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
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
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
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
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
Last year KPMG worked closely with Nissan in setting-up a new company,
Nissan Finance, to provide car owners with financial service
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
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
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
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.