A report on the role of management consultancy
Management Consultancy is team of people which try to find out the problem an organisation is facing as well as try to give the solution of that problem after properly analysing the situation. In 1886 Arthur D. Little, a professor of MIT established the world’s first Management Consultancy firm named ‘Arthur D. Little’. Initially it was a technical consultancy firm but later on it became management consultancy firm. The consultancy industry has grown rapidly since then and there are more than 50 world renowned consultancy firms operating in Information technology, strategic management, financial services, marketing management,hurman resource management, off shore services, infrastructural planning and so on. According to the data monitor report (2009) management consultancy is one of the fastest growing industries having worth of $ 300 billion annually. Most of the big organisations, public departments and government departments are spending huge money on consultancy services so that they could get best advice from the consultant on the related issues, on the other hand consultancy charges heavy fees for offering their services to the client. Consultancy firms have relationships with so many big companies that’s why consultancy companies are perceived to have knowledge of “best industry practices", however these practices vary from industry to industry and it can’t be transferable to every industry. The growth of management consultancy business is highly dependent on economic development of all industry as during the all recession cycle consultancy business was the worst affected sectors across the globe.
According to the Chartered Institute of Management Consultancy companies hire consultancy firms for analysing the problem so that they could plan long term objectives and goals. According to the Greiner and Metzger (1983), Management consulting is an advisory service contracted for and provided to organizations by specially trained and qualified persons who assist, in an objective manner, the client organization to identify management problems, analyze such problems, recommend solutions to these problems, and help the organization in implementing the recommendations’. Management consultancy is a knowledge based industry where knowledge is transferable from consultants to client. Consultancy firms offer help in company’s change management , creating new training skills, implementation of proper technology, strategic improvement, or functional development of knowledge. Management firms normally carry their predefined; structure of guidance and methods to analysis the problems of the client and to resolve them in much defined manner so that they could have better impression on the top management of the client.
There are two kinds on approaches consultancy firms normally have – structural and strategic approach. Strategic approach can be termed as demand creating approach where consultant main focus is to create demand by adopting persuasive and legitimize strategies (Fincham 1999).There are so much obstacle in implementing consultancies practices within the organisation due to so many environment factors so the structural approach focuses on these constraints (Fincham 1999).According to the Arygris (1985) consultancy must adopt such approach so that client could achieve its long term objective by decreasing outside help. According to the Churnhman and Schainblatt (1965) for effective consultancy involvement client must understand the consultant perspective why he is trying to solve the problem according to his pre defined strategic approach. According to the Kolb and Frohman (1970) consultant interaction should not only focus for short term solution by adopting few practices but also for preparing the client for the long term problem handling according to the environment.
Reputation of the consultancy firm is not the only factor which influences the client for selecting a consultancy (IMC Survey 2005).Most of the consultant’s charges heavy fees from the client but most of the organisation neither has the resources nor the time to train their employees, because of this organizations hire consultants with specific knowledge. Knowledge management is the most important aspect in consultancy business so here we, ll discuss the nature of knowledge used in consultancy business and what is the implications of its characteristic across for the client – consultant relationship. Consultants offer various kinds of services through its knowledge to the client business for long term relationship. When assignment start client might require different knowledge transfer from consultant for their businesses. Consultants work with the functional team to improve functional skills, interpersonal and leadership; to recognize personal and company visions; to identify the various components of the organisation's culture.
Nature of Knowledge and Client-Consultant Relationship
Consultancy management is a knowledge based industry where knowledge is transferable from consultant to client. Client-consultant relationship starts with the mutual understanding what client needs and what consultant provide in terms of required knowledge to the client. Client looks for the people firm the outside for their internal problem which they can’t solve because of lack of required knowledge. In most of the consultancy firm knowledge management works through three modes
1. Methods and approach adopted by the consultancy firms where they can differentiate the services according to the client. Like some of the client would be on the top client list and some of the client would on normal one, prices also vary from client to client according to the relationship and belongingness.
2. Facilitate the mutually understood language, knowledge and its implications where consultancy put all information on common platform so that it could be mutually understood as well as easily transferable. Most of the consultancy have experienced professional from the same industry so that they fulfil the gap with the client.
