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Management Consulting A Guide to the Profession 4th
Edition Milan Kubr Digital Instant Download
Author(s): Milan Kubr
ISBN(s): 9789221095194, 9221095193
Edition: 4th
File Details: PDF, 4.54 MB
Year: 2003
Language: english
Manag. Consult. cov only 7/11/02 11:09 AM Page 1

MANAGEMENT
CONSULTING
A Guide to the Profession MANAGEMENT
Fourth editon CONSULTING
This widely recognized reference work on the state of the art of management consulting
offers an extensive introduction to consulting: its nature, professional standards,
intervention methods, behavioural rules, current developments and future perspectives.
KUBR
MANAGEMENT
CONSULTING
It has been used both by students of consulting and seasoned practitioners worldwide,
either in it’s English original or in one of the 13 editions in other languages.
Fourth
Today, the information and knowledge-based economy is creating new opportunities and
edition
challenges for consultants, who can find enough work and be well paid for their services,
provided they are able to cope with complex and rapidly changing conditions, and meet
the demands of increasingly sophisticated clients. In this climate, consultants must
continuously “reinvent themselves”. More than ever, learning is a lifelong job for
A GUIDE TO THE PROFESSION
consultants. This fourth edition actively reflects and confronts these developments and
challenges.

New topics (all treated from a consultant perspective) include: e-business; knowledge
management; total quality management; corporate governance; company transformation
and renewal; social responsibility of business; intellectual property; public
administration; and a guide to essential information sources. The entire text has also
been substantially enhanced and updated. The book is an indispensable tool for
individuals and organizations wishing to start consulting, become more competent at
Fourth edition
serving clients or manage consulting firms and assignments more effectively.

“…the most comprehensive capture of the body of knowledge of management

consulting …the most thorough guide for those who want to develop the competence
leading to certification in this profession.” (E. Michael Shays, CMC FIMC-Executive
Director, International Council of Management Consulting Institutes).

“…a great starting-point to understanding the state of the industry and how it’s
evolving.” (Wayne Cooper, Publisher, Management Consulting International and
Consultants News). Edited by MILAN KUBR

ISBN 92-2-109519-3

9 789221 095194
120 Swiss francs INTERNATIONAL
LABOUR OFFICE
GENEVA INTERNATIONAL LABOUR OFFICE GENEVA
Manage Consult PRELIMS 7/11/02 10:58 AM Page ii

In praise of the fourth edition

“ the first edition of Management consulting appeared, hardly any books had been published
on the subject. Almost immediately, Management consulting became the standard text in the
field… In today’s plethora of books on the subject, the fourth edition still stands out, just like
the first. As a guide for the novice consultant and reference for the experienced, this book´s
grasp of the subject matter, breadth of coverage, simplicity of treatment, and accessibility is
unsurpassed. Its perspective on the world of consulting is fresh and down-to-earth.”
Gerald A. Simon, CMC, FIMC, Chairman of the Editorial Board,
C2M Consulting to Management

“The consulting industry is going through profound changes. Practitioners and clients both
need to be aware of these changes in order to ensure that client value continues to be
delivered. Milan Kubr's book Management consulting: A guide to the profession is a great
starting point to understanding the state of the industry and how it's evolving.”
Wayne Cooper, Publisher of Management Consulting International and
Consultants News, and CEO of Kennedy Information

“Management consulting: A guide to the profession" is the most comprehensive capture of

the body of knowledge of management consulting. The text is the most thorough guide for
those who want to develop the competence leading to certification in this profession.”
E. Michael Shays, CMC, FIMC, Executive Director,
International Council of Management Consulting Institutes, and Chairman,
Institute of Management Consultants, United States

“How fortunate for both the novice and the battle-scarred veteran to now have a new fourth
edition of this classic text, which has been an indispensable tool for me over many years.
Balancing the professional and the business aspects of management consulting, Milan Kubr
and his team of authors have integrated the spectrum of current theories and practices into a
pragmatic guide which will become the handbook of our time.”
Patrick J. McKenna, management consultant and co-author of First among equals:
How to manage a group of professionals

“The Asian Productivity Organization has greatly benefited from the previous editions of
Management consulting in developing consultants in Asia. The current edition will
contribute to further building up the core competence in consulting services with a pragmatic
approach to creating the knowledge economy and enhancing business competitiveness.”
Yuji Yamada, Special Adviser to the Secretary-General, Asian Productivity Organization
Manage Consult PRELIMS 7/11/02 10:58 AM Page iii

