Management in Action

Social, Economic &

Ethical Issues
 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
 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".
 Management Consultants
• Known as Evolutionary rather than

Revolutionary .
• Application must be Collaborative and
Authoritarian .
• Doctors of Management.
 Management Practices &
Outsourcing
• What is Outsourcing?
• What is being Outsourced?
• Core Expertise need to be
retained, nurtured and stretched.
 Why to hire Management
Consultants
• Client require the skills of the Management
Consultants for two purposes:
• Identification of the “Problem”.
• Problem Identification(s), Achieving the
objectives and effective performance.
 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.
 Client’s Expectation(S)
• Independent Viewpoint

• Special Qualifications

• Realistic Gains not just moving the

wheels.
 Attributes of Successful
Consultants
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”.
 Barriers common to Consultants
BARRIERS COMMON TO CONSULTANTS:-**Know – it
– all attitude **Inability to understand technical language **
1.Inadequate background or knowledge
2.Poor organization of ideas
3.Differences in perception
4.Prejudice or bias
5.Personality conflicts
6.Tendency not to listen
7.Resistance to change
 Barriers common to Consultants
**Lack of credibility **Inability to understand Non-Verbal Communication **Hostile attitude **Lack of feedback **Differences in status or position
**Information Overload **Too many Gatekeepers **Overly Competitive Attitude
“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."
 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
 Financial Capability Factors
• Factors related to sources of funds: Capital structure,
Procurement of capital, Financing pattern, Working capital
availability, Borrowings, Capital and Credit availability,
Reserves and Surplus, and relationship with lenders, banks and
financial institutions.
• Factors related to usage of funds:Capital investment,
fixed asset acquisitions, current assets, loans and advances,
dividend distribution, and relationship with shareholders.
• Factors related to Management of funds: Financial,
accounting, and budgeting systems, management control
system, state of financial health, cash, inflation, credit, return
and risk management, cost reduction and control, and tax
planning and advantages.
 Check Point: Financial Capability
• Access to financial resources.
• Relationship with financial institutions.
• Level of credit worthiness.
• Capital budgeting system.
• Cost of capital as compared to competitors.
• Level of shareholder’s confidence.
• Management control system.
• Tax benefits due to various government policies.
 Marketing Capability Factors
• Product-related factors: variety, differentiation, mix quality, positioning,
packaging and others.
• Price-related factors: pricing objectives, policies, changes, protection,
advantages, among others.
• Place-related factors: distribution, transportation and logistics, marketing
channels, marketing intermediaries, and so on.
• Promotion-related factors: promotional tools, sales promotion,
advertising, public-relations, and so on.
• Integrative and systems factors: marketing mix, market standing,
company image, marketing organizations, marketing management information
systems and so on.
 Check Point: Marketing Capability
• Variety of products.
• Quality of products.
• Positioning.
• Prices as compared to similar products in the market.
• Price protection due to Government policies.
• Quality customer services.
• Effective distribution system.
• Effective sales promotion.
• Profile advertising.
• Company and product image.
• Effectiveness marketing management information system.
 Operations Capability Factors

• Factors related to production system: capacity, location, layout,

product or service design, work systems, degree of automation,
extent of vertical integration, and others.
• Factors related to the operations and control system:
aggregate production planning, material supply, inventory, cost and
quality control, maintenance system and procedures, and so on.
• Factors related to R & D system:personnel, facilities, product
development, patent rights, level of technology used, technical
collaboration and support, and so on.
 Check Point: Operations Capability

• Level of capacity utilization.

• Plant location.
• Degree of vertical integration.
• Sources of supply.
• Effective control of operation costs.
• Inventory control system.
• Level of R & D personnel.
• Technical collaboration
 Human Capability Factors
• Factors related to Systems & Processes: SOPs, System for
manpower planning, selection, development, compensation, communication,
appraisal, position of the HR development within the organization,
• Factors related to organization and employees: type of system,
corporate image, quality of managers, staff and workers, perception about the
image of the organization as an employer, availability of developmental
opportunities for employees, and so on.
• Factors related to industrial relations & Salutary conditions for
employees: Organizational Ergonomics, Union management
relationships, collective bargaining, working condition, safety, welfare and
security, morale, employee satisfaction and so on.
 Check Point: Human Capability

• Genuine concern for HR and development or facade.

