1. The management consultancy scam

    September 25, 2010 by

    What is your opinion on Management Consultants? Do you agree with Johann Hari's article for the Independent, see below:  

     "We were proud of the way we used to make things up as we went along", he says. "It's like robbing a bank but legal"

    In the long fake boom of the Nineties and Noughties, we were sold a thousand scams. End government regulation of the financial system! Turn banks into casinos! Pay CEOs 500 times more than their staff! Bow, bow, bow before our mansion-dwelling overlords and the Total Efficiency they will bring! Yet from under the rubble left by these delusions, one of the greatest scams has skipped out unscathed, and it is now successfully selling itself as a solution to the fading of the boom-light. It is probably in your workplace now, or coming soon. Its name? Management consultancy.

    There are now half a million management consultants in the world, and they all grumble that they face one question wherever they go: yes, but what is it that you actually do? They claim to be able to enter any organisation, watch its workers for a short period, and then – using graphs, algorithms, and a jargon that makes quantum physics look like Sesame Street – render it dramatically more efficient, for a fee. They are everywhere: in the US, AT&T (to pluck a random company) spent $500m on them in just five years, while the British state will soon be spending more on management consultants than on upgrading its nuclear weapons.

    Yet the process of management consultancy has always been shrouded in priestly secrecy. Over the past few years there has been a string of memoirs by highly successful former management consultants, finally pulling back the flow-charts.

    David Craig gives a typical explanation of what the consultants Actually Do. After getting a degree specialising in romantic poetry, he was astonished to be hired by a prestigious management consultancy, given three weeks training, and then dropped into major corporations to tell them how to run their oil rigs, menswear stores, and factories, for tens of thousands of pounds a pop. In his brave memoir Rip Off! he explains: "We were proud of the way we used to make things up as we went along… It's like robbing a bank but legal. We could take somebody straight off the street, teach them a few simple tricks in a couple of hours and easily charge them out to our clients for more than £7,000 per week." It consisted, he says, of "lies, lies and even more lies."

    He worked to a simple model, which is common in the industry. He had to watch how a workforce behaved for a week – and then tell the company's bosses, every time, that they had 30 percent too many staff and only his consultancy could figure out who should be culled. If he calculated they actually had the right amount of staff, he was told by his bosses not to be so ridiculous and do his sums again: where was the money for them in a properly-staffed company? The company had to be POPed – People Off Payroll.

    Of course, this advice was often disastrous. His company was sent into a chain of 500 menswear shops. They advised them to cut staff by (surprise!) 30 per cent, and to replace most full-time staff with part-timers. The result? The full-time employees had been highly motivated, because they wanted a career in the company; the part-timers only wanted a little extra cash. So motivation levels in the company collapsed, and with it the standard of service. The company was bankrupt within a few years.

    Yes, you might say, but surely he was just a bad management consultant. The rest must get results. The evidence suggests not. The Cranfield School of Management studied 170 companies who had used management consultants, and it discovered just 36 per cent of them were happy with the outcome – while two thirds judged them to be useless or harmful. A medicine with that failure-rate would be taken off the shelves.

    Matthew Stewart, another former consultant, summarises his high-flying years in the industry by saying: "I felt like a snake oil salesman without snake oil." When he was sent into a company, he was told to use complex formulae to analyse the productivity of its staff, but he soon realised that the results were "nearly random… Similar results could have been achieved by having four monkeys throw darts at a few matrices." Yet, on this basis, he was taking a fortune in payments, and firing thousands of productive people.

    The recession has given a fresh burst to this industry, as corporations beg to be told where to apply the leeches. The number of senior consultants has swollen by 10 per cent in the past year, while the number employed by local government has grown by 11 per cent.

    But there is a growing body of academic research showing that the strategies pushed by these consultancies are in fact disastrous – and hasten the collapse of a company or service. Professor Wayne Cascio of the University of Colorado has studied the relative costs and benefits of POPing your workforce. Corporations and governments are receptive to the idea that the quickest, easiest way to save money is to fire workers. But Cascio has shown that, most of the time, the costs outweigh the gains. Obviously, you have immediately to find large amounts of redundancy and severance pay. But the costs don't stop there. Your workforce becomes very nervous – and a nervous workforce is dramatically less productive and less innovative. The best people leave. The service to the customer deteriorates – so they abandon you even more.

    The facts backing this up are striking. The OECD has studied developed economies over a 20-year period, and it found labour productivity growth was much higher in the countries where it is hardest to fire people. The better you treat a workforce, the better they work. Professor Peter Cappelli studied 122 companies and found that lay-offs most often shrank their future profitability, instead of swelling it.

    Yet this is the antithesis of the management consultancy mindset. Stewart says "consultants are the cattle prods of the modern corporation. The chief message to be communicated, in almost all situations, is that you will be expected to work much harder than you ever have before and your chances of losing your job are infinitely greater than you have ever imagined." It's a dark, dehumanised vision of workers as cogs in a machine – and it's been there from the beginning. Frederick Taylor, the founder of management consultancy, compared workers to "an intelligent gorilla" and said "our scheme does not ask for any initiative in a man. We do not care for his initiative."

