Management consulting is the practice of helping the organization to improve its performance, operating primarily through analysis of existing organizational problems and developing plans for improvement. Organizations can utilize management consulting services for a number of reasons, including obtaining external (and possibly objective) advice and access to specialist expertise.
As a result of their exposure, and relationships with many organizations, consulting firms are usually aware of the industry's "best practices". However, the specific nature of the situation under consideration may limit the ability to transfer such practices from one organization to another.
Consultation may also provide organizational change management assistance, development of coaching skills, process analysis, technology implementation, strategy development, or operational improvement services. Management consultants often carry their own methodology or framework to guide problem identification, and to serve as a basis for recommendations for more effective or efficient ways of performing work tasks.
Video Management consulting
History
Management consulting grew with the emergence of management, as a unique field of study. The first management consulting firm was Arthur D. Little Inc., founded in 1886 as a partnership, and then merged in 1909. Although Arthur D. Little later became general management consultant, he initially specialized in technical research.
As Arthur D. Little focuses on technical research for the first few years, the first management consultation was started by Frederick Winslow Taylor, who in 1893 opened an independent consulting practice in Philadelphia. The card reads "Consulting Engineer - Systematizing Shop Management and Manufacturing Costs a Specialty". By creating Scientific Management, also known as the Taylor method, Frederick Winslow Taylor invented the first method of organizing work, cultivating a career of more management consultants. One of Taylor's early collaborators, Morris Llewellyn Cooke, for example, opened his own management consultant in 1905. Taylor's method was used worldwide until the industry shifted to the methods discovered by W. Edwards Deming.
The early period of growth in the consulting industry was fueled by the Glass Banking Act-Steagall in the 1930s, and was driven by demand for advice on finance, strategy, and organization. From 1950 onwards, consultants not only expanded their activities in the United States but also opened offices in Europe and later in Asia and South America. After World War II, a number of new management consulting firms were formed, bringing a rigorous analytical approach to management and strategy. The postwar years also looked at the principles of application cybernetics for management through the work of Stafford Beer.
The industry experienced significant growth in the 1980s and 1990s, gaining considerable importance in relation to national gross domestic product. In 1980 there were only five consulting firms with more than 1,000 consultants around the world, while in the 1990s there were over thirty companies of this size.
A significant period of growth in the early 1980s was driven by demand for organizational strategy and consultation. The wave of growth in the 1990s was driven by strategic advice and information technology. In the second half of the 1980s, large accounting firms entered the IT consulting segment. Then Big Eight, now Big Four, accounting firms (PricewaterhouseCoopers; KPMG; Ernst & Young; Deloitte Touche Tohmatsu) always offer advice in addition to their traditional services, but from the late 1980s onwards these activities became increasingly important in relation to market maturing accounting and auditing. By the mid-1990s these companies had outgrown service providers that focused on corporate strategy and organization. While three of the Big Four divide the service line differently legally after the Enron scandal and the subsequent details of Arthur Andersen, they are now back in the consulting business. In 2000, Andersen Consulting quit Arthur Andersen and announced their new name: Accenture. Name changes take effect from 1 January 2001 and Accenture is currently one of the largest consulting firms in the world. They are publicly traded on the NYSE with an ACN ticker.
The industry stagnated in 2001 before recovering after 2003, with the current trend towards a clearer segmentation of management consulting firms. In recent years, management consulting firms have actively recruited top graduates from Ivy League universities, Rhodes Scholars, and students from top MBA programs.
In more recent times, traditional management consulting firms have faced the increasing challenge of an annoying online marketplace aimed at meeting the growing number of professional freelance management consultants.
Maps Management consulting
Function
The function of consulting services is usually broken down into eight task categories. The consultant may serve as a bridge for information and knowledge, and that external consultants can provide this linking service more economically than the client company itself. Consultants may engage proactively, without significant external enforcement, and reactively, with external pressure. Proactive consultant engagement is primarily done with the purpose of discovering hidden weakpots and improving performance, while the engagement of reactive consultants is largely aimed at resolving issues identified by external stakeholders.
Marvin Bower, long-term director of McKinsey, has mentioned the benefits of consultant externalities, that they have a variety of experiences outside of the client's company.
Consultants have specific skills on tasks that will involve high internal coordination costs for clients, such as organizational change-wide or application of information technology. In addition, because of economies of scale, their focus and experience in gathering information around the world and across industries makes their information searching cheaper than for clients.
