Management consulting

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Management consulting indicates both the industry of, and the practice of, helping
organizations improve their performance, primarily through the analysis of existing
business problems and development of plans for improvement.

Organizations hire the services of management consultants for a number of reasons,

including gaining external (and presumably objective) advice and access to the
consultants' specialized expertise.

Because of their exposure to and relationships with numerous organizations, consulting

firms are also said to be aware of industry "best practices", although the transferability of
such practices from one organization to another may be problematic depending on the
situation under consideration[citation needed].

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.

Contents
[hide]
 1 History
 2 Approaches
o 2.1 Specializations
 3 Current state of the industry
 4 Trends
o 4.1 Rise of Internal Corporate Consulting Groups
 4.1.1 Advantages
 4.1.2 Disadvantages
 5 Government Consultants
o 5.1 United Kingdom
 6 Management Consulting Companies Rating
 7 Criticism
 8 Professional qualifications
 9 See also
o 9.1 Lists of firms
o 9.2 Areas of action of Consulting
o 9.3 Related Culture
 o 9.4 Institutes
 10 References
 11 External links

 12 Further reading

[edit] 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.

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 Boston Consulting
Group, McKinsey, Booz Allen Hamilton, 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. In
1983, Harvard Business School's influence on the industry continued with the founding
of Monitor Group by six professors.

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[citation needed]. 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[citation needed].
Therefore seeking (and paying for) external advice was seen as inappropriate[citation needed].
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[citation needed].

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]

[edit] 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.

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,
executive leadership, process improvement, talent management, 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.

[edit] Specializations

Management consulting refers generally to the provision of business consulting services,

but there are numerous specializations, such as information technology consulting,
human resource consulting, virtual management 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.

[edit] 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.

Currently, there are four main types of consulting firms:

1. Large, diversified organizations that offer a range of services, including

information technology consulting, in addition to a strategy consulting practice
(e.g. Accenture, ABeam Consulting, Capgemini, Cognizant, Deloitte, IBM,
Logica, PA Consulting). Some very large IT service providers have moved into
consultancy as well and are also developing strategy practices (e.g. Wipro, Tata
Consultancy Services, Infosys)
2. Medium-sized information technology consultancies, that blend boutique style
with some of the same services and technologies bigger players offer their clients.
 3. Management and strategic consulting specialists that offer primarily Strategy
Consulting and Business Intelligence Models to any industries (e.g. Oliver
Wyman, Bain & Company, Booz & Company, McKinsey & Company, Arthur D.
Little and The Boston Consulting Group).
4. Boutique firms, often quite small, which have focused areas of consulting
expertise in specific industries, functional areas or technologies. Most of the
boutiques were founded by famous business theorists. Small firms with fewer
than 50 employees are often referred to as niche consultancies (e.g. Insight CP in
the USA, iProCon Ltd. in the UK, R2P GmbH in Germany, Six Sigma Center of
Excellence - SSCX in Indonesia), who help keep prices down and sometimes
introduce new ideas emulated by larger competitors. If they have a unique
concept and market it successfully, they often grow out of this segment very fast
or are bought by larger players interested in their know-how.(e.g. Tecnova India
Pvt.Ltd.,Visnova, CPL Business Consultants)

A fifth type that is emerging is the sourcing advisory firm, that advises buyers on
sourcing choices related to insourcing, outsourcing, vendor selection, and contract
negotiations. The top 10 sourcing advisors (as ranked by the Black Book of Outsourcing)
were TPI, Gartner, Hackett Group, Everest Group, PwC, Avasant, PA Consulting, and
EquaTerra.[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.

Another method of differentiation of consulting firms is on the basis of revenue model:

1. Based on time & effort: Most firms charge only on a time & effort basis. They use case
studies & past record to justify the fees. e.g Mckinsey, BCG, etc.

2. Based on results delivered only: Very few & usually small firms which have an
excellent success rate charge on this basis.

3. Combination of both: Many of the larger firms take a part of the remuneration on the
basis of delivered results. But usually the variable component is only 20-30% of the total.

[edit] Trends
Management consulting is becoming more prevalent in non-business related fields as
well.[citation needed] 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.

An industry structural trend which arose in the early part of the 21st century was the spin-
off or separation of the consulting and accounting units of the large diversified
professional advisory firms most notably Ernst & Young, PwC and KPMG. For these
firms, which began business as accounting and audit firms, management consulting was a
new extension to their business. But after a number of highly publicized scandals over
accounting practices, such as the Enron scandal, these firms began divestiture of their
management consulting units, to more easily comply with the tighter regulatory scrutiny
that followed. In some parts of the world this trend is now being reversed where the firms
are rapidly rebuilding their management consulting arms as their corporate websites
clearly demonstrate.

[edit] 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 employees. Many corporations have internal groups of as many as 25
to 30 full-time consultants.

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

[edit] Advantages

There are several potential benefits of internal consultants to those who employ them:

 If properly managed and empowered, internal consulting groups evaluate

engagement on projects in light of the corporation's strategic and tactical
objectives.

 Often, the internal consultant requires 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 relationship provides opportunities to keep certain corporate information
private.
 It is likely that the time and materials cost of internal consultants is significantly
less than external consultants operating in the same capacity.
 Internal consulting positions can be used to recruit and develop potential senior
managers of the organization.

Note: Corporations need to be conscious of and consistent with how internal consultant
costs are accounted for on both a project and organizational level to evaluate cost
effectiveness.

