Performance of Management Consultancy Firms - Research Paper Example

Abstract The report looks towards focusing on the manner in which knowledge management and knowledge sharing strategies have an effect on the performance of management consultancy firms. The study looks towards gathering both primary and secondary data from different consultancy firms and looks at propounding the understanding on the manner the different factors contribute towards knowledge management strategies. The research findings further highlight some critical issues and aspects which are very important for the survival and growth of the business. The findings show that it is imperative for organizations to have a proper knowledge sharing strategy, ensure proper relation is established between the project organization and knowledge management, ensuring proper sharing of power and mobility of employees to communicate with each other, building trust and faith based on which the knowledge sharing process can be developed, the importance and role office space and time plays in determining the degree of knowledge management, the problems associated with decontextualization of electronic database, the need to ensure proper incentive mechanism apart from financial and promotion for employees, and the active involvement of the top management in shaping the performance and development of knowledge management strategies. This has thereby helped to develop a typology which has divided the knowledge management process into various parts which looks at six dimensions which are knowledge storing, knowledge distribution, knowledge exposure, knowledge transfer, knowledge exchange and knowledge collectivism. This will help to develop the required infrastructure through which better knowledge management strategies. Table of Contents Introduction 3 Research Question 4 Literature Review 5 Methodology 8 Data Collection Method 9 Analysis, Discussion & Findings 11 Future Findings 17 Conclusion 20 References 22 Introduction The importance of knowledge management is growing and has become an important tool from the perspective of the management. The use of knowledge management can be seen from the increase in different tools that is used by different organizations. Some organizations have been proactive in this field and have been able to use knowledge management very actively especially in the field of consultancy, information technology and other advisory related fields. This still leaves a lot of gap especially in the working of knowledge management being used in the field of management consultancies which needs to be addressed and looked into so that the manner in which it is being used in this field can be understood. This will provide different inputs and will help to identify the mechanism through which the entire process of knowledge management is being used in the development of business solutions to the clients. The different literature review on knowledge management helps to provide useful insights and helps to understand the manner in which knowledge management shapes up the entire working arena but is still unclear on various aspects. This paper thereby looks towards filling the void that exist by conducting research mainly focused on three directions (1) the different strategies which organizations are found to use in the field of knowledge management (2) the effect these strategies have on the performance on the business and (3) some of the basic underlying reasons and factors which have led towards those the use of knowledge management. This will thereby help to understand the manner in which knowledge management is contributing in the field of management consultancy and will highlight the different benefit and factors which accrue towards the growth of an organization Knowledge management thus looks towards developing, sharing and applying knowledge in the organization so that advantage is gained (Cortada & Wood, 2000). The importance of knowledge management has increased with the development of technology, electronic distribution, and human interaction (Davenport, De Long & Beer, 2003) which has made people look towards using this concept seriously and developing ways through which better results can be achieved. The major problem witnessed in this direction is the use of tacit knowledge in the field of knowledge management especially due to the technological aspect which requires that the employees are motivated and focused enough to use tacit knowledge for overall development (Hansen, Nohria & Tierney, 2003). Globalization in this regard has led towards huge emphasis on human dimensions and looks towards creating complexity due to the use of tacit knowledge along with knowledge management. Research Question The research looks towards identifying the manner in which knowledge management is being used in the field of management consultancy and the diverse benefit that the organizations using this are able to retrieve. This thereby ensures that the research looks at identifying the different strategies that management consultancy firms look towards using in the field of knowledge management so that the effect of the different strategy that is being used by the business can be identified and the underlying reasons which will help to understand the dynamics and mechanism in this field can be developed. This will thereby help to understand the manner in which the field of knowledge management will be improved and will thereby help to understand the manner in which knowledge management has improved. Further, it will also help to analyze the manner in which both tacit and implicit knowledge has relevance in the working on management consultancies and their role in shaping the performance of management consultancies. In addition to it the research also looks towards answering the questions like (1) the different strategies which organizations are found to use in the field of knowledge management (2) the effect these strategies have on the performance on the business and (3) some of the basic underlying reasons and factors which have led towards those the use of knowledge management. This will help to draw important findings and mechanism which will help to understand the manner in which