    When challenged, the paltry evidence base of this industry soon becomes clear. Tom Peters, the author of management consultants' bible Excellence, snapped at an interviewer who asked about his way of analysing businesses: "Of course, we all know this is to some extent phoney baloney."

    David Craig suggests a simple way to call their bluff. Insist that, from now on, all management consultants are paid by their results. If they promise greater productivity or higher sales, fine: don't pay them until it comes through. Today, almost no management consultancy works on this basis. If they did, they'd all be bankrupt.

    And yet, and yet… you almost have to admire the rancid chutzpah of it. As the management consultant Bruce Henderson once sniggered: "Can you think of anything more improbable than taking the world's most successful firms and hiring people just fresh out of school and telling them how to run their businesses – and [getting them] to pay millions of pounds for this advice?" It's tempting to chuckle at the absurdity – until you realise the cack-handed consultants' scythe could come for you.

    j.hari@independent.co.uk


  2. Executing Successful Business Surveys and Kuwait

    June 13, 2010 by

    Hello all

    I am bringing to your attention 3 articles on Executing Successful Business Surveys by Dr. Tariq A. Aldowaisan, Associate Professor at Kuwait University and Managing Director of Gulf Lead Consultants.  These articles are written from both an academic and practical perspective – thus providing some very useful insights into what needs to be considered when designing and executing surveys. Surveys are often used to obtain quantitative and qualitative feedback particularly from employees and customers on areas such as satisfaction. However, in many cases, not enough attention has been spent on survey design, sample size, and analysis of data – if you follow Dr Tariq Aldowaisan’s advice your survey methods and results from using them will improve.

    Read the first article of the series here . The remaining articles are available to members of the bpir.com.

    The photo below is when I was with Dr Tariq Aldowaisan in May 2010. I was providing a benchmarking training course on behalf of Gulf Lead Consultants – BPIR.com’s partners in Kuwait. Gulf Lead Consultants are playing a leading role in all aspects of quality management and business improvement. One initiative that Dr Tariq Aldowaisan hopes to start soon is the formation of a Quality Society which will help Kuwait in its endeavour to fulfill its 2035 vision (a vision developed by the Kuwait government with input from people such as the UK’s ex-Prime Minister Tony Blair). Like many countries in the Middle East, Kuwait has produced a long-term plan that is available for all to see – this helps businesses and society in general to buy-in and align themselves to the plan. Dr Tariq Aldowaisan believes that one key omission from the plan is the integration and use of quality – hence the desire for a Quality Society and a greater use of quality management tools and techniques to increase the likelihood of the plan being met. Further information on the Kuwait 2035 plan can be obtained here.

    Dr. Tariq A. Aldowaisan speaking during TRADE benchmarking workshop in Kuwait
    Dr Tariq Aldowaisan at one of TRADE Benchmaking workshops in Kuwait

     

    Best regards

    Dr Robin Mann, Commercial Director and Part-Owner, BPIR.com Limited, r.s.mann@massey.ac.nz


  3. Leading the generations in today’s workforce

    February 25, 2010 by
    In an article in the Quality Journal "How to Lead When the Generation Gap Becomes Your Everyday Reality", the author, Issy Gesell, identifies the four generations in today’s workplace as:
     
    "The Silent Generation: The oldest generational group, born between 1925 and 1945, is the Silent Generation. Also called Traditionalists, Seniors, and Veterans, this group values hard work, conformity, dedication, sacrifice, and patience. Members of this generation are comfortable with delayed recognition and reward.

    The Baby Boomers: The largest group in the work force is the Baby Boomers. Born between 1946 and 1964, Boomers are characteristically optimistic and team oriented. They place a high value on their work ethic while also seeking personal gratification and growth.

     
    Generation X: The smallest group in size is Generation X, which also is known as the Sandwich Generation because of its position between the two largest groups. These folks were born between 1965 and 1980 and were the first "latchkey" kids. They are self-reliant, global thinkers who value balance, fun, and informality.
     
    The Millennial Generation: Millennial were born between 1981 and 2000, and ultimately will become the largest group. Even though less than half of them are presently in the work force, they already are having a significant impact on organizational leadership. Members of this generation exhibit confidence, optimism, civic duty, sociability, street smarts, inclusivity, collaboration, and open-mindedness. They tend to be goal oriented.
    Most of today's organisational leaders represent the Silent Generation or Baby Boomers. Over the past 40 years, these two generations have learned to work together. You can begin to raise awareness about the differences among the generations and their implications to your organization by facilitating a dialogue between and among the generations. Current leaders would be wise to assess their leadership style, knowledge of the different generations, and personal attitudes toward the different members of their work force."
    Izzy suggests the following questions can serve as a basis for evaluating personal perspectives and approaches:

    – What differentiates each generation?
    – Which generations are you responsible for leading?
    – How do generational differences impact your perceptions and leadership style?
    – How do those differences manifest themselves in the organization?
    – How can you lead intra-generational and intergenerational groups?
    – What can you do as a leader to foster mixedgenerational dialogue and problem solving?
    – Which generation has the strongest impact on your organization?
    – Is your organization more like General Motors or Google?
    – How do the major aspects of your organization's culture ("generation-bias") align more with one generation than the others?
    – How does that generation-bias impact inclusion, recruitment, retention, and development of employees?

