1. 1
Amity Business School
Class of 2011, Semester IV
Management in Action Social, Economic & Ethical Issues
Dr. Sanjay Srivastava

2. The Genesis
• Roots are in Management Consultancy
• Emergence from two concept based issues:
1.Total Quality Management & Business Ethics
and Corporate Governance
2.Theoretical frameworks were drawn from
Strategy, Finance & HR

3. Management Consultancy
• "The services provided by an independent and
qualified person or persons in identifying and
investigating problems concerned with policy,
organization, procedures and methods,
recommending appropriate action and
assistance in implementation".

4. Management Consultants
• Known as Evolutionary rather than
Revolutionary.
• Application must be Collaborative and
Authoritarian.
• Doctors of Management.

5. Management Practices & Outsourcing
• What is Outsourcing?
• What is being Outsourced?
• Core Expertise need to be
retained, nurtured and
stretched.

6. Why to hire Management Consultants
Client require the skills of the
Management Consultants for two
purposes:
• Identification of the “Problem”.
• Achieving the objectives and effective
performance.

7. Why to hire Management
Consultants
• Need for fresh ideas from Entrepreneurial Perspective.
• Need for improved performance from the perspective
of Operations, Distribution and Logistics, functional
areas of Marketing, Finance, HR and IT.
• Need for Efficiency and Effectiveness.
• Need to evaluate performance.
• Need to train employees.
• Need for total turnaround.

8. Client’s Expectation(S)
• Independent Viewpoint
• Special Qualifications
• Realistic Gains not just moving the
wheels.

9. Attributes of Successful
Consultants
• Powerful Negotiator
• Effective Communicator
• Reservoir of Self Control
• Understanding of Individual Psychology
• Understanding of Group Psychology
• Understanding of Organizational Psychology
• Complete mastery of the given “area”.

10. Barriers common to Consultants…
1. Know – it – all attitude
2. Inability to understand technical language
3. Inadequate background or knowledge
4. Poor organization of ideas
5. Differences in perception
6. Prejudice or bias
7. Personality conflicts
8. Tendency not to listen
9. Resistance to change
10. Lack of credibility

11. …Barriers common to Consultants
11. Inability to understand Non-Verbal Communication
12. Hostile attitude
13. Lack of feedback
14. Differences in status or position
15. Information Overload
16. Too many Gatekeepers
17. Overly Competitive Attitude

12. “As long as we have hope, we
have direction, the energy to
move and the map to move by,
we have a hundred alternatives,
a thousand paths, and an
infinity of dreams."

13. Organizational Appraisal
Organizational Capability Factors
• Financial Capability Factors
• Marketing Capability Factors
• Operations Capability Factors
• Human Capability Factors
• Information Management Capability Factors
• General Management Capability Factors

14. There’s no business like consulting
business…
They [Management Consultants] are people
who borrow your watch to tell you what time it
is and then walk off with it.
-R. Townsend, Up the Organization

15. WHY CLIENTS HIRE CONSULTANTS?
To learn
To save money
To avoid losses
To solve problems
To improve safety
To improve image
To improve efficiency
To hire new employees
To improve performance
To increase sales and profits

16. To help through busy periods
To introduce, facilitate and sustain change
To open up new markets and opportunities
To comply with laws, standards and regulations
To put new systems, methods and practices into use
To confirm their ideas, concepts, plans and strategies
To facilitate transitions, mergers, takeovers and
downsizing

17. The Advantages of Using Consultants
•Getting a second opinion
•More flexibility in hiring
•Fresh perspective and views
•Expertise that is lacking in the organization
•Opportunity to learn and train employees
•Work is performed faster and is of better
quality

18. The Disadvantages of Using Consultants
•It is expensive
•Desired results are not guaranteed
•It may create bad vibes amongst employees
•Projects and issues may blow up out of all
proportions

19. How do Consultants charge for their services?
Per Hour or Per Day basis
Retainer basis
Fixed-price assignments
Performance-based fee (Contingency Fee)

20. Contingency fees
A client complained that he couldn’t afford a consultant’s
hourly fee.
‘Instead of doing the job on a time and material basis, I’m
willing to do it for a contingency fee,’ responded the
consultant.
‘What is contingency fee?’ asked the client.
‘It’s very simple. If I don’t deliver what I promised, I’ll be left
with no money at all,’ explained the consultant
‘What if you do deliver what you promised?’ persisted the
client.
‘Then you’ll be left with no money at all,’ said the consultant.

