North East Business and Innovation Centre - Essay Example

Business Management: Consulting Business Consultation Report Client: North East Business and Innovation Centre (BIC) Topic: Given the behaviour of our Captains of Industry in 2009, how has this affected the consultancy profession with specific reference to second party quality audits? Introduction Strategic management principles involve defining and setting realistic long term strategic goals for achievement. “Strategic or institutional management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives” (David, 1989). Thus it’s clear that strategic management is all about defining, setting and achieving long term objectives of the organization. During the year 2009 a lot of changes took place in the sphere of strategic management in North America and Europe. Second party quality audits have especially assumed a newer and seminal dimension in the sphere of strategic management and the related field of corporate decision making. The focus of attention on such concepts and theories as convergence/divergence, contingency strategic management planning and design perspectives, the influence of endogenous and exogenous variables on consultation environment and the strategic learning outcomes – e.g. cost reduction, cost escalation, ethical parameters and variance/covariance analysis – has been marked enough in the strategic management context to warrant an extensive analysis of the current developments in literature and methodology. While secondary quality audit related literature is scarcer to come by there is a substantial amount of literature on the directional thrust of strategic management process irrespective of the predicaments faced by the consultant both as a professional practitioner and an articulator of ethical norms. The strategic significance of second party quality audits has also been neglected by many researchers against the evolving backdrop of their obvious preference for pure management practice including first party quality audits (Kubr,2002). The current resurgence of interest in the subject can be attributed to the fact that second party and third party quality audits as against first party quality audits have successfully empowered quality managers at the organizational level to take preemptive action against the probable undesirable outcomes associated with first party quality audits – e.g. de-emphasizing rising costs of such audits and misrepresentation and misinterpretation of information. 2. Analysis 2.1. What are second party quality audits? Second party quality audits are those audits carried out by quality auditing organizations that have been hired by a customer to quality check systems, manufacturing processes, procedures, quality standards and related functions of the seller organization with a view to ensuring that the latter would meet its quality related obligations in delivering what’s expected of. Thus, second party quality auditing, unlike first party quality audits which are carried out by the manufacturing organization itself, has some objective purposes. The customer hires the quality auditing organization to monitor and exercise oversight over the quality related functions of the manufacturing organization. In the process a large amount of information flow takes place between the customer’s quality auditing organization and the manufacturing organization. 2.2. Consultant’s role in the second party quality audits “Strategy is the direction and scope of an organization over the long-term which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations” (Barnes, 2007). Therefore it is possible that quality audits are entrusted to second parties with a view to eliminating waste and above all to ensuring strategic rigor in identifying quality related inefficiencies at the organizational level. The consultant here plays a very important role in helping the customer to identify possible areas for the audit. While many consultants were engaged by customers and indeed by manufacturing companies for internal audits, this paper specifically focuses on the former. The role of the consultant in advising and helping the customer to carry out quality audits of the manufacturing or the auditee’s organization’s processes and procedures concerning quality goes so far as to encompass a greater degree of responsibility and objectivity. The auditing consultant’s professional independence and responsibility act as the most important determinants of their role. In fact the consultant brings into bear a substantial amount of experience and foresight on the quality audit outcomes (Alvesson, & Johansson,2002). 2.3. Recent developments in the field of second party quality audits At the average consultancy firm level second party quality audit environment has been developing along the lines of a strategic qualitative shift in audit lifecycle away from its orthodox time-scale centric approach to independent consultants’ discretion on audit planning. Such sub tasks as the establishment of auditing parameters for the effective execution of the audit and the norms for compliance with regulations have now acquired a newer dimension, viz. consultants’ role has increasingly been centered on a set of professional standards that presume the existence of heterogeneous quality perspectives. Thus hitherto what was practiced as homogeneous quality systems aren’t any more relevant in the professional consultant’s own domain. The concept of process is very closely interrelated to the concept of procedure when it comes to the functions of the quality audit consultant. Whereas the idea of procedure refers specifically to a highly detailed series of specific steps that are to be taken over the course of the audit lifecycle, which are typically to be followed in a highly specific order as well, and in most cases, the endpoint of the procedure as a whole is the accomplishment of a pre-specified task, the idea of process is slightly different. Process refers specifically to any pre-defined set and series of interrelated actions, activities, and events that the auditing team and or the consultant engages in with a view to attaining a predefined set of goals. Process can also refer to the specific order in which things must be done in order for the audit to continue in the appropriate manner (Payne, & Poulfelt, 1993). This report particularly identifies positive and negative correlations between and among the theoretical and conceptual parameters of a contingency model on quality auditing practices. It also identifies and determines the current prevalence of quality auditing practices that converge on a probable reference framework of analysis, thus establishing a set of positive and negative correlations and regressions between and among endogenous and exogenous variables of quality auditing practices by consultants on behalf of their clients. Finally to build a theoretical and conceptual framework for future analytical reference on the convergence parameters of a new auditing and accounting environment free of conventional constraints. 