knowledge management has its impact on the working of consultancy firm which will thereby ensure better results for using knowledge management in the field and ensure better development. Literature Review Knowledge management is a core component in the management consultancy industry as the organization here look towards imparting knowledge and is driven by that. Since, the sell business solutions knowledge management is an important part of their working culture (McDermott & O'Dell, 2001). This identifies that the fact that management consultancy firms produce and sell knowledge through the process of business solutions. This has made management consultancy forms be known a “knowledge intensive firms because of their unique ability to create and use knowledge in different fields (Gable, 2003). The ability to ensure proper manpower and developments in different directions have been the cornerstone based on which management consultancy firms have been able to yield maximum opportunities of providing proper solutions to the clients. To ensure maximum efficiency is delivering proper business solutions it is imperative that management consultancy firms have the ability to look into different insights and have people with the required competence to be able to provide business solutions (Werr & Stjernberg, 2003). This has led towards the development of different framework through which management consultancies work and focuses on knowledge generation, knowledge process and technology (Hauschild, Licht & Stein, 2001). This will help in the development of framework through which better results can be generated. This has also been shown in the diagram below To accomplish the knowledge management process management consultancy firms need to follow a process which involves generation, organizing, developing and distribution of knowledge so that better business solutions can be generated and will help to improve the overall working condition of management consultancy firms (Davenport & Prusak, 1998). This has been backed by the use of both tacit and implicit knowledge so that better strategies to identify the different knowledge management tool is developed which will look towards confronting with the different issues and help to bring forward objectives which will improve the process of knowledge sharing (Ackerman and Halverson, 2000). Studies have also demonstrated that businesses looking towards using knowledge management in their field of study look towards ensuring that the materials are kept privately and not disclosed. This is primarily due to the fact that people speak about it and has thereby resulted in small firms not using knowledge management as extensively as the bigger and larger firms (Blackler, 2005). This has thereby hampered the progress of small firms because a platform through which better services can be delivered hasn’t been developed. It has even been identified that organizations fail because they are not able to integrate their knowledge strategy with business strategy due to which they are not able to get a competitive advantage (Storey & Barnette, 2000). To ensure maximum benefit from knowledge management strategies it is imperative that organizations look towards having a explicit knowledge strategy which has the required foundations like structure, culture, technology and management to be able to deliver quality performance on the highest standard (Badaracco, 2001). Methodology The research proposes to use both primary and secondary research to gather information. On the primary front the research looks at gathering data from management consultancy firms which will help to understand the manner in which knowledge management contributes towards their development. This source of data collection method will ensure that different consultancy firms are approached and their pertinent data and relevance towards knowledge management is identified. Along with it the method proposes to use secondary data where the research looks towards using past findings of different management consultancy firms and engineering consultancy firms. This will help to back the new studies with the previous studies and will have to understand the impact knowledge management has on management consultancy firms. It will also ensure that the new research is backed by previous studies which will help to increase the relevance of the study and will help to build on the past knowledge. This will increase the validity and reliability of the data as interpretation based on it will be better and sounder. On the primary level data is collected from seven management consultancy firms which include both national and international management consultancy firms. The firms included are both large and medium size firm so that the importance of knowledge management in their respective field can be understood. Further, the research looks towards using data pertaining to three management consultancy firms and two engineering consultancy firms which will act as a method where secondary data is collected to be used in the research. This helps to ensure that the primary data is backed by secondary data and helps to understand the manner in which knowledge management has its impact on engineering and other consultancy firms which work in similar business fields. Further, using these sources also ensure that they are knowledge management firms which will help to understand the manner in which the contribution in the growth of the organization is through knowledge management. Data Collection Method The data collection method used in this research looks towards approaching the different management consultancy firms. This will be a source of primary data collection method and will be backed by secondary data. In the data collection methodology stress has been laid to ensure that contacts at the different level of management with respect of knowledge management are made. Further in this regard emphasis has been laid to find out the manner in which knowledge management contributes both internally and externally in executing clients’ projects and the relevance it has on their decision making. Further the data collection method can also be viewed as one which is semi-structured and looks towards