3. Individual experience of the consultant who is interacting with client where that individual would be the face of the consultancy and he/she would interact with the client for enhancing the long term relationship as well as benefitting the client through theirs services and creating the right impression.
Most of the consultancy firms hire very experienced people from different industry so that they could provide the best guidance to the client during working with the client. Every consultancy has certain practices for the client management depending on the industry. According to Lucas and Plimpton (1972) consultant must focus on developing client’s internal capability and strength to solve the problem of the future. Consultancy services are based on the mutual interaction with client where intangible and immediately consumed knowledge is offered to the client.
There was a huge shift from organisational consultancy work to project based consultancy works during the 2nd half of the 20th century but now a day’s consultancy industry is changing very rapidly due to the demand of such services. “Shift in 20th century was based on changing nature of work from mass production, with essentially stable customer requirements and slowly changing technology, to the current situation in which every product supplied may be against a bespoke design, and technology changes continuously and rapidly” (Turner and Keegan, 1999).In the consultancy firms knowledge can be used by two means- 1. Using the existing knowledge owned by experienced professional or owned by the company 2. Creating the new knowledge for the client. Nature of the consultancy firm as well as the required knowledge is changing very rapidly like any fashion industry so consultancy firms required knowledge to fulfil the client requirement. Management consultants are perceived to be the person who repackages the old ideas for the clients. Most of the consultant offer leadership knowledge which can give the direction to the client business. According to the Fincham and Clark 2002 content of the knowledge provided by the consultant are not clear and consultants contribute or assist to the client by creating the managerial and authoritative image.
Most of consultancies are the transferable hub of knowledge from consultant to client location through experienced employees. There are different kinds of approaches used by consultancy firms depending on the client nature of business. According to the Edgar Schein (1990) there are three type of knowledge transfer approach-
Purchase of Expertise: - Consultancy industry is based on all type of knowledge like marketing, finance, human resource, supply chain, Information technology, project management, change management, and so on. In this approach client ask for specific kind of expertise from the consultancy firms and consultant provide that services. Like KPMG is very specialize in strategic consultancy.
Doctor – Patient: - In this kind of approach client come to the consultancy and ask for analysing the problem in the organisation. In the same way when a patient come to the doctor for check up than doctor look at the symptoms and suggest him medicine and all.Conslutant very keening look into the problem and suggest the solution to the client problem. They can work on the basis of feedback they get from each other for that solution and consultant tries to remove that problem.
Process consultation: - In this kind of approach consultants and clients work together to find out the root cause of the problem and then consultant give the different methods to correcting the problem. Most of the manufacturing and project consultation work on the same approach.
In the last 2 decades consultancy business has grown so much that gave the new power to the consultant who have better knowledge than that of clients. According to the Clark and Salaman (1996) most of the clients are victim of the consultant’s ambiguous knowledge and impression management skills. Knowledge possessed by consultants is having ambiguous perceived value as most of the consultancy firms are passing the same information’s in different forms. Knowledge in consultancy is very industry specific like they have expertise from the industry that can understand the intricacies of the client and could give them reaction for their problems. Consultants try to persuade the client for getting new contract as they have the intangibility in the knowledge. One approach which describe the management consultant as rhetorical elements of persuasiveness which try validate their claims in the new management fashion.
Implication of Knowledge on Management Consultancy
Management consultancy literature is divided into two approaches which talk about on different perspective according (Fincham and Clark 2002, and Kipping and Armbrüster 1998).The 1st main theme know as ‘Functional approach’ revolves around providing the advice to client, consultants and third parties for creating the successful client-consultant relationship (Block 2000; Greiner and Metzger 1983; Kubr 1996; Schein 1988). However the second approach known as critical strain which focuses on flaws in 1st approach.
As we can see in the table both approaches based on few common questions on management consultancy where 1st approach treat client as prospective buyer of consultancy services where as 2nd approach indicates the loopholes in the first approach and tells how it could be improve. Knowledge management is very important in the consultancy business as clients pay huge amount to the consultants so they best value for their money. In consultancy it’s very tough for the prospective client to evaluate the effectiveness/quality of consulting knowledge. There are so many professional bodies which try to control the effectiveness of consultancy firms but the industry does not have the entry barrier and evaluation mechanism for the provided services. According to the Clark (1995) consultancy can exploit this fact that there are no proper controlling bodies in the in the industries for their checking the effectiveness of their services. Most of the time consultancies try to improve their impression on client’s management rather adopting the new and effective practices for the up gradation of client performance. According to the Bloomfield and Best (1992); Clark and Salaman (1996) client’s role have changed from a well informed buyer to a victim of consultancy services which have consultant’s rhetorical and Impression management skills to create a right impression on client.
