Management Consulting: The Dark Side

The Dark Side

Dr. Joe O’Mahoney

1. To understand the ethical conflicts and dangers in consulting

2. To know examples of ethical conflicts

3. To understand key principles of managing consultants

Learning Objectives

1. History Lesson

2. Ethical Practice

3. Conflicts of interest

4. The Personal Cost

5. Managing Consultants

The Agenda

History of Consulting Ethics

1. Before Enron- Audit & consulting- Profits up and up- DotCom boom

2. Collapse- Enron- DotCom

3. Threats- Split of audit & consulting- SOX

4. Now- No legislation- Rebuilt consulting arms

• Advice isn’t value for money and doesn’t work.

• Solutions are either fads or ‘boiler-plated’ templates.

• They don’t do anything permanent employees can’t do.

• They collude with their clients.

• They prey on the insecurities and ignorance of managers.

Unethical Practices?

Conflicts of Interest

Client Consultant

Consultancy

Personal Cost

1. Work / Life Balance- 15% churn

- Burn-out

- DotCom boom

2. De-humanisation- Flexibility vs. Instability

- Limits to learning

- Trust & Authenticity

- Cycles of emotional damage

“Today is the day. I am leaving this firm. I have spent (I can't say if it was "invested", "endured", or what) almost nine years destroying my soul with this company and today it stops.

Today, I choose authenticity. Today, for no particular reason that anyone will be able to put on an HR database, I will resign. No one will expect it. That, I think, is the most marvellous thing about it - nobody expects someone to resign because he is being destroyed, existentially, by working with this company.

Nobody - except, perhaps, my HR department who will quite possibly have a "reason for leaving" code on the database: Existential Self-Destruction”.

Controlling the Consultant

The assignment life-cycle

RequirementDefinition

Sourcing AssignmentDelivery

Completion BenefitsCapture

Idea / problem

Exploration

Scoping Selection

ContractTender

Management & Participation

ReviewHandover

LARGELY CLIENT

CLIENT AND CONSULTANT

LARGELY CLIENT

BENEFITS CASE

BENEFITS BASELINE &

MONITORING

BENEFITS REALISATION

Pre Assignment

During the Assignment

Post Assignment

Pre assignment

• Funded business case

• Procurement department involvement: expectations

• Define and communicate clear rules: esp. change

• Break the requirements down

• Consider a variety of resourcing and remuneration options

• Identify and make available internal resource

• Brief your own employees

• Watch out for “scope creep”

Do

Pre assignment

• Be vague: clear benefits and SMART objectives

• Hide the internal political barriers where this is a major factor.

• Have one team doing procurement and another managing the contract

Don’t

During the assignment

• Establish milestones to measure benefits.

• Schedule regular project meetings attended by key players

• Schedule time for handover and any follow-ups

• Manage the contract

• Review invoices thoroughly

Do

During the assignment

• Allow the consultant to dominate, work with them.

• Allow scope creep – maintain focus.

• Exclude other parts of your business

• Micro-manage – trust the consultant to do their job.

Don’t

Post the assignment

• Discuss outstanding issues.

• Ensure handover of accountability for benefits delivery

• Establish reporting & resource for follow-on work

• Conduct a post-completion review (savings, mutual feedback etc…)

Do

Post the assignment

• Allow the consultant to leave without checking with all stakeholders

• Be afraid to dispute payment

• Allow information / documentation / knowledge to leave with the consultant.

Don’t