gathering interviews which are tape recorded and the running commentary of different people at the decision making level. In addition to it focus group strategy is used where the emphasis is evolved around employees. The employees are presented with different situations and pictures based on employee perception regarding the contribution of knowledge management in their company. This will help to provide better inputs and will give the direction based on which better expectations about the future can be organized. It will also help to ensure that employees who provide business solutions perspective on knowledge management is identified which will help to increase the overall efficiency in the use of different strategy for the business based decisions. Further, the primary data has been gathered based on the willingness and amount of data that the consultancy firms are willing to provide, the participation level for the different consultancy firms and the time the consultancy firms are willing to provide for the result to be carried out. In addition to it the project has ensured that employees at all levels which included top level management, organizational members with specialized knowledge in the field of knowledge management and with people both internally and externally were spoken to so that better data pertaining to the project and the role of knowledge management can be identified. The project also looks towards conducting interviews at different level and with the top management employees so that a comparison can be made with the actual performance and the vision of the firm. The research also looks towards using a methodology where it looks at using semantic questions through face to face questions instead of visual ones like photos which have ensured that the results fall into the required research so that better data can be gathered. The methodology of using both semantic question and photos ensured that the research helps to gather valuable information pertaining to the field of knowledge management and ensures that the research is guided through the correct direction and provides maximum benefit. This has also ensured consistency and provided data pertaining to the research which will help to determine the manner in which knowledge management contributes in management consultancy firms. Analysis, Findings & Discussion The data collected from seven management consultancy firms which include both national and international management consultancy firms and three management consultancy firms and two engineering consultancy is shown below. The table also highlights the interviews that were conducted, the meetings, the focus group along with other publicly accessible materials like financial statements, website data and other publications which will help to understand the manner in which knowledge management contributes to their development. The data collected from different firms and the analysis of it shows that large and big firms have invested heavily in developing knowledge management system which uses technology as well so that there is better proximity across the global firms who are seen to operate in different regions of the world. Despite the development in knowledge management technology it has been identified that organizations are still lacking the development of strategies which ensures proper knowledge management sharing across employees. This has been largely limited in all organization as they have looked towards developing their technology to be used in the field of knowledge management but haven’t been able to develop the same process for knowledge sharing (Kluge, Stein & Licht, 2001). The problem of knowledge sharing in large firms is largely due to their size which has made it difficult for the management to ensure that knowledge could be shared. This made it important that small and medium sized firms could be able to ensure that knowledge is properly shared but due to lack of technology in small firms sharing knowledge management among the employees was inadequate. Further, it was notices that the employees kept their private material in binders and didn’t pass it on to others which thereby complicated the matter and made it difficult and a source of annoyance for the management The finding also showed that some of the firms had explicit knowledge management strategy whereas other management consultancy firms lacked it. However this doesn’t confirm that consultancy firms which had explicit knowledge strategy were more focused and those that didn’t have explicit knowledge strategy were not focused thereby showing that there was no actual clarity in the manner and process in which knowledge was shared. From the study it was also viewed that many firms didn’t have knowledge management as the main constituent but was a side effect and secondary matter compared to some where it was primary. The research further confirms the fact that knowledge management didn’t succeed by laving different sporadic initiatives being launched in the direction of knowledge management until it was integrated with the management objectives. This highlighted that the different initiatives didn’t provide the same reward and benefit for which the different firms had implemented knowledge management. An example in this direction is that the management consultancy firms interviewed showed that they used intranet and the purpose of it was to ensure knowledge sharing. Despite it the result showed that when intranet was used for knowledge sharing the employees didn’t have knowledge regarding the different areas on which the other departments were working on. This reduced the importance of knowledge sharing as the basic purpose for the development of it was defeated. It was further noticed that in large consultancy firms which worked on a global scale orders were passed on from the head office to the other offices determining the manner in which the work was to be carried out and the areas in which the work had to be done. This thereby didn’t look towards sharing knowledge but instead looked towards passing on the process based on which the consultancy firms worked. On the other hand in smaller consultancy firms the consultants were independent where they