• Efficient and effective SOPs.
• The organization is perceived as a fair and model employer.
• Learning opportunities and facilities.
• Congenial working environment.
• Motivation level of workforce.
• Level of organizational commitment not loyalty.
• Level of absenteeism.
• Safe and salutary working conditions.
 Information Management Capability Factors

• Factors related to acquisition and retention of

information: Sources, quantity, quality, and
timeliness of information, retention capacity, and
security of information
• Factors related to the processing and synthesis of
information: Database management, systems,
software capability,
 General Management Factors
• Factors to the General Management
System: Strategy Formulation,
Implementation, Evaluation, Strategy
evaluation system, management inf
 THE ENVIRONMENTAL CHANGES

* CHANGES IN TECHNOLOGY

* PROLIFERATION OF NEW PRODUCTS

* FASTER COMMERCIALIZATION OF NEW PRODUCT IDEAS AND

PATENTS

* BUSINESS BOUNDARIES BLURRED DUE TO THE OVERARCHING

TECHNOLOGIES

* SOCIO-POLITICAL CHANGES

* GOVERNMENTS BECAME BARGAINERS IN THE CONDUCT OF

BUSINESSES

* EMERGENCE OF GLOBAL FIRMS & BRANDS

* NEW AFFLUENCE OF CONSUMER, CHANGING TASTES &

PREFERNCES OF CONSUMERS
 NEW DEMANDS FIRMS HAVE TO FACE

* TO BE STRATEGICALLY ALERT & FUTURE ORIENTED.

* TO BE ABLE TO TAKE RISKS IN TAPPING OPPORTUNITIES.

* TO BE INSULATED AGAINST ENVIRONMENTALTHREATS.

* TO DEVELOP COMPETENCE FOR ASSIMILATING CHANGE FASTER.

* TO RESPOND EFFECTIVELY AND ECONOMICALLY.

* TO GROW BIG.

* TO BE ABLE TO GENERATE LARGE RESOURCES.

* TO GAIN EXPERTISE IN TECHNOLOGY, MARKETING AND DECISION

SUPPORT SYSTEMS.
 MYTHS ABOUT QUALITATIVE ANALYSIS

• Just a set of specific methods such as case studies, interviews etc.

• Qualitative research is done by researchers who are poor in statistics

• Only concerned with aspects of self

• Anything that uses the word ‘subjective’ becomes qualitative inquiry

• Used only in the backdrop & against quantitative research

• Is fictional work and is not scientific

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
 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
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
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
 Public Perception of Consultants
• A consultant is a person who takes your money and annoys your
employees while tirelessly searching for the best way to extend the
consulting contract.
• Consultants will hold a seemingly endless series of meeting to test
various hypotheses and assumptions. These exercises are a vital
step toward tricking managers into revealing the recommendation
that is most likely to generate repeating consulting business.
• After the correct recommendation is discovered, it must be justified
by a lengthy analysis. Analysis is designed to be as confusing as
possible, thus discouraging any second guessing by staff members
who are afraid of appearing dense.
 Public Perception of Consultants
• Consultants use a standard set of decision tools that
involve creating alternative scenarios based on different
assumptions. Any pesky assumption that does not fit that
does not fit the predetermined recommendation is quickly
discounted as being uneconomical by the consultants.
• Consultants will often recommend that you do whatever you
are not doing now.
• Consultants do not need much experience in industry in
order to be experts; they learn quickly.
 Public Perception of Consultants

• Consultants eventually leave, which makes them excellent

scapegoats for major management blunders.
• Consultants can schedule time in your boss’s calendar because they
don’t have your reputation as a troublemaker who constantly brings
up unsolvable issues.
• Consultants often are more trusted than your regular employees.
• Consultants will return phone calls because it is all billable time to
them.
• Consultants work preposterously long hours, thus making the regular
staff feel worthless for only working 60 hours a week.
 PARADIGMS IN ANALYSIS

LOGICAL POSITIVISM INTERPRETIVIST CRITICAL THEORY

• Systematically contest creation of knowledge about the social world

• Each paradigm/world view guides inquiry

• Ascribe to different “ontology”, “epistemology” & “methodology”

• Define what falls within & outside the limits of legitimate research

• Question of methods are secondary to question of paradigms

• Debate between quantitative & qualitative refers to paradigmatic forces

• Paradigms are ‘human constructions’: No construction is incontrovertibly
right
 UNDERSTANDING OPERATIONS DIFFER
WITH EACH PARADIGM

AREA OF THEORY AREA OF METHODS

operationalisation

Assumptions Methods/Procedures

Systematization & Data collection &

verification
comparison of analysis
information

Observation of
Interpretation reactions
explanation

AREA OF THEORY AREA OF METHODS

 3 important questions unique to each
paradigm …
ONTOLOGICAL

• What is the nature of reality & what can be known about it?
• ‘How things really are’ & ‘how things really work’?

