MANAGEMENT CONSULTANCY

Effective Management Consultancy



ABSTRACT

Management consultancy organisations of the 21st century realise that they need to move away from balance sheet accounting systems as the primary tool of management. Intangible assets, such as knowledge, skills and process assets, may be worth more than their physical assets, and require effective management to gain a competitive advantage. Many models for process-improvement and knowledge management that currently exist could be used in leveraging organisational intangible assets. Though the intricate interaction between the domains of process improvement management and knowledge management is clear in current models, a fully integrated model does not exist. The aim of this article is to demonstrate the integration possibilities of process improvement and knowledge management in an attempt to improve the practices of both during the same exercise, using an integrated model.

Effective Management Consultancy

Introduction

The new e-business economy of today has changed the understanding of what creates value for organisations. Intangible assets (e.g. intellectual capital, which includes the knowledge and skills of employees) are now among the most important sources of value creation. A company may have a book value (appearing on its balance sheet) of R10,000,000, yet be worth R100,000,000 on the stock exchange. Intellectual capital accounts for the R90,000,000 difference (Bahra [7]).

The World Bank (cited in Bahra [7], p. 49) noted that "the balance between knowledge and resources has shifted so far towards the former that knowledge may have become the most important factor determining the standard of living...Today's most technologically advanced economies are truly knowledge based". "To make knowledge work productive is the great management task of this century, just as making manual work productive was the great management task of the last century" (Drucker, cited in Bahra [7], p. 58).

People's skills, knowledge and creativity (also called human capital) have become important in the creation of economic value (Bahra [7]). Employees also realise their value, and command the highest fees from organisations that will "recognise and respect their talent and allow them to learn and earn and develop their skill base" (Bahra [7], p. 51). The relationship between employee and employer is changing - the balance of power is shifting to the talented, creative individual. Employees realise that job security is something of the past. "Three career moves and eight job changes will be the norm in the future" (Walter, cited in Bahra [7], p. 49).

Consultancy firms are some of the very first adopters of KM (Knowledge Management) practices. This sector's main asset is people. Consequently, consultancy firms invest heavily in training and development, but are also characterised by a high staff turnover rate. These organisations are engaged in multiple projects with various clients. Each project contains a set of project-specific processes, tasks and project team members. The challenge is to utilise employee expertise and knowledge efficiently within consultancy firms, ensuring that KM investments are balanced with strategic business objectives, other organisational improvement initiatives, and their relative value addition. Due to the strong process orientation of management consultancy firms, KM and organisational ...