Performance of the Client Organizations - Case Study Example

Whether prescribed methods and tools can be developed for all consulting jobs because all organisations eventually have the same type of problems. In a progressively dynamic and turbulent external environment, contemporary organizations are left increasingly dependent on their unique set of internal resources and capabilities to create value and sustainable competitive strategy (Grant, 2005). In order to acquire and/or employ the knowledge and/or expertise required for optimal development and change, organizations partner with specialist entities or management consultancies. Consultants utilize knowledge, techniques and assets to identify, change or implement solutions for improved performance of the client organizations in a wide-range of sectors including finance and banking, telecoms and entertainment, government, health, utilities, energy, mining and infrastructure, retail and consumer business, not for profit/social and manufacturing (O’Mahoney, 2010). This essay aims to analyze the argument, whether prescribed methods and tools can be developed for all consulting jobs because all organisations eventually have the same type of problems, by evaluating published literature in scholarly journals and books. First, the types of management consultancies and the approaches, methods and tools they employ in relation to the various consulting jobs required by client organizations will be examined. Next, the essay will investigate consultancy-client interactions and issues, followed by conclusions The approaches, tools and methods employed by management consultancies to provide assistance to client are principally positioned in the context of organizational development and change, and fundamentally based on reactions to changing external environment (Biggs, 2010). A broader perspective on the change process which explains the overall beliefs concerning realization of a desired change is referred to as approach, whereas the term method provides operational guidance regarding effective management of the change process. The word tool describes a specific practice employed for solving a focused issue during the change process. However, since tools may be slackly connected to specific methods, same tools can be applicable in change processes under different methods. The methods and tools which prove to be effective when employed in a change process, i.e., aligned with client’s strategy and resources, determine their legitimacy. However, some consultants argue that value in the change process is created by unique knowledge and expertise of the consultant rather than the method itself (Werr et al., 1997). Due to the global transition of production-based economy to a knowledge based economy over the past few decades, management consultancies increasingly rely on innovative knowledge as their core assets on which to define their identity. Knowledge here refers to the information inherent in people, processes and systems. Consulting firms capture innovative knowledge and value from ongoing activities which then remains embedded in their organizational structure (Anand et al., 2007). In order to ensure constant supply of management solutions to the unique needs of clients as well as production of innovative knowledge, management consultancies utilized the concept of knowledge commodification (Heusinkveld and Benders, 2005). Knowledge commodification is a process of codifying raw management ideas into transferable products and solutions which are become available for market consumption. However, such commodities prove short-lived due to evolution of new and attractive products in response to market demand. Thus, commodification is a cyclical process which occurs from the transfer of managerial knowledge between a myriad of organizational actors (Heusinkveld and Benders, 2005). Along with increase in effectiveness of consulting practice and transparency, the formulation of easy to use approaches, methods and tools allows for transfer of knowledge and management to junior consultant, hence reducing costs. Commodified knowledge, therefore, leads to increase of leverage (Van-den-Bosch, et al., 2005). Leverage structure is crucial to all aspects of consulting firms and can be defined as the ratio of partners (senior consultants) to consultants (junior consultants). For instance, in two companies having same number of consultants, the company employing more senior consultants will profit more for providing skilled services as compared to the company who has more junior consultants providing commodified services. However, the leverage does not only influence financial situation. It also affects the type and quality of work. For instance, a company with fewer senior consultants will not be able to take on skill demanding projects and also deliver relatively lesser quality of work, damaging reputation. Therefore, a balanced leverage structure according to market demands and internal resources and capabilities is essential in building a sustainable competitive advantage (Boxall and Steeneveld, 1999) Leverage also influences the human resource management policies in a firm. For instance, firms with high leverage will recruit large number of consultants, who would have difficult promotions and lesser training (Suddaby and Greenwood, 2001). While studying various private and public sector organizations, Carmeli and Schaubroeck (2005) found that increased recruitment of junior consultants was positively correlated with performance goals only when senior partners valued them distinctively. Thus, “leverage is not just an outcome, it is a strategy, a performance indicator, and a design for the company” (O’Mahoney, 2010). Consulting industry mostly depends on unique partnership models of ownership which do not conform to the standard rules and practices followed in other industries (Biggs, 2010). In the words of Nesheim, et al. (2007), “In contrast to the standard dyadic service relationship, the work and employment environment in which consultants operate is characterized by triangulated relationship structures that extend beyond the boundaries of the firm and shape the attitudes and behaviours of consultants”. However, while this environment helps create critical resources and synergic employee relationships contributing to a competitive advantage, it may also lead to conflicts over ownership and exchange of the captured value (Donnelly, 2011). Another process, knowledge colonization, involves the expansion of commodified products into new knowledge areas. This leads to intensifying competition, legitimization of some social actor as more appropriate source of knowledge at the expense of others, and jurisdictional disputes (Suddaby and Greenwood, 2001). The consulting industry is diverse and employs a number of business models, services, and innovations. The business models include; pure consultancies or companies which exclusively rely on consulting work or have included consulting separately as further competence, hybrid consultancies or firms which have include consulting to the other existing structure, generalist/change management consultancies or firms which offer a broad range of services, niche consultancies or firms which