2.4. Regulatory regimes, compliance standards and the quality audit consultant’s changing role Corporate quality auditing environments have been changing fast in their regulatory and compliance spheres with ever increasing emphasis on such international quality standards like Quality Standards ISO 9001:2000 and ISO 14000. The Quality Management System (QMS) provides rules and regulations for the documentation of audits and as a result audits have to be executed in accordance with procedures in the Quality Manual. In other words what’s not found in the Manual aren’t intended to be audited. There are an equally significant number of quality standards adopted by the European Union (EU). For instance European Medicines Agency’s (EMA) primary task is to scientifically evaluate drugs developed by the pharmaceutical industry for sale and use in Europe. As of late the Agency has been empowered to impose stricter controls on big pharmaceutical companies that tend to cultivate closer links with the medical fraternity. This outcome is very important against the backdrop of recent accusations in the US that big pharma and medical experts have a very close but ethically undesirable rapport. It’s the same experts who act as quality auditors and consultants in their private capacity for these pharmaceutical companies (Czerniawska,1999). Thus attention must be focused on the probable conclusions related to the presently compliance-based environments of quality auditing practices as adopted by consultants and then make an attempt to delineate the probable parameters of a more unconventional contingency model of quality auditing to identify the existing shortcomings of the current practices and rectify them accordingly. It is just a tentative effort right now and it would include such possibilities of adopting good quality auditing practices at the organizational level in accordance with some international standards. As a result the strategic quality auditing practices also have undergone some rapid changes, including in the conventional auditing practices. Thus the consultant’s role has acquired a new objectivity related dimension (Fombrun, & Nevins,2004). The primacy and the immediacy of the current quality auditing standards and system-centric compliance regimes as that of the European Union’s in the context of an evolving paradigmatic dichotomy between the conventional practice and the modern pressures for change. However modern quality auditing corporate environments demand not simple compliance with rules and accuracy of figures but also a greater degree of the consultant’s involvement in determining the overall outcomes and preventing negative management. In other words they are not just number jugglers but active players in the process of detecting errors in advance. Thus this whole process can be regarded as a holistic mechanism that controls and assesses the validity and the reliability of the presented quality records. The recent international developments and also the current economic recession have forced businesses to adopt far reaching changes that the need of a proper system of auditing standards at least to survive in the business environment is essential. 2.5. Quality management consultant’s significance and relevance for the modern organization The more recent literature on the subject of broader principles of management consulting has been more concerned with the assertion that researchers ought not to focus attention on novel management practices but on independently verifiable organizational information (Zhang, 2000). Their subsequent line of arguments is centered on the belief that the significance of current research efforts in the field is essentially seen in the modern compliance-centric management environments where hierarchically organized structures exert an extraordinary amount of pressure on the average auditor to comply with norms that have very little if any to do with such broader and more important concepts like corporate governance, quality of accounting and auditing practices, judgment, business ethics concerning accounting practice and the corporate responsibility. Thus the inevitable outcome is that many writers disagree with the conventional wisdom of management practitioners including tradition-bound consultants that various management consulting contexts present the same kind of experience and latitude for decision making( Poulfelt, & Greiner, 2005). In fact the decision making aspect of the consultant in determining quality benchmarks has been ignored by many writers. This impact reshapes the existing theoretical and conceptual frameworks of management consulting practice to such an extent that theoretical concepts alone might not be sufficient to successfully integrate different paradigms of concepts and logical perceptions to build a cohesive system of regulation centric management consulting environment. Nowadays organizations have better approaches to such intricate problems as quality control and metrics. For instance in the planning and design process of VRIO (value, rarity, inimitability and organization) framework businesses have adopted such revolutionary approaches. Accenture, the largest strategic management consultancy in the world, places emphasis on VRIO framework in such a manner that it’s very difficult for its competitors to duplicate its VRIO environment in any meaningful manner. This example illustrates how best modern organizations are able to redesign their existing strategic operational and functional environments to face off competition. In this context the modern management consultant’s task is to redefine the contours of management consultation practice (Fincham, & Clark,2003). Given the quality auditing consultant’s strategic response to external pressure and the responsibility to the customer organization there is very little freedom left to the consultant except to bring in VRIO framework centric benefits to the consultation environment. 