21. How consultants market their
services?
Membership of community organizations and professional
institutions
Publishing books and articles
Networking with other consultants
Speaking at seminars, conferences and other gatherings
attended by both clients and consultants
Word of mouth advertising – recommendations from
satisfied clients

22. Paradigm Shift in Consulting Accountability
Activity–Based Consulting
• No business need for the
consulting intervention
• No assessment of
performance issues
• No specific, measurable
objectives for implementation
and business impact
• No effort to prepare
stakeholders/participants to
achieve results
• No effort to prepare the work
environment to support
implementation
Result-Based Consulting
• Intervention linked to
specific business needs
• Assessment of performance
effectiveness
• Specific objectives for
implementation and
business impact
• Results/expectations
communicated to
stakeholders/participants
• Environment prepared to
support implementation

23. Activity–Based Consulting
• No efforts to build
partnerships with key
managers
• No measurement of results
or cost benefit analysis
• Planning and reporting on
consulting intervention is
focused on input
Result-Based Consulting
• Partnerships established
with key managers and
clients
• Measurement of results
and cost-benefit analysis
• Planning and reporting on
consulting interventions
are focused on output

24. Methods of Data Collection
• Follow-up surveys measure satisfaction from stakeholders.
• Follow-up questionnaires measure reaction and uncover
specific application issues with consulting interventions.
• On-the-Job observation captures actual application and use.
• Tests and assessment are used to measure the extent of
learning (knowledge gained or skills enhanced).

25. • Interviews measure reaction and determine the extent to which the
consulting intervention has been implemented.
• Focus groups determine the degree of application of the consulting
solution in job situations.
• Action plans show progress with implementation of the job and the
impact obtained.
• Performance contracts detail specific outcomes expected or obtained
from the consulting intervention.
• Business Performance monitoring shows improvement in various
performance records and operational data.

26. Methods for Isolating the Effects of
Consulting
• A Pilot group with consulting is compared to a control group
without consulting to isolate consulting intervention impact.
• Trend lines are used to project the values of specific output
variables, and projection are compared to the actual data after
a consulting intervention.
• A forecasting is used to isolate the effects of a consulting
intervention when mathematical relationships between input
and output variables are known.
• Participants/stakeholders estimate the amount of improvement
related to a consulting intervention.

27. • Supervisors and manages estimate the impact of a consulting
intervention on the output measures.
• External studies provide input on the impact of a consulting
intervention.
• Independent experts provide estimates of the impact of a
consulting intervention on the performance variable.
• When feasible, other influencing factors are identified and the
impact is estimated or calculated, leaving the remaining
unexplained improvement attributable to the consulting
intervention.
• Customers provide input on the extent to which the consulting
intervention has influenced their decision to use a product or
service.

28. 1. Reaction to and satisfaction with the consulting
intervention from a variety of different stakeholders
within different time frames.
2. The extent of learning that has taken place as those
involved in the consulting intervention learn new
skills, processes, procedures, and tasks.
3. The success of the actual application and
implementation of the consulting intervention as the
process is utilized in the work environment.
The Score Card Perspective :
Six Balanced Measures

29. 4. The actual business impact changes in the
work unit where the consulting project has
been initiated. These values include hard
data as well as soft data.
5. The actual return on investment reported as a
ratio or in a percentage format. The measure
shows the monetary return on the cost of the
project.
6. Intangible measures, which are usually soft
data items that are not converted to monetary
values for use in the ROI formula.

30. Methods for Converting Data to Money
• Output data are converted to profit contribution or cost savings
and reported as a standard value.
• The cost of a quality measure, such as a reject, is calculated
and reported as a standard value.
• Employee time saved is converted to wages and benefits.
• Historical costs of preventing a measure, such as customer
complaint, are used when they are available.

31. • Internal and External experts estimate a value of a measure.
• External database contain an approximate value or cost of a
data item.
• Participants estimate the cost or value of the data item.
• Supervisors or managers provide estimates of costs or value
when they are both willing and capable of assigning values.
• The consulting of staff estimates a value of a data item.
• The measure is linked to other measures for which the costs are
easily developed.

32. Recommended Consulting Costs
• The Cost of initial analysis and assessment, possibly
prorated over the expected life of the intervention.
• The cost of developing solutions.
• The cost of acquiring solutions.
• The cost of application and implementation of the
intervention.
• The cost of maintenance and monitoring
• The cost of evaluation and reporting
• The costs of administration and overhead for the
consulting intervention, allocated in some convenient way

33. Consulting Benefits
BCR = _______________
Consulting Costs
Sometimes the ratio is stated as a cost-benefit
ratio, although the formula is the same as
BCR. The return on investment uses the net
benefits divided by consulting costs. The net
benefits are the consulting benefits minus the
costs. In formula form, the ROI becomes.

34. Net Consulting benefits
ROI% = _________________ X 100
Consulting Costs
This is the same basic formula used in
evaluating other investments where the ROI is
traditionally reported as earnings divided by
investment.

35. The BCR and the ROI present the same
general information, but from slightly different
perspectives. An example will illustrate the
use of these formulas: a consulting
intervention produces benefits of Rs. 581,000
at a cost of Rs. 229,000. Therefore, the
benefit-cost ratio is:
Rs. 581,000
BCR = __________ = 2.54 (2.5:1)
Rs. 229,000

36. As this calculation shows, for every Rs.1
invested, Rs.2.50 in benefits are returned. In
this example, net benefits are Rs.581,000 -
Rs.229,000 = Rs. 352,000. Thus, The ROI is:
Rs.352,000
ROI% = _________ X100 = 154%
Rs.229,000