EPISTEMOLOGICAL
• What is the nature of relationship b/w the knower & the known?
• What can be known?

METHODOLOGICAL
• How can inquirer go about finding out whatever can be known?
• What rules & procedures would help us understand reality?
 LOGICAL POSITIVISM
ONTOLOGY REALISM

• Reality is assumed to ‘exist’ out there

• Driven by immutable natural laws

• Knowledge of “the way things are” reflected by context free

generalizations

• Goal of inquiry is to form cause-effect laws: PREDICTION & CONTROL

• Research can converge on the ‘true’ state of affairs

 LOGICAL POSITIVISM
ONTOLOGY REALISM

• Reductionist & deterministic posture

• Social relationships are regarded as “facts” to be investigated ‘objectively’

• Something that can be known outside oneself

• Primary aim of social science research is ‘discovery’ of law of behaviour

• Associated with empirical-analytical “hard” paradigm of research

 LOGICAL POSITIVISM
EPISTEMOLOGY DUALIST & OBJECTIVIST
• Researcher & the researched “object” are independent entities
• Researcher is the “expert”
• “Neutrality” of researcher is desired & emphasised
• Inquiry takes place as through a one-way-mirror
• Values, beliefs, emotions, or anything “subjective” is prevented

METHODOLOGY EXPERIMENTAL & MANIPULATIVE

• Questions/Hypothesis stated in propositional form
• Subjected to empirical test to verify theories
• Possible confounding conditions are carefully controlled
• Replication of results
 DISENCHANTMENT WITH POSITIVISM

• Shattering of the ‘objectivist’ ideal of positivism

• Pluralisation of life worlds

• Research conducted in the real world

• Knowledge needs to be ‘locally’, ‘temporally’ & ‘situationally’ relevant

• “Sensitizing Concepts” required to approach social contexts

• Recognition of central role of language & discourse

• Concern with process & individual rather than statistics & variables

• ‘Human face’ is lost in statistical manipulations

 DISENCHANTMENT WITH POSITIVISM

• Knowledge production is relative to frames of reference

• Truth is not absolute and is decided by human judgment

• Positivism: Context stripping, Exclusion of meaning, Theory ladenness

• Crisis of representation

• Exclusion of ‘discovery’ dimension in positivism

• Etic/Emic dilemma: Inability of general data to individual cases

• Received view of natural science followed blindly by positivists

• Human science should study web of meanings that people live in

 INTERPRETIVIST PERSPECTIVE
ONTOLOGY RELATIVIST

• Reality is in the form of multiple, intangible mental constructions

• Socially & experientially based, local & specific in nature

• Constructions are alterable as are their associated ‘realities’

• Systematic analysis of socially meaningful action

• Understanding & interpretation of how people create & maintain their

world
 INTERPRETIVIST PERSPECTIVE
ONTOLOGY RELATIVIST

• Purpose of research is to discover how people construct meanings

• Meaning is maintained by interaction

• Generalizations emerge from specific details of observations of social life

• Emphasizes everyday knowledge

• Merely suggest “directions along which to look” rather than prescriptions of

“what to see”
 INTERPRETIVIST SOCIAL SCIENCE

EPISTEMOLOGY TRANSACTIONAL & SUBJECTIVE

• Researcher and the researched are interactively linked

• Co-construction of knowledge by the researcher & the researched
• Subjectivities of the researcher & the researched are integral part
• Researchers’, reflections, impressions, feelings become data

METHODOLOGY HERMENEUTICAL & DIALECTICAL

• Interactions between researcher & the researched elicit & refine data
• Researcher is central to the process of research
• Thick descriptions, stories, narratives
 INTERPRETIVIST
MAJOR INFLUENCES

Verstehen
• “Empathic Understanding”
• The world of “lived experiences”
• Situation-specific meanings constitute the general object of investigation
• All of us our particular actors, in particular places, at particular times
• Uniqueness of human inquiry
• Meaning of social phenomena
• Celebrate the permanence & priority of the real world of first-person
• Useful in the context of discovery but not in the context of justification
 INTERPRETIVIST SOCIAL SCIENCE
MAJOR INFLUENCES