‘Impression management’ is another area in consultancy business which is taking bigger role. According to Clark (1995) Consultancy firms are more concern about the presentation of the knowledge rather than having actual knowledge to create the right impression on client. So many authors discussed that some knowledge characteristics are common in client-consultant relationship. On the basis of following characteristics of shared knowledge we can know the implication of knowledge in the client-consultant relationship.
As in the consultancy management most services are intangible which give advantage to consultancy firms where as client would not be able to judge the quality of knowledge shared during the process.Accoridng to the Clark and Mitchell (1994) intangibility is the biggest reason for quality assurance problem in the consultancy business. According to the Nelson (1970) you can assure that quality of management services before making the order so that you could get the best services for your requirement. In terms of client-consultant relationship intangibility plays an important role as consultant knows what they are selling but clients don’t have idea what they are purchasing unless they receive that service (Alvesson 1994).Intangibility gives the commanding posting to the consultants so that they could create the right images, impression and confidance with the client for future projects as well as the running projects. It give the chance for the new consultancy firms so that they could create a niche for them self by providing the best knowledge to the client even though it is intangible in nature.
Consultancy business depends on the trust between the client and consultant interaction because knowledge in this business is like a wine or food in restaurant until unless you won’t taste it you would not know about the quality of the food or services. In the same way quality of the knowledge provided by the consultants can be judged only by experiencing it. Quality of knowledge is highly dependent on the client – consultant relationship. This nature of the services gives the difficulty for the client to evaluate the quality of knowledge provided by the consultants. According to Jackall (1988) “management consultants are virtuosos in symbolic manipulation”. Interaction between the client and consultant give s the chance to consultants to convince the client about the quality and value for the services where as for client interaction gives an opportunity to evaluate pre and post purchase quality of the knowledge provided. During the pre purchase talks consultants try to focus on quality assurances where as client try to reassure not to do mistake what they have done in previous relationships.Qulaity evaluation is dependent on the way of using the service by the client so for making the higher quality services consultants must focus on the interaction with the client.
In the consultancy business because of the intangible nature of knowledge consultant finds very tough to manage same quality in every project with the client.Client expects the best quality services from the consultants in each and every project. Consultants can follow some good practices so that they could maintain the best quality in every project.Heterogenity gives the bad impact for the consultant impression on the client whereas client realize the variation in the services provided by the consultant. Now a day’s especially after the recession requirements of the client have changed a lot and they are expecting best transferable skills from the consultancy firms for long term relationships as well as objectives.
Perishability also affects the client – consultant relationship as it’s tough to evaluate the quality of services once it’s consumed. It can be best evaluated only during the implementation process or after the implementation. Consultancy knowledge have Perishability in nature so it’s tough for the consultant to store, replicate or increase output of the services during the high demands. For the client perspective it’s tough to purchase the same kind of services or knowledge at later point if required. Consultant understanding with the client is most important as in new projects client might ask the same level of services which he delivered before but due to Perishability it won’t be created again. Most of the consultancy firms try to replicate their best practises to other clients also. But it’s very tough for them to manage same quality in that due to the Perishability.
Finally we can say that knowledge in management consultancy is revolves around creating the impression among the clients so that consultants could prove their quality and value of their services. According to Bergholz (1999) for successful consultant-client relationship trustworthy co-operation is required so that consultant could understand and fulfil client’s psychological, organizational, social and professional requirements. There are so many characteristics of the knowledge in the consultancy business which gives uncertainty to evaluate the quality of the services client has got. Most of the time consultants approach the client with the presentation skills so that they can highlight the key points for getting good reputation in the eyes of the clients. Most of the consultancies try to have very good relationships with the client and do as the top management of the company for creating the quality and value in terms of impression management. According to Mangham (1978) very important feature of consultants is ‘creation and management of impression’ so most of the consultant tries to manage the knowledge very effectively for having best impression on the client.
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