PROOF CAMPAIGN: The measure of success - Management consultancy is at the heart of business, but it could learn from PR about evaluation Ian Darby reports.

It is a good time to compare standards in management consultancy against those in public relations. Management consultancy has recently been through a time as traumatic as the Ian Greer episode or ’lobbygate’ was for public relations.

It is a good time to compare standards in management consultancy

against those in public relations. Management consultancy has recently

been through a time as traumatic as the Ian Greer episode or ’lobbygate’

was for public relations.



The recent Channel 4 series Masters of the Universe analysed the

development of the management consultancy sector, from a hobby horse of

the intellectual through to a business worth pounds 25 billion globally

and growing at 16 per cent per year. Newspapers picked up on the

programme and an outcry began with journalists asking ’what do

consultants do to justify their fees?’



The fundamental accusation the programme makers, and many other

observers, levelled against management consultancy was the apparently

obvious nature of the work they carry out and, crucially, the difficulty

in assessing the results of their expensive advice.



Management consultancy was born at roughly the same time as PR. Its

founding father, Charles E Bedaux, whose favoured technique was using a

stopwatch to time workers performing menial tasks, pushed the values of

efficiency and time management in the 1930s.



But management consultancy did not become a widespread culture until the

1960s when partnerships such as McKinsey and Bain sprang up to advise

top companies on re-engineering and refocusing.



Since then, the industry has grown at a phenomenal pace. The management

consultant is a now a constant presence in 90 per cent of the UK’s top

300 companies. Unfortunately for consultants, many people’s perception

of their role is that of chief gun bearer for a cowardly chief executive

who needs to fire staff.



The reality is very different, according to industry trade body the

Management Consultants Association (MCA). Activity can range from

restructuring of IT systems through to advising on the launch of new

divisions within companies, and the development of new consumer brands.

Inevitably though, human resources is a key area of influence.



But how does the industry measure and evaluate its work for clients?



Will White, deputy director of the MCA, says: ’It is a big issue for

management consultants. It is easy to justify to sceptical people if we

can say we have spent so many millions on a project, but qualify it with

results.



Unfortunately, sometimes it is impossible to quantify the work of

consultants on a project.’



White says there are several reasons for this. If a management

consultancy is called in to provide general advice on a company’s

strategy over time it is difficult to track results immediately. It’s

more a case of wait and see. With a consultancy project like an overhaul

of IT systems, the benefits across a company often take years to

emerge.



The MCA admits that it does not have a formal set of procedures akin to

the PRCA/IPR/PR Week Toolkit, which provides a template for clients and

agencies to evaluate and measure PR activity from day one. White says:

’We have close links with the PRCA, but we don’t have anything like the

Toolkit. It’s fair to say with management consultancy that companies

evaluate where they can, producing economic reports, but there are some

elements that they can’t quantify.’



The MCA says that around ten per cent of management consultancy projects

are fully evaluated from start to finish along the lines of the PR

Toolkit model, including a full data audit, setting of objectives and

full measurement and evaluation followed by results. But its research

shows that this level of evaluation may happen in only two to three per

cent of projects in areas such as IT systems consultancy. And the

management consultancy profession has no guidelines on the percentage of

budgets that should be allocated to projects, unlike the 10 per cent

recommended in the PR industry.



One consultant, Fiona Czerniawska, who runs Arke Consulting, agrees that

the sector needs to look more closely at evaluation: ’There is little

structure to evaluation except perhaps in the public sector, but there

is increasing pressure from clients, so consultancies are starting to

look at it.’



It is difficult to get management consultants to talk about their own

policies on research and measurement. Andersen Consulting is not willing

to talk about its strategy for evaluating its work with clients and will

only say that it ’works closely with clients on this matter on an

individual basis.’ Similarly, McKinsey refuses to talk about the

specific procedures it has in place.



However, some consultancies are willing to talk about specific case

studies of best practice in evaluation. PA Consulting embarked last year

on a large-scale human resources project for Lloyds TSB. The merger of

the two banks brought together 90,000 employees, and the newly merged

operation decided to review its needs.



PA Consulting was set the task of transforming the way in which Lloyds

TSB viewed its employment strategy, to make staff more customer-focused,

and to develop the human resources function itself. The biggest

challenge is to make Lloyds TSB become recognised as a ’preferred

employer’ compared with other banks by the year 2000.



Lloyds TSB set clear financial targets, too. The new organisation wanted

to achieve savings in the human resources function of pounds 7.4 million

by the end of 1999. PA Consulting developed a new business model,

working closely with the client at all times and set up a ’project

office’ at Lloyds to run the programme and monitor budgets.



This is where management consultancy has the advantage over PR.

Sometimes it becomes so closely wedded to a client that evaluation is

constant and ongoing.



The consultancy says the project has been thoroughly measured and

evaluated.



It claims to have cut Lloyds TSB’s human resources budget by pounds 5

million in the first year of the project and is on target to reach its

1999 goals.



But the evaluation is unceasing. Bridget Skelton, a member of PA’s

management group, says: ’The team is not complacent. Lloyds continues to

consider and implement continuous improvements to processes, people

capabilities and business delivery.’



Another strong example of the use of research and evaluation in

management consultancy is found in KPMG Consulting’s work for the Nissan

Motor Company.



Last year KPMG worked closely with Nissan in setting-up a new company,

Nissan Finance, to provide car owners with financial service

options.



Nissan set KPMG a clear brief to manage the establishment of IT,

finance, commercial and legal operations. Because KPMG’s role was so

central to Nissan, it devised a schedule of ongoing programme

management. Progress reports were collated by KPMG and presented at a

weekly meeting, chaired by the Nissan managing director, with all senior

Nissan directors present.



This access to top-level management provides its own system of measuring

and evaluation.



Though management consultancy has no clear way of analysing the

percentage of budgets which are spent on measuring the success of

projects, it scores on undertaking projects which are supported at a

high level within companies and often overseen by a company’s chief

executive and managing director.



There are few tools used in management consultancy which can be borrowed

by the PR industry - the sector may even have a lot to learn from

PR.



But management consultants are still more likely to get to the heart of

the board than PRs, despite the progress that has been made in this

direction.



Until PR is seen by more companies as a vital strategic function, it’s

unlikely that spending time and money on proving its effectiveness will

be seen as top priority.



White at the MCA admits that the management consultancy business has a

long way to go before it produces a set of guidelines like those

implemented by the PR industry. ’The PRCA’s Toolkit publication may put

the pressure on us to follow suit. The Channel 4 series has provided the

industry with a strong reason to put research and measurement of results

on the agenda.’



A good start was the BBC’s response to the Channel 4 revelation that it

spends pounds 20 million on management consultancy. It produced evidence

that this investment has made savings of pounds 400 million.



Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.