Amity Business School

Class of 2011, Semester IV

Management in Action Social, Economic & Ethical Issues
Dr. Sanjay Srivastava

1
 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.
 Client’s 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. Know – it – all attitude
2. Inability to understand technical language
3. Inadequate background or knowledge
4. Poor organization of ideas
5. Differences in perception
6. Prejudice or bias
7. Personality conflicts
8. Tendency not to listen
9. 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
There’s no business like consulting
business…

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
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
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
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 couldn’t afford a consultant’s
hourly fee.
‘Instead of doing the job on a time and material basis, I’m
willing to do it for a contingency fee,’ responded the
consultant.
‘What is contingency fee?’ asked the client.
‘It’s very simple. If I don’t deliver what I promised, I’ll be left
with no money at all,’ explained the consultant
‘What if you do deliver what you promised?’ persisted the
client.
‘Then you’ll 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
Activity–Based 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
Activity–Based Consulting Result-Based Consulting

• No efforts to build • Partnerships established

partnerships with key with key managers and
managers clients
• No measurement of results • Measurement of results
or cost benefit analysis and cost-benefit analysis
• Planning and reporting on
consulting intervention is • Planning and reporting on
focused on input 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. Reaction to and satisfaction with the consulting
intervention from a variety of different stakeholders
within different time frames.
2. The extent of learning that has taken place as those
involved in the consulting intervention learn new
skills, processes, procedures, and tasks.
3. 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.
 Net Consulting benefits
ROI% = _________________ X 100
Consulting Costs

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