CASE 17

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Gary Akehurst

Watkins International is a long established firm of chartered accountants

and managementconsultants, with international interests in accountancy
and audit services,corporatefinance,insolvencyservices,taxationand man-
agementconsultancy.This caseis concernedwith one division of Watkins
International, the Brownloaf MacTaggart Management Consultancy
Division, which until merger with Watkins in 1988had been a successful
small engineeringconsultancypractice.
Moving from being a small, close-knit company to a small, insignificant
division in an international corporate empire has createdconsiderableten-
sions. Managerial control has changed rapidly from one of benevolent
dictatorship to one of corporate uniformity. The end result has been a cli-
mate of intimidation, of unfair reward and punishment, uncertainty and
mistrust, set againsta backdrop of falling profits and plummeting morale.
This case1s concerned with issues of managerial control and power
among a group of highly qualified and initially, at least, highly energetic
and enthusiasticprofessionaJconsultants.Additional issuesinclude chang-
ing culture within a rapidly changing organisation and how the position of
senior managers can gradually change from one of respect and trust of
judgement, to one of fear and loathing.

BACKGROUND

Brownloaf MacTaggart (BM) is the engineering consulting division of

Watkins International, a large international firm of chartered accountants
and managementconsultants.
Watkins was established as a chartered accountancy practice in 1893.
Following decadesof moderategrowth it entered the managementconsul-
tancy market in 1955primarily as a 'spin-off' from audit and taxation work.
 188 Casesin Organisational Behaviour

In the following yearsthis diversification proved to be profitable. What had

started as a very small sideline activity has developed into a multidivi-
sional managementconsultancybusinessemploying in the UK alone some
700 people. Worldwide Watkins employs around 70,000people through a
network of firms and associatefirms. The international firm has at leastone
office in most countries, and in the early 1990shas establishednew offices,
particularly in Eastern
Watkins has Europe.
endeavoured to grow primarily by acquisition and internal
growth, but acquisition has beenby far the most successfulstrategy,partic-
ularly in the 1980swhen a software development company and BM were
acquired. The firm now has five consultancy divisions in the UK covering
information technology and software engineering; public sector manage-
ment; financial services and treasury; leisure and retailing; and general

Brownloaf MacTaggart and Co. had started business in 1962as a two

engineering.
man partnership. Alex MacTaggarthad been a successfulproduction engi-
neer, who had assiduously built up a long list of good contacts while
working for blue chip engineeringcompanies.Duncan Brownloafhad been
a successfulengineering company salesmanselling diverse products such
as hydraulic pit props and mining pump equipment. The two men com-
bined their undoubted strengthsby taking small premisesin Walsall, in the
West Midlands. The business flourished and in 1977,now employing 20
people, two additional employees were admitted into partnership -
I Heinrich Grubber, a German national, and William Smallpiece,a native of

Shropshire.
The BM businessflourished, establishing a good reputation for creative
and practical solutions for engineering businesses across the world.
Projectstended to be fairly small in value, averaging £10,000to £15,000(at
I. current prices), with occasionallarger assignmentsbut clients were presti-
gious and BM gained a reputation as one of the top three in its specialised
1;
i:~
field. Successhowever, was to prove to be a double-edgedsword.
Having admitted the two new partners, both founder partners were
,,;
~ beginning to think of retirement. Duncan Brownloafs health was failing
and perhapsit was time for a change.In 1980the companymoved into
bigger offices in the heart of Birmingham. One month after the move both
Alex MacTaggart and Duncan Brownloaf were gone. It was suggested,
although never proven, that both men suffered a 'palace coup' led by
Heinrich
The BM Grubber.
name was continued, after all the goodwill generated was con-
siderable, and Heinrich Grubber and William Smallpiece set about
planning for the future. For some time both partners worried about future
strategy.Should they stay as a small stand-alonecompany or actively seek
mergeror acquisition?In 1988the future directionwas effectivelysettled.
Watkins International had been looking to acquire an existing engineering
 Brownloaf MacTaggart-Control and power in a management consultancy189