offer specific services, and small and large consultancies which employ fewer or larger no of employees. Other models such as internal consultants, contractors, body-shoppers and interim managers may not be included on the basis that they do not offer advice, are not significantly large or give services internally. The services offered by management consultancies can be categorized into three main fields; strategy, IT and generalist/change management consultancies. Strategy consulting offers strategic solutions such as where a client organization should be positioned and how it can reach there. These consultancies provide clients with market analyses, competitor reviews and benchmarking etc. IT consulting offers projects such as IT strategy, architecture, IT outsourcing, enterprise software, systems integration, product development and information management. Generalist or change management consultancies are concerned with organization change and offer wide-range of solutions including business process reengineering (BPR), quality improvement, culture change/change management, human resource management, operations management, program/project management and outsourcing advice (O’Mahoney, 2010; Biggs, 2010). Similar to other service industries, management consulting are client-led organizations where consultant act as hired experts. While management consultancies constantly strive to improve efficiency, market innovative products and advertising ideas, client organizations have their own problems, priorities and agendas. However, they are both interdependent in a knowledge based economy. A healthy and balanced relationship between client and consultancies is essential not just in terms of success but also in terms of development of content, sharing of perspectives and consequences for stakeholders involved (Nikolva and Devinney, 2009). The common reasons behind most project failures despite consultant’s intervention are uncomplicated. Either client has not provided consultant with enough information regarding the nature of problem, the resources available to tackle that problem, or know why they should employ a consultant. Such a situation develops in which consultants lack the clarity about the scope of their job, while managers are uncertain about future of their goals. The relationship is also heavily affected by the cultural, social, political and environmental conditions prevalent at the time. A balanced relationship in terms of power sharing requires that managers know what changes would assist them in realization of goals and consultants know what solutions could bring about those changes (Mahoney, 2010; Biggs, 2010). A study conducted by Beldi, et al. (2010) showed that successful implementation of a consumer relationship management project requires an integrated and impartial approach aimed at suitable selection of the system, efficient business process reengineering and additional improvement of existing firm structures. As Ashford (1998) stated, “clients are concerned that consultants are pushing standardised solutions rather than really listening to the issues and being guided accordingly”, clients demand for innovative methods and tools in the face of fluctuating external environment is becoming increasingly challenging for consultants. To summarize, management consultancies are knowledge intensive firms, which rely on knowledge innovation and utilize a wide range of approaches, methods and tools in order to assist client organizations in optimization and development of their unique internal resources and capabilities. Critical analyses of published literature revealed that methods and tools employed by management consultancies for implementing the appropriate services and solutions in client organizations and their ability to achieve desired results rely on leverage structures and commodified knowledge. The prescribed methods and tools are beneficial and easily accessible to even junior consultants through knowledge commodification but organizations are increasingly demanding innovative solutions to their unique needs. Such methods and tools also do not have the capability to implement change process on their own, and the way in which they are utilized, interpreted and communicated by consultant’s knowledge and skills are central to successful organizational change. It can also be argued that competitive advantage in organizations is based on unique resources and capabilities, and prescribed tools are likely to damage affect their performance. References Anand, N., Gardner, H. K., and Morris, T., 2007. Knowledge-based innovation: Emergence and embedding of new practice areas in management consulting firms, Academy of Management Journal, 50(2), pp. 406-428. Aschford, M., 1998. Con tricks – The shadowy world of management consultancy and how to make it work for you. London: Simon & Schuster. Beldi, A., Cheffi, W., and Dey, P. K., 2010. Managing customer relationship management projects: The case of a large French telecommunications company, International Journal of Project Management, 28(4), pp. 339-351. Biggs, D., 2009. Management consulting: A guide for students. Hampshire, UK: Cengage Books. Boxall, P. and Steeneveld, M., 1999. Human resource strategy and competitive advantage: A longitudinal study of engineering consultancies. Journal of Management Studies, 36 (4), pp. 443-463 Carmeli, A. and Schaubroeck, J., 2005. How leveraging human resource capital with its competitive distinctiveness enhances the performance of commercial and public organizations. Human Resource Management,44 (4), pp. 391-412. Donnelly, R., 2011. The coalescence between synergies and conflicts of interest in a top consultancy firm: an analysis of the implications for consultants’ attitudes and behaviours. Human Resource Management Journal, 21(1), pp. 60-73 Freitas, I. M. B., 2008. Sources of differences in the pattern of adoption of organizational and managerial innovations from early to late 1990s, in the UK. Research Policy, 37(1), pp. 131-148. Grant, R. M., 2005. Analyzing resources and capabilities: Contemporary strategy analysis. 5th ed. Malden, MA: Wiley-Blackwell. Heusinkveld, S. and Benders, J., 2005. Contested commodification: Consultancies and their struggle with new concept development. Human Relations, 58(3), pp. 283–310. Nesheim, T., Olsen, K.M. and Kalleberg, A.L., 2007. Externalizing the core: Firms’ use of employment intermediaries in the information and communication technology industries. Human Resource Management, 46 (2), pp. 247–264. Nikolova, N. and Devinney, T. M., 2009. Influence and power dynamics in client-consultant teams. Journal of Strategy and Management, 2(1), pp. 31-55. Suddaby, R. and Greenwood, R., 2001. Colonizing knowledge: Commodification as a dynamic of jurisdictional expansion in professional service firms. Human Relations. 54(7), pp. 933–53. Van den Bosch, F. A., Baaij, M. G., and Volberda, H. W., 2005. How knowledge accumulation has changed strategy consulting: strategic options for established strategy consulting firms, Strategic Change, 14(1), pp. 25-34. Werr, A., Stjernberg, T. & Docherty, P., 1997. The functions of methods of change in management consulting, Journal of Organizational Change Management, 10, pp. 288 – 307. Read More