looked towards developing their own work and look towards delivering it by ensuring that the assignment was done by the required personnel and no process of knowledge management was developed. Relevance of Project Organization: The research highlighted the importance project organization has on knowledge management. It was seen during the research that project organization determined the manner in which knowledge sharing was implemented within the organization. The organization structure has to be such that it allows free passage of information and knowledge so that there is better cooperation and sharing of knowledge within the colleagues (Werr, & Stjernberg, 2003). It was also advocated that when a competent and knowledge employees leaves an organization it leads towards a loss of competitive advantage which requires that consultancy firms looks towards developing their structure in such a manner that it ensures uniformity and better sharing of knowledge so that mobility improves and the process of knowledge management gets shaped up (Hildreth, Kimble & Wright, 2000) Relevance of Office Space: The research conducted over different consultancy firms highlighted different offices from one being a single cabin to one with a large house for many employees. It was identified from the research that office space and layout has a role in knowledge management as it determines the person with whom the employees interact during the day which leads towards knowledge sharing in the organization. Some firms highlighted the same by ensuring flexibility so that interactions was better whereas some followed the same structure and looked towards being rigid. Flexibility helps to ensure that along with a formal structure and informal structure is developed which helps to ensure that the productivity and efficiency of the employees improve (Moberg, 2001) leading towards better knowledge management Relevanace of Deconceptualization in Electronic Database: It is generally assumed that knowledge which is stored in the form of text in the database when used by another person results in creating mistakes as the other perceives the information differently which could lead towards disastorous results. Instead the study showed that when the database is used by different people from the same department it helps to create new and innovative knowledge which when shared will help the consultancy firm to improve their performance. The research also highlighted than new and innovative knowledge sharing can be ascertained only when the organization uses explicit knowledge and allows all the employees to use and share it. This helps to ensure that the orientation program even developed for the new employees is able to understand the relevant data and based on it is able to develop strategies which will ensure that the errors are reduced and maximum efficiency in the process of knowledge sharing is gained. Relevance of Communication Mode: The study also helped to find out the manner in which different communication metho helps in knowledge sharing. This has been depicted in the chart below (Boisot, 2002) The study showed that knowledge sharing is best possible when the information is shared face to face as it leads towards understanding the entire situation in a better way and also helps to solve the doubts which thereby ensure that knowledge sharing provides maximum benefit. This has been followed by video-conferencing which is also a sort of face to face communication and lastly in the list is document database. This thereby helps to understand the manner in which knowledge management sharing gets affected by the communication process used Relevance of Trust: The research highlighted that trust is important in management consultancy firms based on which knowledge can be shared. Developing trust and faith among the employees help to enhance the progress of the employees as it ensures that they are able to contribute positively. This thereby helps to ensure that the overall process looks towards filling the gaps that the knowledge management process has as it simplifies the entire process and ensures effectiveness in passing information. Relevance of Incentive System: The research confirmed the previous studies which highlighted that developing the appropriate reward system which aims at motivating the employees through proper incentive helps to develop the knowledge sharing process (Foote, Matson & Rudd, 2001). The research took it further and stated that the incentives should be something apart from the financial and promotion that the employees get. This will help to develop the socially desirable response from the employees which will help to facilitate the process of knowledge sharing and will thereby help to gain overall efficiency in knowledge sharing. Relevance of Support from Top Management: The research confirmed the previous studies which stated that the organization is able to witness development of knowledge management strategies only when the top level management supports it (Dierkes, Berthoin, Child & Nonaka, 2001). This is primarily due to the fact that support from the top management ensures that the necessary infrastructure through which the business is able to deliver quality performance can be developed. This will help to ensure that the required technology which will help in developing knowledge management system is developed which will ensure better interaction among the employees and shape the performance of the organization. Future Findings The research helps to further crystallize the concept of knowledge sharing into sub-categories which help to develop a typology through which knowledge sharing is possible as shown in the table below The above table highlights the manner different factors contribute towards enhancing knowledge management. It is shown in the above table the different directions which when worked on by management consultancy firms will help to improve the overall process of knowledge management and will help to shape the performance through which better results can be achieved. Using the above mechanism will help the management consultancy firms to get a better platform through which understanding of the knowledge management process can be