ld consulting company. Merger negotiations were started with BM. These

11- negotiations proved to be unusually protracted. Besidesissuesof partner
ae capital, there were a number of issuessurrounding managerial autonomy.
La Surprisingly, merger was nearly aborted by the insistenceof the BM part-
ae ners that young Eric Reliant be admitted into partnership. The partnership
~s, qualities of Eric were not immediately obvious to the senior partners of
Watkins. A redemptive new age traveller, he tended to be seenas a disor-
lal ganised blue sky thinker (or 'head in the clouds' visionary). Underneath
ic- however, he was an artful schemerwho had carefully flattered and fawned
~re around the BM partners. What he lacked in technical engineering skills he
l1g more than made up for in low-life cunning.
-e-
o With agreementreachedon the admission to partnership of Eric Reliant,
'al the way to merger was clear. Following the merger life appeared to con-
tinue much as before. BM continued to occupy the samepremises,and to
vo all intents and purposesoperatedas the samecompany.The BM name was
n-
~ retained for the sound commercial reasonsof client goodwill and recogni-
iie tion, but now operated as the BrowruoafMacTaggart Division of Watkins
en International.
ch For eighteenmonths it was businessas usual. The head office of Watkins
:n- was two miles away - in many respects out of sight and out of mind.
he Surprisingly Watkins did not rein in its new division. Proceduresstayed
20 more or less the same although the house style of reports to clients now
- had to conform to strict and elaborateWatkins' requirements.The name of
of the overall finn had changedbut the three partners continued to behaveas
if BM was an independent company. Heinrich Grubber was particularly
ve proud of now being a partner in an international finn with all the apparent
ld. prestigeand jet travel this implied.
(at
,ti-
ed THE SITUATION

!re Watkins International began to introduce firm-wide standardisedpractices

ng early in 1990.First the time sheet recording system linked to client billing
lto was changed from a manual system to a computerised system;later, stan-
)th dardisedroutines and forms were introduced for a number of administrative
!d, procedures,including holiday requests,staff appraisal,ex~nses and assign-
by ment control. All curricula vitae were placed into a computeriseddatabase
linked to a propoSal(or bidding for work) administration system.Updating
)n- of eachcurriculum vitae takes place after each consultancy assignmentby
jut the project managercompleting the relevantform and sendingit to the mar-
Ire keting department. Surprisingly/despite the relative sophistication of this
~k system, matching the personnel with the requisite experience to project
~d. requirements is rather hit and miss/ and depends more on an informal
ng reward and punishment system (consultantswho conform to the company
 culture are rewarded with interesting and prestigious assignments,which
may help career advancement,while consultants who do not conform, for
I whatever reason,can be impeded by a successionof mediocre or difficult
projects). BM employeesbegan to recall nostalgically the 'old days' of BM
beforemerger. little did they know that more was yet to come.
hi May 1991Watkins secured three floors of a prestigious office block
located adjacentto their head office in Birmingham. This office block con-
sists of ten floors, four of which are occupied by a commercial bank and
architectural practice. All Watkins' management consultancy divisions
were located, in Au~t and September 1991,on to one floor of the new
office. Some 700 people (including all management consultancy support
staff such as accounts,personnel and office management)are housed in a
I, huge open plan office (although partners have individual, if small, offices).
Individual consultants are assignedto a desk, each desk accommodatesat
least two consultants.If both consultantsare working in the office, working
spacebecomesa simple matter of early desk possession.All consultantsare
required to log on to a computerised staff locations system,which records
contact telephone numbers and physical location for every hour of the
working day. The same system acts as a messagerecording point when
consultantsare working outside the office.
The changefrom a relatively small office away from the main manage-
ment consultancy to the big company environment came as quite a shock
to several BM staff. For many staff there was a realisation, perhaps for the
first time, that they were working in a large, rather impersonal, increas-
ingly automated and tightly regulated environment. Above all they were
expectedto sink or swim in a fiercely competitive environment. There was
also a realisation among staff, and indeed the BM partners, that although
they may be well known in the engineering industry, within the Watkins'
empire they were minute in terms of size of turnover, number of projects"
number of employeesand profitability.
The length and severity of recession, not just in the UK, but also in
other developed countries was beginning to causedifficulties not just in
the BM division but also in the information technology and software engi-
neering division. Many engineering businesses were being taken into
receivership, and while managing businessesunder receivership became
for a time highly profitable for BM, other more profitable work needed to
be generated.The traditional feasibility study and other development type
work had steadily becomelesseasy to obtain" and in the early part of 1993
there was virtually no on-going development work. While international
work had provided a cushion during the depths of the recession, UK-
based work had seriously declined since the beginning of 1993.The BM
divisional plan for the five years to 1997envisagesa doubling of turnover
.I from £3.5 million to over £7 million; the number of BM consultancy staff
staying the same at 30 consultancy staff (including three partners) and

