Management consulting

Lecture 6 and 7

Managing knowledge and knowledge workers

Human capital

Social capital

Structural capital

NetworkCapital

Client Capital

OrganizationalCapital

Human capital

Social capital

Structural capital

NetworkCapital

Client Capital

OrganizationalCapital

IC

Staffing Development

Communication

Performance Management

Remuneration and Reward

Intellectual Capital

Products and services which have market value

Employee Knowledge Skills Experience

Human Capital

Human Capital – Intellectual Capital

Structure of Lecture 6 and 7

• Lecture 6– Level of analysis

• Organisational perspective– Framework for analysis

• Management of knowledge (reactor model)

• Lecture 7– Level of analysis

• Work process– Framework for analysis

• Identity model

• HRM issues across both lectures– Recruitment and selection of consultants– Promotion policies – ‘up-or-out’ principle– The boundaries of HRM practices

Human capital

Social capital

Structural capital

NetworkCapital

Client Capital

OrganizationalCapital

Objectives

• To understand the characteristics of the management consulting industry– History– Types of organisations– Types of consultancy activities

• Typology of human capital – According to the client interface process – Career structures within management consultancy– The role of consultants as knowledge brokers

• Typology of client capital– The consulting firm – client relationships

• The HRM practice focus:– Recruiting human capital– Managing across boundaries

Human capital

Social capital

Structural capital

NetworkCapital

Client Capital

OrganizationalCapital

History• Management as a unique field of study• Arthur D.Little (1890s)• McKinsey & Company

– First management and strategy consultancy– Founded by James McKinsey in 1926 (Chicago) – Hiring of bright young MBAs

• Rise of management consultancy after World War II– Development of tools for strategic management– Boston Consulting Group (1963), McKinsey&Co, Harvard Business

School– Bain&Co - focus on shareholder wealth

• Consulting within accountancy and technology firms– PwC and IBM

• Niche consultancy firms– Corporate social responsibiity

Types of firms in the industry

• Accountancy firms offering consultancy

• Large non-accounting consultancies

• Small specialist boutiques

• Gurus

• Independents

Types of Consultancy services

Strategy HR

Marketing

Change

Process and

Operations

Org design

Infotech

Management consulting

Major consultancies

• Bain & Company• Boston Consulting Group• Deloitte & Touche• Ernst & Young• A.T. Kearny• KPMG• Arthur D.Little• McKinsey & Co• Mercer• PriceWaterhouse Coopers

Different types of consulting services: a knowledge-based view

Bespoke

Expert economics

Person-to-person

IT enables personal

Build experience

Reward for knowledge creation and

sharing

McKinsey & Company

Productise

Reuse economics

People-to-documents

IT focus

Buy experience

Reward for contribution to document database

Ernst & Young

Competitive strategy

Economic model

KM strategy

Technology

HRM

Example

Typology of Human Capital

• The consultancy process

• Career structures

• Consultants as brokers of human capital – Boundary spanning

The consultancy process:Your experience

• Paired assignment• Identify a consultancy experience that you have

been part of.• Characterise the individual stages of the

consultancy process• Interview your partner and identify:

– Which skills were developed at each stage of the consultancy process

– Which other knowledge resources did you rely upon during this process

• Summarise your findings and be prepared to feed back to the group

The career structure

• Analysts

• Consultants

• Senior Consultants

• Business development managers

• Directors/Partners

The McKinsey Facilitator case

• Specific type of human capital

• Across boundaries

• How would you design the recruitment process to capture this human capital?

Components of a high performing culture

•IQ

•EQ

•SQ

• General business knowledge• Understanding of client context• Logical problem solving

• Creates environment of trust

• Manages group dynamics• High awareness of emotions• High self knowledge• Experience of own

transformational journey• Sense of vocation

Using external facilitators poses a challenge to many forms of intellectual capital flows

Clients Facilitators

Facilitator network: HC viewpoint

External pool of facilitators

Focal Practice Group

Regions

Other Practice Groups

Clients

Clients

Clients

ClientsFacilitators

within clients

External skill experts

External skill expertsExternal skill experts

HC boundary

Mindsets are often misunderstood and ignored

Needs – met and unmet

Thoughts and feelings

Values and beliefs

Be-haviour

A desire to change ends up like most New Year’s resolutions if root causes are not identified and addressed