HERMENEUTICS
• Subjective experience and interpretation of text
• Text as representations of reality & versions of the world
• Processing experiences of social environments into texts
• Transformation of texts in understanding occurs through interpretation

CONSTRUCTION

EXPERIENCE INTERPRETATION
 INTERPRETIVIST SOCIAL SCIENCE
MAJOR INFLUENCES

SYMBOLIC INTERACTIONISM

• See humans as purposive agents who engage in self-reflexive behaviour

• Human beings act towards their environments on the basis of their meanings

• Meanings derive from communication that is symbolic for creating knowledge

• Meanings are established & modified through an interpretive process

• Builds on the concept of self, language, social setting, culture, joint act

• Humans ‘act’, they do not merely ‘respond’

 CRITICAL THEORY

ONTOLOGY HISTORICAL REALISM

• Reality is assumed to be constantly evolving over time & is apprehendable

• Reality shaped by social, political, cultural, economic, gender, ethnic

forces

• These forces crystallize into series of structures that are ‘real’

• Assumes: change is rooted in conflict/tensions/contradictions/paradoxes

• Critique conditions & implies a plan of change & provide vision of future

• Aim is to smash myth & empower people to change society

• Advocacy & activism are key concepts

 CRITICAL THEORY

EPISTEMOLOGY TRANSACTIONAL & SUBJECTIVIST

• Researcher and the researched are interactively linked

• Values of researcher & situated ‘others’ influence inquiry
• Findings are value mediated

METHODOLOGY DIALOGIC & DIALECTICAL

• Dialogue b/w researcher & participant

• Dialogue must be dialectical in nature to transform ignorance
 A DEBATE
QUANTITATIVE RESEARCH
• Logical Positivism
• Natural science world view
• Hypo-deductive
• Particularistic
• Objective/ Outsider centered
• Outcome oriented
• Attempt to control variables
• Goal: find facts & causes
• Static reality
• Verification oriented
• Confirmatory
• Inquiry is value free/neutral
QUALITATIVE RESEARCH
• Interpretive/Phenomenological
• Naturalistic world view
• Inductive
• Holistic
• Subjective/ Insider centered
• Process oriented
• Relative lack of control
• Goal: understand actor’s view
• Dynamic reality
• Discovery oriented
• Exploratory
• Inquiry is value bound
HOW TO AVOID THIS SITUATION?
 Consultant's DILEMMAS

• How does the Consultant make a difference in the production of data?

• What does the Consultant do to retain the “voices of participants”?

• What role should the Consultant' take? ONLOOKER, PARTICIPANT, OBSERVER

• Does he need to keep a check on his/her biases?

• Will the Consultant be able to represent the ‘true’ version of accounts?

• How does one ensure validity and reliability of the investigation?

• Can Consultant unmask his emotions while interacting with participants?

• Are there any established standards of data processing?

• Can this study persuade the readers of its worthiness?

 “GENRE” OF QUALITATIVE METHODS

QUALITATIVE METHODS

DATA COLLECTION TECHNIQUES DATA ANALYSIS APPROACHES

 DATA COLLECTION TECHNIQUES

• PARTICIPANT OBSERVATION
• INTERVIEW
• FOCUS GROUP DISCUSSIONS
• CASE STUDIES
• TEXTUAL MATERIAL: Autobiographical accounts, document analysis
 DATA ANALYSIS APPROACHES

• GROUNDED THEORY
• NARRATIVE ANALYSIS
• THEMATIC ANALYSIS
• DISCOURSE ANALYSIS
• CONTENT ANALYSIS
• CONVRSATION ANALYSIS
• ETHNOGRAPHY
 ROLE OF QUALITATIVE RESEARCHER

ENTERING
FIELD

REPRESENTING DATA
DATA GENERATION

DATA
ANALYSIS
 ROLE OF QUALITATIVE RESEARCHER

• Researcher an integral part of the research process

• Requires sustained contact & immersion in the ‘lived life’ of participants
• “Get close” or insider to the participants world
• Onlooker Vs Being an actor
• Expert Vs Learner:
• “I WANT TO KNOW WHAT YOU KNOW, IN THE WAY YOU KNOW IT”
• Detachment Vs Involvement
• Rapport Vs Empathy
• Co-constructor of knowledge
 JUDGING QUALITATIVE RESEARCH