I
 which four support staff, and the averageconsultant utilisation rate (or percent-
rm, for age of employable time charged to a client) increasingfrom just under 60
ifficult percent to 65 per cent. At a divisional meeting early in 19938M staff were
ofBM warned that, although staff numbers were forecast to remain the same,
new staff were to be recruited. Many staff saw in this statementan implied
? block threat of dismissal or redundancy for some,while younger and lessexpen-
:k con- sive consultantswere to be recruited.
t1k and In order to improve its competitive advantage in a stagnant manage-
tisions ment consultancy market (by being seen to conform to the highest service
le new
quality delivery standards) Watkins introduced in 1992 a new quality
upport managementsystem, in an effort to secureBS5750Part 1 certification (the
edina British Standards quality award). This new system required a complete
)ffices). rethink of the way consultancy assignmentsare managed,and introduced
lates at an essentially mechanistic approach to quality management based on an
.orking accountant'sview of correct filing, record keeping and random assignment
nts are audits. Elaboratequality procedures becameprogressively refined during
'ecords 1992and becameencapsulated in a beautifully printed Watkins Quality
of the Manual. This manual was revised five times in as many months, and not
twhen surprisingly, many consultants became confused as the quality system
appeared to be used by partners as part of a reward and punishment
anage- system; it is all too easy to miss completion of a form, completion of a sec-
lshock tion of a form, neglect to obtain a partner's signature on a form or miss a
for the quality plan review. The threat of periodic quality audits hangs over every
1creas- consultant and, instead of using the quality management system as a
y were means of improving services to clients, many consultants have become
~rewas increasingly antagonistic towards it. The whole quality management
:hough system has become a bureaucratic nightmare instead of the aide to suc-
atkins' cessfulservicequality and client satisfactionit should be.
rojects, The following paragraphs briefly describe the organisational structure,
recruitment policy, assignments allocations and perceived methods of
also in advancing within the company.
just in At the current time the 8M Division consistsof three partners (Heinrich
e engi- Grubber, William Smallpiece and Eric Reliant); three associates(Quintin
!n into Bottomley, Nigel Redcoatand Rupert Wormwood), four managing consul-
-ecame tants; four senior consultants; twelve consultants; two analysts, two
Qed to technical assistants, three secretaries and one researcher/librarian.
:tt type Although Watkins International prides itself on ostensibly not having a
:>f 1993 rigid hierarchy, it is in fact very hierarchical, consisting (for billing and
ltional employment purposes) of four grades of technical assistant,one grade of
.'\, UK- analyst, consultant and senior consultant; two gradesof managing consul-
heBM tant, associateand partner. Having climbed the greasypole to partner in a
mover division, the hierarchy continues remorselessly upwards, and includes -
y staff divisional senior partner, partner-in-charge of central departments (audit,
'5) and tax, managementconsultancy, corporate finance and insolvency services),
 192 Casesin Organisational Behaviour
..
partner-in-charge of regional offices, managing partner of regional offices,
managing partner of head office in Birmingham, chief executiveand senior
partner and chairman of the board. Added to this list are the partners in
chargeof offices in eachcountry and of associatedfirms.
Recruitment policy within Watkins is generally rudimentary but calcu-
lated. There is no shortageof well-qualified applicants.In normal economic
conditions the Watkins management consultancy thrives on a constant
inflow and outflow of bright young staff, although in the past three years
recessionhas generally slowed down this movement such that Watkins has
made around five per cent of its managementconsultantsredundant since
the end of 1992.The typical management consultant is aged around 30,
with a few years professional accounting or industrial experience.He (for
the typical consultant tends to be male, although exceptionally gifted
women are being recruited in greater numbers) generally has a first degree
from a well-known university plus an MBA from one of the top three
British businessschools.Occasionally an accounting qualification has also
been obtained. He or she is also highly motivated with an almost obses-
sional ambition to climb the career ladder. Becauseof this obsessionwith
success,the typical consultant is prepared to work all hours of the day and
night, and working at weekends in the office is thought to be particularly
important, provided of course,a partner is made aware of this fact.
Entrants to the BM Division are somewhat different to the typical
ijj~
Watkins consultant. A typical BM consultant is aged around 29 to 33; has a
c~;
~ j
first degree in engineering, usually from one of three universities plus
: ~
membership of a professionalengineering institute, such as the Institute of
!;
j"
~
..
Mechanical Engineering.Possessionof a higher degreeis rare. As a conse-
.i
quence,the averageBM consultant and partner are lesswell qualified than
other Watkins consultantsand partners. A climate of almost anti-intellectu-
alism has therefore flourished in the BM Division, particularly since the
merger with the Watkins empire, along the crude lines of 'we're only the
oily engineers- ignorant butproud-of it'. To reinforce this somewhatmav-
erick ethos, and in the rare moments when everyonedowns tools to relax,
the BM Division has earned some notoriety in the mammoth drinking ses-
sions in local Birmingham pubs, followed so it is alleged, by dubious
parties in far flung suburbs.As with the Watkins company as a whole there
is never a shortageof young hopefuls eagerto join the ranks of BM and as
such, the BM partners have over the yearsdevelopeda callouSand cavalier
attitude to personnelmanagement. Suchattitude by the partnership would
have been unthinkable during the time of Alex MacTaggart and Duncan
Brownloaf. The Watkins management consultancy personnel function is
small and subordinateto the wishes of the partners.
Motivation of staff is rarely considered and their well-being is sec-
ondary to the business of improving profitability. Heinrich Grubber in
particular, takes a cool and calculating approach to staff management.He
tends to selectbright new consultants and then invariably burn them out
 Brownloaf MacTaggart- Control and power in a management consultancy193

