Management Consultancy

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During the last decade of the twentieth century the management consultancy industry has seen an extraordinary growth, particularly in the Western Europe and in the USA, which has overall led to increased investigation into the sector. Glücker’s study (1999) of 1600 companies clarifies that organizations now hire increasingly more than before because, as a primary reason, they have “lack of experience in certain problem areas” (66%), feel the need for “impartiality of external viewpoint” (49%), believe that is essential “to learn from other firms” (48%) in order to progress and lead the market, and seek for “new ideas” (46%). Even if there is no perfect definition, management consultancy has always been seen, according to Micklethwaite and Wooldridge (1996), as the “management knowledge industry”, where “expert outsiders” bring new knowledge to “organizational insiders”, providing “independent expert advice” and “change facilitation”. However, for the last years, experts such as Berger (1963) reached the agreement that this view has become a largely taken-for-granted and persistent assumption about client-consultant relationships. Therefore, having the previous statement as a starting point, throughout this essay, the working methods of consultants and their relationships with clients, as well as some relevant study cases, will be evaluated in order to demystify the management consultants’ impact on the organizations by which they are hired.

Armbrüster (2006: 54) states that “consultants have the ability to gain experience, expertise, methods and tools in one industry or organization and then apply them in another”, indicating this way that they are not really “generators of knowledge” (Thrift, 2005: 35-6) and that their knowledge is strictly experience based. What also points in this same direction are the conclusions drawn from interviews with the CEO’s of the ten largest Swedish companies (Engwall and Eriksson, 1999) which indicate that seven out of ten agreed on the statement that “consultants diffuse the ideas of their clients”, while none disagreed. Having this in mind, at a general level it can then be argued that consultancies knowledge is not so much outside knowledge as (other) client or shared knowledge. O’Shea and Madigan (1997) go even further within this analysis by questioning what happens if in a certain case consultants feel unable to bring new knowledge to the client and their only alternative is to confirm or legitimate existing understandings, clarifying, the main point here is trying to know how do consultants defend their supreme knowledge holders’ reputation when they have nothing else to say than what is already known. McKenna (2006: 230), in response, observes that “from the late 1980s onward, consultants increasingly found themselves selling legitimacy, not simply knowledge transfer”, suggesting that when consultants face such situations their services can be seen as a form of “management audit” which aims minimizing the exposure to corporate liability claims and that, this would not be possible if consultants would not have any knowledge prevenient from previous experiences. This way, the fact that consultants either legitimate or rubber-stamp client-based ideas while providing consultancy services does not necessarily imply that they have no knowledge at all, it may, in fact, reflect their sophisticated wisdom-selling (or even manipulative) techniques when they make clients believe that they were “the brain” of the idea or proposed method.

Pfeffer (2006), as an example, says that “If doctors practiced medicine like many companies practice management, there would be more unnecessarily sick or dead patients and many more doctors in jail or suffering other penalties for malpractice”, making the point that since companies vary so wildly in form, size and age, establishing the link with human beings, it is far more risky in business to presume that a recognized “cure” tested in one place will be...
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