MANAGEMENT
CONSULTING
A GUIDE TO THE PROFESSION

Fourth edition

Edited by MILAN KUBR

INTERNATIONAL LABOUR OFFICE GENEVA

Copyright © International Labour Organization 2002
First published 1976
Fourth edition 2002

Publications of the International Labour Office enjoy copyright under Protocol 2 of the
Universal Copyright Convention. Nevertheless, short excerpts from them may be
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Kubr, M. (ed.)
Management consulting: A guide to the profession (fourth edition)
Geneva, International Labour Office, 2002

Guide, management consultancy, management consultant. 12.04.1

ISBN 92-2-109519-3
ILO Cataloguing-in-Publication Data

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Printed in Switzerland
Typeset by Magheross Graphics, Switzerland & Ireland
 CONTENTS

Authors and acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

Abbreviations and acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi

Part I MANAGEMENT CONSULTING IN PERSPECTIVE

Chapter 1 Nature and purpose of management consulting . . . . . . . . . . . . . . . 3

1.1 What is consulting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Why are consultants used? Five generic purposes . . . . . . . . . . . . . . 10
1.3 How are consultants used? Ten principal ways . . . . . . . . . . . . . . . . . 16
1.4 The consulting process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.5 Evolving concepts and scope of management consulting . . . . . . . . . 26

Chapter 2 The consulting industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

2.1 A historical perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.2 The current consulting scene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.3 Range of services provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.4 Generalist and specialist services . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.5 Main types of consulting organization . . . . . . . . . . . . . . . . . . . . . . . 45
2.6 Internal consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.7 Management consulting and other professions . . . . . . . . . . . . . . . . . 53
2.8 Management consulting, training and research . . . . . . . . . . . . . . . . . 56

Chapter 3 The consultant–client relationship . . . . . . . . . . . . . . . . . . . . . . . . . 61

3.1 Defining expectations and roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3.2 The client and the consultant systems . . . . . . . . . . . . . . . . . . . . . . . . 64
3.3 Critical dimensions of the consultant–client relationship . . . . . . . . . 66

v
Management consulting

3.4 Behavioural roles of the consultant . . . . . . . . . . . . . . . . . . . . . . . . . . 70

3.5 Further refinement of the role concept . . . . . . . . . . . . . . . . . . . . . . . 73
3.6 Methods of influencing the client system . . . . . . . . . . . . . . . . . . . . . 76
3.7 Counselling and coaching as tools of consulting . . . . . . . . . . . . . . . 80

Chapter 4 Consulting and change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

4.1 Understanding the nature of change . . . . . . . . . . . . . . . . . . . . . . . . . 85
4.2 How organizations approach change . . . . . . . . . . . . . . . . . . . . . . . . . 91
4.3 Gaining support for change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
4.4 Managing conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
4.5 Structural arrangements and interventions for assisting change . . . 103

Chapter 5 Consulting and culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

5.1 Understanding and respecting culture . . . . . . . . . . . . . . . . . . . . . . . 113
5.2 Levels of culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
5.3 Facing culture in consulting assignments . . . . . . . . . . . . . . . . . . . . 121

Chapter 6 Professionalism and ethics in consulting . . . . . . . . . . . . . . . . . . . 129

6.1 Is management consulting a profession? . . . . . . . . . . . . . . . . . . . . . 129
6.2 The professional approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
6.3 Professional associations and codes of conduct . . . . . . . . . . . . . . . 140
6.4 Certification and licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
6.5 Legal liability and professional responsibility . . . . . . . . . . . . . . . . 145

Part II THE CONSULTING PROCESS

Chapter 7 Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

7.1 Initial contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
7.2 Preliminary problem diagnosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
7.3 Terms of reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
7.4 Assignment strategy and plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
7.5 Proposal to the client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
7.6 The consulting contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

Chapter 8 Diagnosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

8.1 Conceptual framework of diagnosis . . . . . . . . . . . . . . . . . . . . . . . . 179
8.2 Diagnosing purposes and problems . . . . . . . . . . . . . . . . . . . . . . . . . 182
8.3 Defining necessary facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
8.4 Sources and ways of obtaining facts . . . . . . . . . . . . . . . . . . . . . . . . 190
8.5 Data analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
8.6 Feedback to the client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208

vi
 Contents

Chapter 9 Action planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

9.1 Searching for possible solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
9.2 Developing and evaluating alternatives . . . . . . . . . . . . . . . . . . . . . . 221
9.3 Presenting action proposals to the client . . . . . . . . . . . . . . . . . . . . . 225

