Management in Action

Social, Economic &

Ethical Issues

Aim
The course aims at bringing the students closer to reality by
developing their understanding of the professional
prerequisites to practice of management in terms of
required skills and attitude to respond proactively to rapid
discontinuous change in business environment.
Integrative in approach, this course aims at developing not
theoreticians but practitioners who are expected to sense
the ongoing conflict between environmental change and
internal desire of management for stability.

Objective
At the end of this course the students will understand:

Various Issues Involved in practicing

management particularly in the Indian context
Possible approaches to Ethical, Economic
and socially acceptable Decision-making
problem solving through examination of
alternative paths.

Module I: Introduction
Modern Management Practices and Issues
Involved, Outsourcing Management Services and
Evolution of Management Consultancy, Skills-set
Required for Management Consultants. Consulting
and performance counseling.

Module II:The Process of

Management Consulting
Consulting Proposals. Identification and Definition
of Problem, Fact-Finding Leading to Solution
Development and Implementation, Developing
Strategic and Tactical Plans and Subcontracting,
Pricing of Consultancy, Acquiring and Developing
Talents for Consulting.

Module III: In-house Management

versus Management Outsourced
Why a Sense of Skepticism and Unease Towards
Management Consultants. Cost versus Value of
Advice, Separating Consulting Success from
Consulting disaster. Some Revealing Situations.

Module IV:Cross Cultural Management

Systems and Processes

Types of organizational culture, Strength of

organizational culture, Function of organizational
culture, Importance of culture to the organization,
Cultural Models, Cross- Cultural Perspectives,
Geert Hofstede and Cross- Cultural Issues

Module V: Economic and Social Issues

in Management
Adaptation to Changing Environment in General and
Economic Environment in Particular, Economic Growth and
Change Areas, Emerging Opportunities in Various Sectors
including Social Sector, Management Practice and Cultural
Issues, The global Political Situation, The Global
Competitive Environment and the internal scene in India,
War Game.

Module VI:Ethical Issues in

Management
Relationship among Various Stakeholders, Reasons
for Conflict of Interests Among Stakeholders,
Corporate Governance and Ethics. Why Unethical
Decisions Leading to Conflicts are Taken, Power
and Politics, Initiatives on Corporate Governance by
the Governments.

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.

Clients Expectation(S)
Independent Viewpoint
Special Qualifications
Realistic Gains not just moving the
wheels.

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

1.
2.
3.
4.
5.
6.
7.
8.
9.

Know it all attitude

Inability to understand technical language
Inadequate background or knowledge
Poor organization of ideas
Differences in perception
Prejudice or bias
Personality conflicts
Tendency not to listen
Resistance to change

Barriers common to Consultants

10. Lack of credibility
11. Inability to understand Non-Verbal Communication
12. Hostile attitude
13. Lack of feedback
14. Differences in status or position
15. Information Overload
16. Too many Gatekeepers
17. 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 shareholders 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
TECHNOLOGIES

OVERARCHING

* 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

Theres no
business

business

like

consulting

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 bosss calendar because they
dont 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

Systematization &
comparison of
information

Methods/Procedures

verification

Data collection &

analysis

Observation of
reactions

Interpretation
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
Criterion for progress is that emancipation should occur

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

QUALITATIVE RESEARCH

Logical Positivism

Interpretive/Phenomenological

Natural science world view

Naturalistic world view

Hypo-deductive

Inductive

Particularistic

Holistic

Objective/ Outsider centered

Subjective/ Insider centered

Outcome oriented

Process oriented

Attempt to control variables

Relative lack of control

Goal: find facts & causes

Goal: understand actors view

Static reality

Dynamic reality

Verification oriented

Discovery oriented

Confirmatory

Exploratory

Inquiry is value free/neutral

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

DATA
GENERATION

REPRESENTING
DATA

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
Personal
Reflexivity

Knowing who you are

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

Functional
Reflexivity

Continuous examination of the practice/process of

research to reveal assumptions, values & biases

Disciplinary
Reflexivity

Reflecting on larger issues that include research

methodology & questioning psychology itself

FEW ANSWERS
REPRESENTATION
Representation doesnt mean writing up the findings after the study
Difficulties inherent in representing the other
Acknowledgement that self & other are entangled
Researchers 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 participants 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 researchers 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
Stability, predictability

21st Century
Discontinuous change,
continuous improvement

Size and scale

Speed and responsiveness

Top-down command &

control

Empowerment; leadership
from everybody

Organizational rigidity

Virtual organizations,
permanent flexibility

TH

20TH Century
Control by rules &
hierarchy
Information closely
guarded
Rational, quantitative
analytics
Need for certainty
Reactive; risk-averse
Process driven
Corporate independence
and autonomy
Vertical integration

21st Century

Control by vision and values

Information shared
Creativity, intuition

Tolerance of ambiguity
Proactive;entrepreneurial
Results driven
Interdependence; strategic
alliances
Virtual integration

20TH Century
Internal organizational
focus
Consensus
Domestic market
orientation
Competitive advantage
Sustainable competitive
advantage
Competing for todays
markets

21st Century
Focus on comptitive
environ ment
Constructive contention
International focus
Collaborative advantage
Hyper-comptition,
constant re-invention of
advantage
Creating tomorrows
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

Customer loyalty & ideas

Distribution & marketing

channels
Strategic alliances

Structural Capital (+ / -)
* Individual competencies
& innovation potential
Capacity for teamwork
Values

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 couldnt afford a consultants hourly fee.
Instead of doing the job on a time and material basis, Im willing to do
it for a contingency fee, responded the consultant.
What is contingency fee? asked the client.
Its very simple. If I dont deliver what I promised, Ill be left with no
money at all, explained the consultant
What if you do deliver what you promised? persisted the client.
Then youll 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

ActivityBased 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

ActivityBased Consulting

Result-Based Consulting

No efforts to build
partnerships with key
managers
No measurement of results
or cost benefit analysis
Planning and reporting on
consulting intervention is
focused on input

Partnerships established
with key managers and
clients
Measurement of results
and cost-benefit analysis
Planning and reporting on
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.
2.
3.

Reaction to and satisfaction with the consulting

intervention from a variety of different stakeholders within
different time frames.
The extent of learning that has taken place as those
involved in the consulting intervention learn new skills,
processes, procedures, and tasks.
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.

ROI%=

Net Consulting benefits

_________________
Consulting Costs

X 100

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