•What we see and usually try to change

•What we cannot see, make assumptions about and often do not address

•Requires insight

•Requires a choice

•Requires practice

The first step in mindset change is a new level of personal understanding

The first step in mindset change is a new level of personal understanding

“You cannot solve a problem from the

same level of consciousness that created the problem

in the first place”

Albert Einstein

•Requires insight

•Requires a choice

•Requires practice

The McKinsey Facilitator case

• How would you design the recruitment process to capture this human capital?

Facilitator network: OC viewpoint

External pool of facilitators

Focal Practice Group

Regions

Other Practice Groups

Clients

Clients

Clients

Clients

Facilitators within clients

External skill experts

External skill experts

Recruitment & development processes

Client delivery processes

Positioning in the lecture

• Nature of the industry• Typology of human capital

– Consulting process– Career structure– Knowledge brokers

• Now we turn to the human-client capital interface– We take a closer look at how clients perceive

consultants?

IDEA SUBMISSION PROCESS

•Workshop room

•1. Group discussion on topic/idea

• Individual or group write up idea cover sheet and attach backup materials (others at table may start on another idea at this time if appropriate

4. Receive hexagon at idea table and write on idea no. and title

5. Stick hexagon on hexagon wall with similar ideas and rejoin group

– Video station helper puts idea no. stick on to idea coversheet and onto video cassette record sheet. Records idea title onto cassette record sheet

– Individual(s) write idea no. and idea title on directors board—hold up at start of recording

– Record 2–3 mins video

2. Individual(s) go outside to record 2–3 minute video to explain idea

•Patio

•Video station helper with stickers of idea number

In tray

Filing

3. Submit written materials at idea table

•Cassette record sheet

•Door to patio

•Wall

#1

The perception of Human Capital

• The ability to learn in practice

• Why smart people don’t learn

• The impact on organisational learning

• The impact on social capital

• The impact upon the client relationship– social construction of learning

The client-consultant relationship

• Human capital and its link to client capital• Dimensions for analysis

– Strength of ties• frequency

– Relational• trust

– Cognitive• Shared mental models

• Giving answers or shaping futures

The nature of relationshipsSocial capital (between facilitators)

Morphology Structural density X

Structural holes

Trust:Nature

Deep X

Resilient

Positional X Generalized

Social capital (between sponsors)

Morphology Structural density X

Trust:Nature

Deep ResilientX

Positional Dyadic GeneralizedX

Client-and-network capital (between internal and external facilitators)

Morphology X Structural holes

Trust:Nature

Deep X

Resilient

Positional Dyadic X

Generalized

Organisational capital:HRM process

Flexibility Mechanistic AdaptiveX

Client relationship process

Flexibility Mechanistic AdaptiveX

Facilitator network: SC & CNC viewpoint

External pool of facilitators

Focal Practice Group

Regions

Other Practice Groups

Clients

Clients

Clients

ClientsFacilitators

within clients

External skill experts

External skill expertsExternal skill experts

Dense: Deep and

dyadic trust

Structural holes: resilient and

generalised trust

Structural holes:

Deep and dyadic trust

Dense:

Resilient and dyadic trust

Books about management consulting

• Flawless Consulting, Peter Block, ISBN 0-7879-4803-9 • Guerrilla Marketing for Consulting, Jay Conrad Levinson and

Michael W. McLaughlin, ISBN 0-471-61873-X • Managing at the Speed of Change, Daryl Conner,

ISBN 0-471-97494-3 • Managing the Professional Services Firm, David Maister, ISBN 0-

7432-3156-2 • The Professional Services Firm Bible, John Baschab, ISBN 0-471-

66048-5 • Managing Transitions, William Bridges, ISBN 1-85788-341-1 • Management Consulting: A Guide to the Profession, Milan Kubr

(ed.), ISBN 92-2-109519-3 • The World's Newest Profession: Management Consulting in the

Twentieth Century, Christopher D. McKenna, ISBN 0-521-81039-6