 Internal consultants are often uniquely suited to

1. Lead external consulting project teams, or

2. Act as organizational subject matter experts ‘embedded’ with external consulting
teams under the direction of organizational management.
A group of internal consultants can closely monitor and work with external consulting
firms. This would ensure better delivery, quality, and overall operating relationships.

External firms providing consulting services have a dichotomy in priority. The health of
the external firm is in aggregate more important than that of their client (though of course
the health of their client can have a direct impact on their own health).

[edit] Disadvantages

 The internal consultant may not bring the objectivity to the consulting relationship
that an external firm can.
 An internal consultant also may not bring to the table best practices from other
corporations. A way to mitigate this issue is to recruit experience into the group
and/or proactively provide diverse training to internal consultants.
 Where the consulting industry is strong and consulting compensation high, it can
be difficult to recruit candidates.
 It is often difficult to accurately measure the true costs and benefits of an internal
consulting group.
 When financial times get tough, internal consulting groups that have not
effectively demonstrated economic value (costs vs. benefits) are likely to face size
reductions or reassignment.

[edit] Government Consultants

The use of management consulting in governments has increased significantly in recent
times. Booz Allen Hamilton (now split from Booz & Company) is particularly well
known now as a consultant that primarily serves the US Federal Government. Deloitte
Consulting LLP applies its industry expertise and decades of experience to helping
government departments and agencies solve their toughest problems. In India agriculture
finance corporation limited provides consultancy mainly to governments and related
institutions.

[edit] United Kingdom

From 1997 to 2006, Labour governments 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.[2] 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.[3]

[edit] Management Consulting Companies Rating

The webservice "vault.com" prepares a list of the top 50 consulting companies to work
for each year. The ranking considers company culture, practice strength, prestige and
compensation (6 percent), among a few other options. The top 25 for 2011 are:

1. Bain & Company (8.492)

2. Boston Consulting Group (8.176)
3. McKinsey & Company (8.159)
4. Analysis Group (7.251)
5. The Cambridge Group (7.178)
6. Deloitte Consulting LLP (7.162)
7. Oliver Wyman (7.123)
8. A.T. Kearney (7.089)
9. Triage Consulting Group (7.024)
10. Censeo Consulting Group (6.903)
11. West Monroe Partners (6.899)
12. Cornerstone Research (6.897)
13. PricewaterhouseCoopers LLP (6.89)
14. Alvarez & Marsal (6.844)
15. Trinity Partners, LLC (6.84)
16. Booz & Company (6.814)
17. Milliman, Inc (6.795)
18. Strategic Decisions Group (6.774)
19. PRTM (6.769)
20. Gallup Consulting (6.761)
21. Diamond Management & Technology Consultants (6.753)
22. Health Advances, LLC (6.729)
23. Strategos (6.704)
24. The Brattle Group (6.696)
25. Monitor Group (6.694)

[edit] Criticism
Despite consistently high and growing revenues, management consultancy also
consistently attracts a significant amount of criticism, both from clients as well as from
management scholars.

"Management consultants are often criticized for overuse of buzzwords[4], reliance on and
propagation of management fads, and a failure to develop plans that are executable by the
client." A number of 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.[5] In his
book "Flawed Advice and the Management Trap," Chris Argyris believes that much of
the advice given today has much in it of real merit. However, a close examination shows
that most advice given today contains gaps and inconsistencies that may prevent positive
outcomes in the future.[6]
Disreputable consulting firms are often accused of delivering empty promises, despite
high fees. They are often charged with "stating the obvious" and with lacking the
experience on which to base their advice. These consultants bring few innovations,
instead offering 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'. [7]

Another concern is the promise of consulting firms to deliver on the sustainability of

results. At the end of an engagement between the client and consulting firms, there is
often an expectation that the consultants will audit the project results for a period of time
to ensure that their efforts are sustainable. Although sustainability is promoted by some
consulting firms, it is difficult to implement because of the disconnect between the client
and consulting firms after the project closes.

Further criticisms include: disassembly of the business (by firing employees) in a drive to
cut costs[4], only providing analysis reports, 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 and
lack of (small) client focus, lack of clarity of deliverables in contracts[8], and secrecy[9].

[edit] Professional qualifications

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

 The internationally recognized Certified Management Consultant (CMC)

professional designation
 Accountancy qualifications: Chartered Management Accountant (CIMA),
Chartered Certified Accountant (ACCA), Chartered Accountant (CA), Certified
Public Accountant (CPA), Certified Practising Accountant (CPA), Certified
Management Accountant (CMA) Chartered Cost Accountant CCA Designation
from AAFM
 Engineering qualifications: Chartered Engineer (C.Eng - UK) Professional
Engineer (P.E / P.Eng - USA and Canada), Engineer Diploma Grande Ecole
(France)
 Actuarial qualifications: Casualty Actuarial Society (FCAS) - US, Society of
Actuaries (FSA) - US, Institute of Actuaries (FIA) - UK, Faculty of Actuaries
(FFA) - Scotland
 Finance qualifications: Chartered Financial Analyst (CFA) Certified Treasury
Professional (CTP)
 Consulting qualifications: Master of Business Administration in International
Business Consulting (MBA) Hochschule Offenburg University of Applied
Sciences, Germany
 Business Administration qualifications: Master of Science in Management
-Europe- (MSc.in Management), Master in Management at Grande Ecole -
France, Master of Business Administration (MBA) -USA Canada Doctor of
 Management ( Ph.D.), Doctor of Business Administration-USA/Canada- (DBA),
Master of Science in Management Consultancy (MSc) - UK
 Public Administration qualifications: Master of Public Administration (MPA)
-USA/Canada/Europe, Doctor of Public Administration
 Project Management qualifications: Project