Key Issues Associated with an Important Practical and Theoretical Area Related to Management Consulting - Essay Example

A review of the key issues associated with an important practical and theoretical area related to consulting Introduction Management consulting may have originated in engineering but what it is primarily concerned with today is the output of the employees, the effectiveness of the machinery in use and putting these two factors into perspective, the scale of production from factories or deliverables from companies. Large scale ventures in 19th century that saw the materialisation of the ‘multiunit’ transpired into what began to be called management consulting. Subsequently, this change was described in the way business was done as a “managerial revolution” that swept the American business place in a huge wave, followed up by other geographies that caught up with the idea. The work of the management consultant is to sell ideas that are packaged so attractively as to seem irresistible. Most new business ideas take birth in the academic world but the job of the management consultant comes into play in translating these ideas and transforming them so they work in the commercial world. That is like finding way into a consulting jungle (Freedman & Zackrison, 2001). For example, in the United States it is a rampant practice for consulting firms to have strong associations with leading business schools. A large number of the top Harvard business school graduates are employed invariably by leading American management consultancies like Boston Consulting Group and McKinsey etc. It is inevitable that these Harvard graduates will be partial to new ideas that emerge from the Harvard Business School. It is not knowledge about management that the managing consultant is seeking but arousing the interest of the organization to a new administrative idea so much so that the organisation is prodded on to utilise the model in such a way that it becomes fashionable to do so and all other businesses then adopt it promptly. While it has become essential for the companies to have a competitive advantage in the global market, it has also becomes necessary for the world manager to be increasingly knowledgeable (Davenport & Prusak, 2005). Unlike theorists, social scientists and research institutes that are known to be thinkers the management consultant is known as a ‘scientist’. This in other words translates to the management consultant as being a technician who is best at finding a solution to the problems that accrue in administration. The management school believes in teaching a particular doctrine or policy but the management consultant will not necessarily follow that ideology. When responsibility fails and cooperation desists, it normally results in resources crunch at a crucial time when these resources are required the most (Frame, 1999). Management consulting is evolutionary and hence subject to change. Some scandals that rocked the business world have also forced businesses to look at the management consulting in an ethical light particularly after the Enron and Worldcom fiascos. On their part consulting firms have been forced to review their own work and the implications thereof in the light of such scandals. The first and foremost step in this direction is considered to be getting the leverage system in place, create trust in the client by proper and ethical behaviour and interaction (Maister, 2004). Management consulting which was highly successful at one time is now faced with a plethora of questions on ethics especially since reputed businesses have been found lacking in the legal and ethical fibre. At Enron it is the top executives and the CEO who stood accused of alleged wrongdoing. It forced the company to see how the independent thought process of accountants, lawyers, consultants and board was so easily clouded. One of two possibilities come to light, either the rules were broken intentionally by the employees or they were unaware that they had broken any rules. In all, it has been found to be revolving around lack of ethical principles and practices. Besides the ethical issues what consulting firms now have to compete with is the fact that increasing businesses would like to work independently without utilizing the services of the management consultant. Businesses are increasingly training their own employees to handle problems that the organization might face. They are also pursuing the development of knowledge management. But against a backdrop of increasingly competitively growing economies, such arrangements are not always feasible to be implemented where there is more pressure on maintaining quality and level of services being provided (Booms & Bitner, 1981). The four areas where consulting firms can help organizations are human resources, costing, management of finances and information. With the realization that the employee is the biggest asset to the company, businesses have increased consultation on issues like incentives, additional training and employee involvement in the business. Identifying costs that involve activities is the new area where time and money are both saved with the efforts of the managing consultant. The choices facing businesses in the selection of software and computer systems that will suit their particular needs is always a tricky one. Reliability of the consulting firm in aiding them to choose the right technology is a new area as technology can be an effective tool and yet the uncertainty of the medium requires consulting. With the emergence of e-commerce, consultations on this aspect become almost imperative if the firm wishes to move strategically towards the new economy (Schein, 2009). Ethics and other issues are the challenging that management consultancies today with regard to their future prospects in the field, including how these challenges are related to consulting principles. The international debate has questioned the integrity of management consulting systems in view of the many corporate scandals. Under scanner has been the ethical conduct of consulting firms that corporate scandals have forced consultancies to address. The new trend of relying on their own personnel for consultation by business organizations have been examined time and again; often being rocked by another corporate wrongdoing even while the previous one hasn’t ebbed out yet. While ethical challenges in the consulting business are widespread, the corporate world has been doing its bit to plug these loose ends in management consulting by bringing in periodic rules and regulations. Over the last two decades, a number of codes of ethics have been adopted throughout the world (McDonald, 2009). How consulting firms can remain in the business will be factored in after the above points have been addressed and a recommendation for the consulting firms will follow. In this way the study would serve to throw light on the work of the management consulting for business organizations. The 1980s saw a rapid increase in the growth of the management consulting as an industry. What saw consulting increase its business were the many changes that the 21st century witnessed like information technology, outsourcing and downsizing. Corporate ethics is clearly the foundation of a good economy. The shareholders of the company naturally feel it is rudimentary for auditors, accountants, business executives in the higher hierarchy to be ethically sound. Any breach of trust besides having ethical and financial implications affects the overall business activity as well. Ethical collapse in the financial markets has led to raised fingers against corporations who might have taken advantage of deregulation. Laws like Glass Steagall might seem flawed but prohibitions and firewalls still served to protect. Stronger security laws and regulations are the requirement of a world class economy. The ethical practices of the Enron Corp executives and the lack of moral courage shown by its board of directors has led universities to begin additional courses that will pertain to “business ethics”. Stephen Hicks, Chairman of the department of Philosophy at Rockford College says that the faculty believes that successful businesses are by their nature corrupt and this is tantamount to corrupting students in the business ethics class. Emphasis in business classes should be laid on business as creative undertaking like other creative fields and integrity must be the cornerstone of the endeavour. Enron, Worldcom, Global Crossing, Qwest Communications International are companies that have shaken public trust and faith that investments are in safe hands has taken a severe beating after the malpractices in these companies were unearthed. Businesses are no longer seen as incorporating principles and ethics. These scandals have led people to believe that there is obviously something not worth consideration in the functioning of the management. Businesses are now compelled to get consultants who will set right any financial bungling that might lead to financial losses through accounting misunderstandings or fraud. Earlier the practice was to hire accounting consultants for audits only when fraud was suspected or for advice in case of a law suit and payment of damages when a contract was breached. Now all, businesses are under scrutiny of consultants when requested to do so by investors, venture capitalists and collaborators before they enter into a contract or form a business partnership. Even investors do not risk their money unless the company’s books have been found to be in order. If one is to study business ethics, then a deeper understanding of its meaning becomes relevant. Ethical behaviour is considered to be thought based and includes the pursuance of one’s interests but with loyalty towards those whose interests could be jeopardized by one’s actions. Those who profess to possess ethics are considered to be more credible in the eyes of third parties, like investors. This translates into trust that the operative capabilities of an organization is in safe hands. For those who are involved in negotiation in the course of a business relationship the fact that an organization is possessed of high ethical reputation reduces the need to garner information through management consultants. Negotiation is a fact of life (Fisher, 1999) but not everybody’s cup of tea. Also contractual consultations and precautionary measures needed for safeguarding interests will be minimised as both parties will have the reputation for ethical conduct. Hence relevance of ethics for business ranks high. Behavioural ethics can be that magnet which could pull business towards any organization and hence the management consultant will do well to encourage this strategic approach to further the organisation’s competitive advantage. However the reputation of a firm on ethical lines is not built in a day but over an accumulated period of time. There is also no guarantee that the ethical behaviour of the business will continue on ethical lines. It falls on the business therefore to create an ethical image and ensure that the ethical behaviour is consistent in the eyes of the observer on the outside who then finds it easy to identify the business on ethical lines. The main objective of the managing consultant is to ensure that a positive image of the company allows it to achieve its objectives. To this end there is a difference between the created ethical image and actual ethical behaviour. Is the ethical behaviour just a result of the need of the client or is the ethical behaviour real enough for the consultant to take it forward. For a consulting firm it becomes important to see to the continuance of such behaviour and so systems should be in place that will help the business and its employees to overcome ethical issues that could deviate the business from achieving its business goals. Business ethics can be a complicated issue as it is not just about somebody stealing from a firm but it is as complex as the business itself and the activities that go into sustaining it. It also follows therefore that the relationship between the consultant and the business organization is as complicated. There is a fine line between doing business in an ethical way and ensuring that the activities of the firm result in ethical consequences at all times. It is very easy for a business that has a monopoly of a product to take advantage of the situation and seek higher profits from its customers without appearing to do so. Conclusion The boundaries of business ethics are difficult to lay down and would vary from business to business and situation to situation. The management consultant will therefore have to be alert to the changing situation to ensure that there is no mismatch between the perceived image and the actual ethical practices followed by the firm. There are times when the management consultant though ethically relevant in his advice may be dealing with an organization which does not adhere to the basic tenets, as laid down in various laws and regulations, such as working conditions, safety, environmental pollution and tax compliance. Therefore an ethical business behaviour model does not necessarily translate into ethical values if it induces a negative reaction and indirectly leads to unethical behaviour. 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