Approach
In general, the various approaches to consultation can be considered as a place along the continuum, with an 'expert' or prescriptive approach at one end, and a facilitative approach on the other. In an expert approach, the consultant takes the expert role, and provides expert advice or assistance to the client, with, compared to a facilitative approach, less input from, and less collaboration with client (s). With a facilitative approach, consultants focus less on specialist or technical knowledge, and more on the consultation process itself. Focusing on this process, the facilitative approach is often referred to as 'process consultation', with Edgar Schein being considered in America as the most famous practitioner. The consulting firms listed above are closer to the expert approach of this continuum.
Many consulting firms are organized into structured matrices, where one 'axis' describes a business function or type of consultation: for example, strategy, operations, technology, executive leadership, process improvement, talent management, sales, etc. The second axis is the industry's focus: for example, oil and gas, retail, automotive. Together, this forms the matrix, with the consultant occupying one or more 'cells' in the matrix. For example, one consultant may specialize in operations for the retail industry, and the other may focus on process improvement in the downstream oil and gas industry.
Specialization
Management consulting generally refers to the provision of business services, but there are many specializations such as strategic management, information technology consulting, human resource consulting, financial consulting, virtual management consulting, design, operations management consulting, engineering management, management science, and others. , many overlap, and most are offered by more diverse consultants. The so-called "boutique" consultants, however, are small organizations that focus on some of these specializations.
The 1990s saw an increase in what is called a 'future-based' approach. It emphasizes the language and harmony of people in the organization for a shared vision of the organization's future, as set forth in the book Three Performance Laws . The important concept here is that the way people work appears to be correlated with the way the world is happening to them, and that future-based languages ​​can change the way the future actually happens to them. These principles are increasingly being used in organizations undergoing market transitions or mergers that require the integration of two corporate cultures. However, by the late 1990s the approach declined because of the perception that the concept described in this book was not in practice offering added value to the organization.
Current industry conditions
Management consulting has grown rapidly, with industry growth rates exceeding 20% ​​in the 1980s and 1990s. As a business service, consulting remains very cyclical and related to overall economic conditions. The consulting industry shrank during the period 2001-2003, but grew steadily until the recent economic crisis in 2009. Since then the market has stabilized.
Increasingly, management consulting firms are being challenged by annoying technology that facilitates the work for freelancer ex-management consultants.
By December 2016, revenues grossed $ 229.9 billion with a profit of $ 26.2 billion. Annual growth from 2011-2016 is expected to increase at a rate of 5.8% year on year. The projected growth rate from 2016-2021 is 2.4%, accounting for potentially disruptive technologies as mentioned earlier which will affect independent consultants and freelancers.
Trends
Big Four accounting firms in market management consultancy
The Big Four audit firms (Deloitte, KPMG, PwC, Ernst & Young) have invested significantly into the strategy consulting market since 2010. In 2013, Deloitte acquired the Monitor Group - now the Deloitte Monitor - while PwC acquired PRTM in 2011 and Booz & amp; Company in 2013 - now Strategy & amp;. From 2010 to 2013, some Big Four companies have tried to acquire Roland Berger. EY follows the trend, with the acquisition of Parthenon Group in 2014, and BeNeLux as well as French business OC & amp; C in 2016 and 2017.
Deloitte has been named the largest consulting firm for six years running according to Gartner's annual consultation report. Deloitte Consulting is divided into three practices: Human Capital, Strategy & amp; Operation, and Technology. They are ranked # 4 in the Vault rankings in 2018, 2017 and 2016 for consulting firms. In 2016, PwC took over Deloitte again as the world's largest consulting firm, with a revenue gap between the two Big Four companies at around $ 600 million, according to Gartner.
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Government consultant
United Kingdom
In the UK, the use of external management consultants in government is sometimes debatable because of the perception of variable value for money. From 1997 to 2006, for example, the British government reportedly spent Ã, Â £ 20 billion on management consultants, asking questions in the House of Commons regarding returns on those investments.
The UK has also experimented with providing the use of long-term internal management consulting techniques provided internally, especially for the local government's high demand consulting arena and the National Health Service; Agency for Improvement and Development of Local Government Associations and National Public Support Team; both generate positive feedback at a cost level that is considered to be a small part of what external commercial consultation input will take place.
Europe
European Standard EN 16114: 2011 "Management consulting services".
Romanian
In 2011, Romanian management consultants managed to recover after the economic downturn and resumed growth. At the end of 2010, most companies declared stagnant revenue or even declined and by the end of 2011 about 70% of companies declared an increase or a stagnation. The years 2010 and 2011 are important tests for many Romanian consulting firms under the European Federation of Management Consultancies Association (FEACO).
In 2015, the Romanian management consultant has a turnover of 350 Mln. EUR and exports 10% of total turnover, 75% in EU and 25% outside. The local leader of the Romania management consulting market is Ensight Management Consulting.