offices, with sustainedhard work until the next young person comesalong to take
i senior their place.It takesaround eighteenmonths to two years of relentlesshard
tners in work in the 8M Division for the tnie nature of the situation to dawn on the
more perceptive consultant - basically promotion to the next grade is rarer
.t calcu- than a Norwegian parrot and, while one or two consultantshave recently
:onomic been promoted from consultant to senior consultant, only one person in
onstant the past fifteen years has been promoted from senior consultant to manag-
~years ing consultant.
<ins has The allocation of consultancy assignments within the 8M Division is
nt since basedprimarily on either 'the warm body' principle (who is available)or as
und 30, part of a none too subtle punishment and reward system.Generally there is
He (for a perceived hierarchy of jobs, ranging from an international assignmentin
'gifted some exotic location, working for Heinrich Grubber and the well-respected
: degree associateNigel Redcoat(rated as a top job) to the managing of a small engi-
p three neering business under receivership, working for Eric Reliant and the
:tas also loathed and feared associate,Rupert Wormwood, famous for his unprinci-
t obses- pled ways and ill-disguised alcoholic binges (most certainly a low-rated
:>nwith job). A successionof either top-rated jobs for prestigious clients or small
fay and insignificant jobs managed by poor job managers, can make or break a
icularly Watkins careerin around four months.
Advancement in the steadily deteriorating atmosphere of the 8M
typical Division is always likely to be a rather haphazard process.Surprisingly,
.3; has a technical engineering skills per se are not the key to career successin this
.es plus organisation. Advancement, if it comesat all, may occur by a combination
tillite of of conformity to, compliance with, and dependenceon the sub-culture of
1 conse- the 8M Division, within the wider culture of the Watkins company.
.ed than Conformity, complianceand dependencycan be demonstratedin a number
tellectu- of ways - being seento work all hours in the office; flattery of the partners
lnce the resulting in appalling sycophancy; exercising personal responsibility by
>nly the undertaking small marketing and selling exercisesdesigned to bring in
.at mav- new assignments;completing already time pressuredprojectsbefore sched-
to relax, ule and under budget (which generally can only be achieved by under-
ing ses- recording time expended on a project), and the honing of good old fash-
iubious ioned Machiavellian techniquesof back stabbing.
)le there It is againstthis background of difficult trading conditions in an environ-
[ and as ment that is uncertain, together with the absorption of a relatively small
cavalier firm into an international managementcompany with all its standardised
) would procedures, and where mistrust, intimidation and fear are common emo-
Duncan tions, that this caseis developed.
lction is

ACTIVITY BRIEF

1 Identify the different ways in which managerial control and power are being
exercised in both Watkins International as a whole and the 8M Division in
particular.

~
194 Casesin Organisational Behaviour
-
2 Havingidentified the different aspectsof managerialcontrol, examinehow p
appropriate these are in managing the different types of employeesin
WatkinsInternational. 1
3 Explore the nature of the apparent dichotomy and tensionscreated, in
allowing highly qualified,creativeand essentiallyautonomousconsultants
room to reachcreativesolutions to client problems(often under consider-
able time pressureswithin an uncertain environment)and the employing
organisation'sneedfor order,stability and reliability. Pe
4 Considering the Watkins International approach to quality assurance,which tic
appears to be primarily bureaucratic and perhaps at variance with the image '0.
management consultants would wish to present to clients, is this likely to va
affect the way consultants consider and make recommendations for the bu
implementation of total quality management systemsin client organisations? sid
pr.
inf
RECOMMENDED READING un
mE
Huczynski, A. and Buchanan,D. (1991).OrganizationalBehaviour,SecondEdition,
New York: Prentice Hall, Chapter 22 'Management Control' and Chapter 19 of
'Leadershipand ManagementStyle'. col
Sveiby, K. E. and Lloyd, T. (1987) Managing Knowhow.Add Value by Valuing
Creativity,London: Bloomsbury. de
Mullins, L. J,. (1993). Managementand OrganisationalBehaviourThird Edition, po
London: Pitman, Chapter 17 'The Nature of ManagementControl' and Chapter be
20 'OrganisationDevelopment'. trc
Kakabadse,A. Ludlow, R. and Vinnicombe, S. (1988).Workingin Organizations, res
London:Penguin,Chapter8 'Power:A Basefor Action'. tio
Thomas,K. W. (1976).'Conflict and Conflict Management',in M. D. Dunnette(Ed), of
Handbookof Industrialand OrganizationalPsychology,
Chicago:Rand McNally, pp
Of!
889-935
tOI
Morgan, G. (1986).Imagesof Organization,Newbury Park, California and London:
re(
~ge, Chapter6 'Interests,Conflict,andPower'.
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