2.6. Total Quality Management and Six Sigma Concepts Finally under the major TQM principle of continuous improvement the quality audit management consultant must pay attention to the fact that simply forming quality circles and teams and empowering employees would not help if continuous improvement were not practiced. Therefore continuous improvement is essential as a basis for TQM initiatives to be implemented successfully. Actually continuous improvement refers to hard work and consistency. In other words it is a scientific way of improving the work standards at the organizational level. The failure to do so might increase costs and reduce the organization’s ability to focus on quality improvement (Clegg, Kornberger, &Rhodes, 2004). Quality circles and teams are formed with a view to obtaining suggestions of workers. In other words if suggestions made by employees were ignored, they would be discouraged. Therefore it is necessary to improve not only quality but also the quality of inputs by way of suggestions. In fact some of the private organizations are focusing their attention on innovative ways to overcome some of the challenges in the modern quality improvement process including creating structural changes that are essential for a total quality improvement process. Thus Six Sigma strategies can be used to enhance the quality of the service in the organization by reducing the errors and variability in service standards. It can also be used as a quality management method within the different departments with sequence of steps to achieve desirable objectives such as improving the quality of the product, enhancing product dimension, reducing the cost, creating additional value to the customer and increasing the profits and so on. As a result the quality improvement techniques can produce positive outcomes on staff and the bottom line. The relationship between the management and the subordinates has been brought into sharper focus here owing to the very important decisions involving quality management initiatives and practices and above all the existence of a dichotomy between the theory and the Six Sigma approaches shows that indisputably international TQM practices under cultural diversity have to be adopted in a variety of contexts. This is none so well borne out than by the fact that where there are international culturally diverse TQM practices in organizations there is a precise tendency to define quality management strategy in keeping with long term organizational goals. This is in sharp contrast to the inefficiencies associated with less culturally diverse workforces elsewhere where organizational outcomes and goals tend to be synonymous with inward looking local practices. 2.7. Evolving industry standards and performance of the management consultant A variety of business practices are adopted by companies in the process of planning and design of management and business strategy. In 2009 many big consultancies in Europe and elsewhere registered positive growth trajectories despite the global economic recession. Thus it’s obvious that the consulting industry has produced the results that are being seen today through a dynamic commitment to standards and procedures that in turn are the result of a far-sighted policy paradigm shift. Standards have come to be accepted as professionally homogenous and practically feasible for those practitioners whose performance in 2009 was marked by creditable progress in quality of service and delivery efficacy. The industry based norms have brought about a paradigm shift in the performance metrics of both those client organizations and the consultancy service providers (Fincham,1999). Quality audit consultancies in Europe in 2009 performed dramatically well though this success was partially clouded by such negative developments as increasing cost consciousness among client organizations and a rising preference for internal quality audits. Despite these negative results, an ever increasing number of client organizations and their seller organizations (auditees) continued to adopt quality auditing systems and structural management changes in conformance with the globally changing regulatory and compliance related demands. Conclusion Quality auditing can be defined as an assessment of an individual, organization, system, process, enterprise, project or product or a thorough investigation of records to determine standards and compliance. The ever increasing need for quality management has forced client and other manufacturing organizations to obtain the services of quality audit consultants. Thus this is part of the overall management consultation sphere. The modern day consultant has to face many challenges including those directly related to the organization’s own strategic operational and competitive environments. The year 2009 saw a slew of heightened consultation activities in Europe. Quality auditing and management related consultations increased on par with the global environment in which the changing demand for such service kept on rising. Particular in Europe industry giants performed better though American consultancies carried much weight in their strategic paradigm shift away from simple quality audit practices to decision making process conversion, thus empowering the quality auditor and the consultant both. Recommendations Recommendations Management Consultancies ought to think of strategically shifting the gear onto more diverse practices such as quality audits for environmental organizations that right now depend on cost-benefit-analyses (CBA). The SME (small and medium scale enterprises) clientele has been much less convinced of the need to hire consultants to carry out quality audits. Therefore it’s imperative for management consultancies to adopt such measures as the provision of quantitative data to convince potential clients of the possible successes. There are very few or no comprehensive internal VRIO frameworks in many management consultancy organizations. VRIO frameworks enable consultancies, especially quality audit organizations, to map out their resource capabilities in advance so that clients and seller organizations tend to trust the level of expertise. REFERENCES 1. Alvesson, M. & Johansson, A. W. 2002, Professionalisme and Politics in Management Consultancy Work. I: Clark, T. and Fincham, R. (eds.) Critical Consulting. New Perspectives on the Management Advice Industry. Oxford, Blackwell Publishers. 2. Barnes, D. 2007, Operations Management: An International Perspective, Thomson Learning, Florence. 3. Clegg, S.R.; Kornberger, M and Rhodes, C. 2004, Noise, Parasites and Translation. Theory and Practices in Management Consulting. I: Management Learning. 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