developed. This will facilitate the overall development of ensuring better performance and being able to match the requirements of the evolving business environment. The research will help to understand the manner in which knowledge management has its relevance in the field of management consultancies as it will look towards presenting the different aspect which has been also shown below (Saint-Onge, 2006) This will help to understand the action that management consultancies have to develop so that a better action can be developed which will look towards analyzing different issues and will present before the clients an appropriate business solution. This research will also imply towards certain important ramifications for the business and will help to understand the manner in which tacit and implicit knowledge is being used by management consultancies as shown below (Little, Quintas & Ray, 2002) This will thereby build on the mechanism of understanding the manner in which management consultancies have been able to benefit from the use of different knowledge management strategies and will provide a direction which will help to understand the varied opportunities that management consultancy has by using knowledge management and will help to improve the working of the management consultancies in the future. This thereby ensures that tangibility is provided which will ensure that the process of knowledge management gains maximum efficiency and will help in creating an invisible hand based on which the business will be able to achieve better efficiency and will be able to ensure higher standards of knowledge sharing. Conclusion The research will thereby help to answer the questions that have been asked in the research regarding the manner in which knowledge management is being used in the field of management consultancy and the diverse benefit that the organizations using this are able to retrieve. This will also help to identify different framework different strategies that management consultancy firms are using in the field of knowledge management. This will help to find out the underlying reasons which will help to understand the dynamics and mechanism in this field can be developed. This will thereby help to find out the different fundamentals based on which management consultancy firms have been able to deliver better results and will help in the overall improvement of the management working style. The paper has thereby explored the different parameters and problems which constitutes towards improved knowledge sharing and will help management consultancy firms to develop their business. The research shows the fundamental problems that smaller and medium sized firms are facing due to lack of technological penetration and the lack of initiative to share information. In addition to it the report also looked towards analyzing the situation in the manner explicit knowledge has its importance in the field of knowledge management and thereby helps to draw important fundamentals based on which the knowledge management process is developed. The report brings forward the fact that organizations that have been able to integrate knowledge management strategies along with the business strategies are able to reap benefit. This thereby highlights the importance of knowledge management strategies and knowledge sharing so that the overall performance of the business gets shaped up and the organization is able to deliver better performance. References Ackerman, S. and Halverson, A. 2000. Reexamining Organizational Memory, Communications of the ACM, 43 (1), 59-64 Badaracco, J.L. 2001. The knowledge link. Boston: Harvard Business School. Blackler, F. 2005. Knowledge, knowledge work and organizations: An overview and interpretation. Organization Studies, 16 (6): 1021-1046 Boisot, M.H. 2002. Knowledge assets: Securing Competitive advantage in the information economy. Oxford: Oxford University Press Cortada, J. & Woods, J. 2000. The knowledge management yearbook 2000-2001. Woburn, MA: Butterworth-Heinemann Davenport, T., De Long, D. & Beer, M.C. 2003. Successful knowledge ma nagement projects. Sloan Management Review, 39 (2): 43-57 Dierkes, M., Berthoin, A.A., Child, J. & Nonaka, I. 2001. Handbook of organizational learning and knowledge. Oxford: Oxford University Press Foote, N.W., Matson, E. & Rudd, N. 2001. Managing the knowledge ma nager. The McKinsey Quarterly, (No. 3): 120-129 Green Peace International. 2010. Make IT Green Cloud Computing and its Contribution to Climate Change Retrieved on Oct 10, 2012 from http://www.greenpeace.org Gable, G. 2003. Editorial preface: consultants and knowledge management. Journal of Global Information Management. 1. Hildreth, P., Kimble, C., & Wright, P. 2000. Communities of practice in the distributed international environment. Journal of Knowledge Management, 4 (1): 27-38 Hauschild, S., Licht, T. & Stein, W. 2001. Creating a knowledge culture. The McKinseyQuarterly, (No. 1): 74-81 Hansen, M.H., Nohria, N. & Tierney, T. 2003. What's your strategy for managing knowledge? Harvard Business Review, (March/April): 106-116 Kluge, J., Stein, W. & Licht, T. 2001. Knowledge unplugged. New York: Palgrave Little, S., Quintas, P. & Ray, T. 2002. Managing knowledge. London: SAGE Publications Ltd. Moberg, A. 2001. Närhet och distanc – Studier av kommunikationsmönster i satelitkontor och fleksibla kontor. Sverige: Linköping Universitetet McDermott, R. & O'Dell. C. 2001. Overcoming cultural barriers to sharing knowledge. Journal of Knowledge Management, 5 (1): 76-85 Werr, A. & Stjernberg, T. 2003. Exploring Management Consulting Firms as Knowledge Systems. Organisation studies, 24 (6), 881-908 Saint-Onge, H. 2006. Tacit knowledge: The key to the strategic alignment of intellectual capital. Strategy & Leadership, 24 (2): 10 Storey, J. & Barnett, E. 2000. Knowledge management initiatives: Learning from failure.Journal of Knowledge Management, 4 (2): 145-156. Stephen, R. 2009. Green IT — More Than a Three Percent Solution?. Published by the IEEE Computer Society. Retrieved on Oct 10, 2012 from www.computer.org/internet/ Werr, A, & Stjernberg, T. 2003. Exploring Management Consulting Firms as Knowledge Systems. Organisation studies 24(6), 881-908 Read More