Consulting No business need for the consulting intervention No assessment of performance issues No specific, measurable objectives for implementation and business impact No effort to prepare stakeholders/participants to achieve results No effort to prepare the work environment to support implementation Result-Based Consulting Intervention linked to specific business needs Assessment of performance effectiveness Specific objectives for implementation and business impact Results/expectations communicated to stakeholders/participants Environment prepared to support implementation

Activity–Based Consulting No efforts to build partnerships with key managers No measurement of results or cost benefit analysis Planning and reporting on consulting intervention is focused on input Result-Based Consulting Partnerships established with key managers and clients Measurement of results and cost-benefit analysis Planning and reporting on consulting interventions are focused on output

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).

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.

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.

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.

The Score Card Perspective : Six Balanced Measures 1.Reaction to and satisfaction with the consulting intervention from a variety of different stakeholders within different time frames. 2.The extent of learning that has taken place as those involved in the consulting intervention learn new skills, processes, procedures, and tasks. 3.The success of the actual application and implementation of the consulting intervention as the process is utilized in the work environment.

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.

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.

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.

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 monitoring The cost of evaluation and reporting The costs of administration and overhead for the consulting intervention, allocated in some convenient way

Consulting Benefits BCR = _______________ Consulting Costs Sometimes 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.

Net Consulting benefits ROI%=_________________X 100 Consulting Costs This is the same basic formula used in evaluating other investments where the ROI is traditionally reported as earnings divided by investment.

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. 581,000 BCR =______ = 2.54 (2.5:1) Rs. 229,000

As this calculation shows, for every Rs.1 invested, Rs.2.50 in benefits are returned. In this example, net benefits are Rs.581,000 - Rs.229,000 = Rs. 352,000. Thus, The ROI is: Rs.352,000 ROI% = _______X100 = 154% Rs.229,000