Australia
In 1988, the newly elected Greiner State Government assigned a report to State Rail Authority by Booz Allen Hamilton. The resulting report recommends up to 8,000 job losses, including staff withdrawals from 94 state railway stations, service withdrawals on the Nyngan-Bourke line, Queanbeyan - Cooma line and Glen Innes - Wallangarra, suspension of some state passenger services ( Canberra XPT , Silver City Comet to Broken Hill and diesel locomotives transporting services) and the removal of sleeper carriages from service to Brisbane and Melbourne. The report also recommends the abolition of all state passenger services and small transport operations, but the government does not consider this politically feasible. SRA is divided into business units - CityRail, responsible for urban trains; CountryLink, responsible for state passenger services; FreightRail, responsible for shipping service; and Rail Estate, is responsible for the railroad property.
Many of the smaller players have also been cited as organizations that have government contracts.
New Zealand
In New Zealand, governments have historically played a greater role in providing some infrastructure and services than in some other countries. Reasons that contribute include inadequate scale in the private sector, smaller capital markets and historical political support for the provision of government services. Current infrastructure investment plans are open to public/private partnerships. The New Zealand government hires expertise to complement the advice of professional civil servants. While management consultants contribute to policy and strategy development, Governments tend to use management consultants for strategic reviews and for strategy execution. There is a difference between management consultants (who typically provide fixed advice and delivery, often with fixed costs) and professional contractors (who work for hourly or daily rates that provide specialist services). Official figures from 2007 to 2009 show annual expenditures of around NZ $ 150 to NZ $ 180 Million by the New Zealand Government on consultants, but this may be poorly understood. While multinational consulting firms provide advice on major projects and in specific areas, the majority of management consultants who advise the New Zealand government operate as single practitioners or as members of small consulting practice. The range of services provided is considerable, including change management, strategic reviews, project and program management, procurement, organizational design, etc.
Criticism
Management consultants are sometimes criticized for overuse of keywords, reliance on and deployment of management modes, and failure to develop clients' executable plans. As stated above management consulting is an unregulated profession so that anyone or any company can design itself as a management consultant. A number of critical books on management consultations argue that a discrepancy between management consultancy advice and the ability of executives to actually create the suggested changes result in major damage to existing businesses. In his book, Disability Advice and Management Traps , Chris Argyris believes that much of the advice given today has real benefits. However, rigorous scrutiny suggests that most of the current suggestions contain gaps and inconsistencies that may prevent future positive outcomes.
Ichak Adizes and co-authors also criticized the consultant's service time. The client organization, usually lacking the knowledge it wants to acquire from the consultant, can not precisely estimate the right time to engage the consultant. Consultants are usually late, when problems are seen at the edge of the organization's iceberg, so proactive checking, like regular medical checkups, is recommended. On the other hand, it opens additional dangers to the misuse of unfair practitioners.
The worse consulting firms are sometimes accused of delivering empty promises despite high costs, as well as by "stating the obvious" or lack of experience on which they base their advice. These consultants bring some innovations, but offer generic and "packaged" strategies and plans that are not relevant to client-specific issues. They may fail to prioritize their responsibilities, placing their own corporate interests before the client's interests.
Further criticisms include: business dismantling (by firing employees) in an effort to cut costs, providing only analytics reports, junior consultants who charge senior rates, reselling similar reports to multiple clients as "custom work", lack of innovation, overbilling for days, day does not work, speed with quality costs, large companies are unresponsive and lack of client focus (small), lack of clarity of delivery in the contract, do not adjust the criteria of special research reports and confidentiality.
International standard
ISO issued the ISO 20700 international standard Management Consulting Services Guidelines on June 1, 2017. This document is the first international standard for the management consulting industry.
The international qualification for management consulting consultants is the Certified Management Consultant (CMC).
See also
- Big Three (management consultant)
- List of management consulting firms
- Category: Management consulting firm
- Consulting Institute
Consultation action area
- Strategic management
- Operations management
- Industrial engineering
- Industrial/Organizational Psychology
- Industrial Psychology
- Organizational Psychology
- Organizational Development
- Project Management
Related cultures
- Case interview
- Motivational talks
- Business coaching
- Fashion management
- The business philosophy and organizational management system of sub-organizations is popular and influential on the entire culture of management
- Big Three (management consultant)
- Nathan for you and House of Lies - television programs parodying management consultancy
References
Further reading
- Christopher D. McKenna (2006). World-Renowned Profession: Management Consulting in the Twenty-Second Century . Cambridge University Press.
- Joe O'Mahoney (2006). Management Consulting . Oxford University Press.
Source of the article : Wikipedia
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