TRADITIONAL TERMS NATURALISTIC TERMS

• Internal Validity • Credibility

• External Validity • Transferability

• Reliability • Dependability

• Objectivity • Confirmability
 FEW ANSWERS…
ART OF REFLEXIVITY

• “Disciplined self-reflection”
• Making the process of data production & analysis explicit
• Experience of doing research is critically evaluated throughout
• Maintaining reflexive journal/memo taking

• Knowing who you are

Personal
• Your individuality as a researcher
Reflexivity • Influence of personal interests/biases on research

Functional • Continuous examination of the practice/process of

Reflexivity research to reveal assumptions, values & biases

Disciplinary • Reflecting on larger issues that include research

methodology & questioning psychology itself
Reflexivity
 FEW ANSWERS…

REPRESENTATION

• Representation doesn’t mean ‘writing up’ the findings after the study

• Difficulties inherent in representing the “other”

• Acknowledgement that self & other are entangled

• Researcher’s struggles/crisis is also a part of data

• 2 views: (a) Researcher can directly capture lived experience

(b) Experience is created in the text written by researcher

• How does a researcher understand & communicate participant’s reality

• Presentation of data say as much about the researcher as the participant

 FEW ANSWERS…

TRUSTWORTHINESS
• Encompass efforts to reduce or make explicit sources of bias
• Increase the investigators’ & readers’ exposure to the phenomenon
• Provide thick descriptions
• Disclosure of the researcher’s orientation
• Intensive & prolonged engagement with the material
• Persistent observation
• Triangulation
• Discussion of findings with others
• Iterative cycling b/w observation & interpretation or b/w “dialogue & text”
• Responsible search for negative instances
• Seeking consensus through peer briefing
 FEW ANSWERS…

THEORETICAL
SENSITIVITY
• An awareness of the subtleties of meaning of data

• Having an insight, ability to give meaning to data, capacity to understand

• Being sensitive to data and making appropriate decisions in the field

• Comes from thorough study of literature, professional & personal experience

 ORGANIZATIONAL PARADIGMS
20 Century
TH 21 st Century
• Discontinuous change,
• Stability, predictability continuous improvement

• Size and scale • Speed and

responsiveness
• Top-down “command &
• Empowerment; leadership
control”
from everybody

• Organizational rigidity • “Virtual” organizations,

permanent flexibility
 20 TH Century 21 st Century

• Control by rules &

– Control by vision and
hierarchy values
• Information closely – Information shared
guarded – Creativity, intuition
• “Rational,” quantitative
analytics • Tolerance of ambiguity
• Need for certainty
• Reactive; risk-averse • Proactive;entrepreneurial
• Process driven • Results driven
• Corporate independence • Interdependence; strategic
and autonomy alliances
• Vertical integration • “Virtual” integration
 20 TH Century 21 st Century

• Internal organizational • Focus on compétitive

focus environ ment
• Consensus • Constructive contention
• Domestic market • International focus
orientation • Collaborative advantage
• Competitive advantage • Hyper-compétition,
• Sustainable competitive constant re-invention of
advantage advantage
• Competing for today’s • Creating tomorrow’s
markets markets
Iceberg Corporate Value Potential

Only 10% of the value of any firm we are able to

study 90% is hidden  days of financial analysis
are over.

Today we need to study the “Iceberg Balance Sheet”.

This has 3 kinds of capital:

• Human Capital
• Stakeholder Capital
• Shareholders Capital
 Financial Capital

Structural Capital (+ / -)

Stakeholder Capital Structural Capital (+ / -)

 Customer loyalty & ideas * Individual competencies
& innovation potential
 Distribution & marketing
 Capacity for teamwork
channels
 Values
 Strategic alliances
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
How do Consultants charge for their services?

Per Hour or Per Day basis

Retainer basis
Fixed-price assignments
Performance-based fee (Contingency Fee)
 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.
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
 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
Activity–Based Consulting Result-Based Consulting

• No efforts to build • Partnerships established

partnerships with key with key managers and
managers clients
• No measurement of results • Measurement of results
or cost benefit analysis and cost-benefit analysis
• Planning and reporting on
consulting intervention is • Planning and reporting on
focused on input consulting interventions
are focused on output
 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).
• 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.
 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.
• 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.
 The Score Card Perspective :
Six Balanced Measures
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.
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.
 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.
• 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.
 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
 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.
 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.
 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
 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