     
    How will you manage?

    We also found this clip on YouTube:

    "How will you manage in an era of transformative changes in workplace demographics, technology, regulations, and expectations? Kronos and XPLANE present fascinating statistics."

     
     
    Kevin McKenna
    BPIR

  4. Findings from a global survey on business improvement and benchmarking

    December 17, 2008 by admin

    Hello all

    Thanks to all those BPIR members/supporters that participated in the Global Benchmarking Network’s survey on “Business Improvement and Benchmarking.”

    In total over 450 people responded from over 40 countries. It was the most comprehensive survey to date on the use of business improvement tools and,  in particular, on benchmarking. Key insights were revealed into this increasingly popular technique and how organisations were applying it and using it to improve their performance.

    Key findings were:

    • Mission and Vision Statements and Customer (Client) Surveys are the most used (by 77% of organisations) of 20 improvement tools, followed by Strengths, Weaknesses, Opportunities, and Threats (72%), and Informal Benchmarking (68%). Performance Benchmarking was used by (49%) and Best Practice Benchmarking by (39%).
    • The tools that are likely to increase in popularity the most over the next three years are Performance Benchmarking, Informal Benchmarking, Strengths, Weaknesses, Opportunities, and Threats, and Best Practice Benchmarking. Over 60% of organizations that are not currently using these tools indicated they are likely to use them in the next three years.
    • When Best Practice Benchmarking is done well significant benefits are obtained with 20% of projects resulting in benefits worth $250,000.
    • Respondents indicated that the external help/service that they most want (out of 8 services) is access to a best practice database!  This is obviously good news for the BPIR.com and means we are on the right track with our collection of 1,000’s of best practices.

    BPIR members can read the full report here, once logged in, and non-members can read Excerpts from a Report on the Global Use of Business Improvement Tools and Benchmarking.

    Join now to read the full report.

    II hope the report’s findings will assist you all in undertaking benchmarking more effectively.

    Best regards

    Robin

    Dr Robin Mann, Commercial Director and Part-Owner, BPIR.com Limited.

     


  5. People, Priorities, and Wee-Early-Hours Finishes

    November 11, 2008 by admin

    Sat here in my usual apparent stupor, mouth open, eyes fixed – in between bursts of soft tap tap tapping on the keyboard – I am fiercely concentrating on the inside.  Its 2.17am according to my laptop. As usual I am working towards one of many regular weekly deadlines, any of which, if I miss, will affect people; individuals.  These take priority in my life over less personal deadlines that may in fact affect the company bottom line more significantly.  Why do I prioritise so?  And why do I place my own work-life balance, and even health, at so much risk on their behalf?   Thinking about this takes me back to an incident on eBay a couple of years ago when I invoked a ‘gentlemen’s rule’.  An item I had received was not as per the description advertised.  It was a mistake; nothing devious.  The seller, Jared, agreed to take back the item and pay for the postage too – both ways.  He ended up paying more in postage than the worth of the item he had intended to sell.   He said, in an email, “people before money, mate” when I thanked him for being so gracious.  

    Jared’s comment has stayed with me ever since.   He was right of course and is one of the ‘good guys’, but the point I want to make is that, increasingly, business is becoming more about individuals and relationships than about supply and demand.  The arrival of Web 2.0 and networking concepts referred to in previous posts here, and our deliberate move to orientate the BPIR resource towards a more personal relationship-based approach, is part of the natural evolution in our society.  Looking back, this change started to build up steam a couple of decades ago when terms such as ‘internal customer’,‘supplier-relationship’, and ‘customer-supplier partnership’ became new buzz-words in contemporary management jargon.  Mergers and Acquisitions gave way to Strategic Partnerships and Alliances, Collaborative Projects, and Joint Ventures.  The reality of these brave new concepts is of course that they were built around trust and strong relationships between the leaders of the participant organizations.  The coincidence of relationship-based enabling technologies and the ‘survival’ need for businesses to become more sharing, open to alliances and partnerships, and to identify and nurture Human Capital has forced an almost quantum leap in a few short years.  I have always believed that every business is a ‘people business’, but recognition of this is only now growing strongly.

    Well, I’d better crack on.  I just thought I’d share those thoughts with you since they derailed me from my work. It’s now almost 3am and I’d like to accomplish a few more tasks before bed. 

    Nitey-nite

    Steve

    General dog’s body, grafter, and MD of BPIR.com Limited  ” A boss with no humor is like a job that is no fun”