AuthorKevin Nelson, Deborah Hausler

Page 120

Management consulting is generally a contract advisory service provided to organizations in order to identify management problems, analyze them, recommend solutions to these problems, and when requested, help implement the solutions. Although there are few formal educational or professional requirements to be a consultant, these services are ideally provided by individuals who are specially trained or qualified in a particular field, such as information technology or organizational change, and who strive to provide independent, objective advice to the client organization.

Only a moderate amount of research has been done on the management consulting industry, although the industry has experienced a phenomenal growth rate since essentially emerging during the 1980s. Management consultants perform a variety of services and use many different methods to complete their tasks. These external consultants do not take the place of managers and have no formal authority, although they are responsible for the value of their advice—occasionally in a legal sense.

The practice itself has existed since the early 1900s. Management consulting pioneers such as Arthur D. Little and Harrington Emerson contributed much to the foundations of the concept. The two were also involved with the founding of the first consulting firms. In the first half of the twentieth century, consultants began to expand on the earlier work. They began offering what was termed "business research" and introduced such business practices as budgeting, divisionalized organization, merit-based compensation schemes, and forecasting methods. During the early postwar years, and in many cases growing out of wartime experience, consulting experienced a big rush, with the formation of such firms as Cresap, McCormick & Paget, William E. Hill, Hay Associates, and Towers Perrin. In the 1960s, major accounting firms began to take notice of the growing market for consulting and began to offer consulting services of their own (however, by the late 1990s charges of conflicts of interest would cause some of these firms to distance their accounting practices from their consulting activities). Also at this time, with the formation of the Cambridge Research Institute and Management Analysis Center, consulting firms began to integrate methodology of the bigger firms and consolidate practices.

In the early 1980s there were an estimated 18,000 management consultants. Only 30...

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