Chapter 10 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229

10.1 The consultant’s role in implementation . . . . . . . . . . . . . . . . . . . . . 230
10.2 Planning and monitoring implementation . . . . . . . . . . . . . . . . . . . . 232
10.3 Training and developing client staff . . . . . . . . . . . . . . . . . . . . . . . . 234
10.4 Some tactical guidelines for introducing changes in work methods . 236
10.5 Maintenance and control of the new practice . . . . . . . . . . . . . . . . . 242

Chapter 11 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245

11.1 Time for withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
11.2 Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
11.3 Follow-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254
11.4 Final reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

Part III CONSULTING IN VARIOUS AREAS OF MANAGEMENT

Chapter 12 Consulting in general and strategic management . . . . . . . . . . . 261

12.1 Nature and scope of consulting in corporate strategy and
general management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
12.2 Corporate strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
12.3 Processes, systems and structures . . . . . . . . . . . . . . . . . . . . . . . . . . 272
12.4 Corporate culture and management style . . . . . . . . . . . . . . . . . . . . 276
12.5 Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278

Chapter 13 Consulting in information technology . . . . . . . . . . . . . . . . . . . . . 283

13.1 The developing role of information technology . . . . . . . . . . . . . . . 283
13.2 Scope and special features of IT consulting . . . . . . . . . . . . . . . . . . 285
13.3 An overall model of information systems consulting . . . . . . . . . . . 287
13.4 Quality of information systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
13.5 The providers of IT consulting services . . . . . . . . . . . . . . . . . . . . . 292
13.6 Managing an IT consulting project . . . . . . . . . . . . . . . . . . . . . . . . . 295
13.7 IT consulting to small businesses . . . . . . . . . . . . . . . . . . . . . . . . . . 296
13.8 Future perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297

Chapter 14 Consulting in financial management . . . . . . . . . . . . . . . . . . . . . . 299

14.1 Creating value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301
14.2 The basic tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

vii
Management consulting

14.3 Working capital and liquidity management . . . . . . . . . . . . . . . . . . . 305

14.4 Capital structure and the financial markets . . . . . . . . . . . . . . . . . . . 306
14.5 Mergers and acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
14.6 Finance and operations: capital investment analysis . . . . . . . . . . . . 312
14.7 Accounting systems and budgetary control . . . . . . . . . . . . . . . . . . . 315
14.8 Financial management under inflation . . . . . . . . . . . . . . . . . . . . . . 317
14.9 Cross-border operations and the use of external financial markets . . 319
Chapter 15 Consulting in marketing and distribution management . . . . . . 327
15.1 The marketing strategy level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
15.2 Marketing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
15.3 Consulting in commercial enterprises . . . . . . . . . . . . . . . . . . . . . . . 337
15.4 International marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
15.5 Physical distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
15.6 Public relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Chapter 16 Consulting in e-business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
16.1 The scope of e-business consulting . . . . . . . . . . . . . . . . . . . . . . . . . 341
16.2 Bricks-and-mortar and bricks-and-clicks: value-chain connectivity . 345
16.3 Bricks-and-mortar and bricks-and-clicks: internal processes . . . . . 352
16.4 Dot.com organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358
16.5 Internet research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360
Chapter 17 Consulting in operations management . . . . . . . . . . . . . . . . . . . . 361
17.1 Developing an operations strategy . . . . . . . . . . . . . . . . . . . . . . . . . 361
17.2 The product perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366
17.3 The process perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370
17.4 The human aspects of operations . . . . . . . . . . . . . . . . . . . . . . . . . . 378
Chapter 18 Consulting in human resource management . . . . . . . . . . . . . . . . 381
18.1 The changing nature of the personnel function . . . . . . . . . . . . . . . . 381
18.2 Policies, practices and the human resource audit . . . . . . . . . . . . . . 383
18.3 Human resource planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386
18.4 Recruitment and selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387
18.5 Motivation and remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389
18.6 Human resource development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393
18.7 Labour–management relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
18.8 New areas and issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
Chapter 19 Consulting in knowledge management . . . . . . . . . . . . . . . . . . . . 415
19.1 Managing in the knowledge economy . . . . . . . . . . . . . . . . . . . . . . . 415
19.2 Knowledge-based value creation . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
19.3 Developing a knowledge organization . . . . . . . . . . . . . . . . . . . . . . 425

viii
 Contents

Chapter 20 Consulting on productivity and performance improvement . . . 437

20.1 Shifts in productivity concepts, factors and conditions . . . . . . . . . . 438
20.2 Productivity and performance measurement . . . . . . . . . . . . . . . . . . 443
20.3 Approaches and strategies to improve productivity . . . . . . . . . . . . 445
20.4 Designing and implementing productivity and performance
improvement programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454
20.5 Tools and techniques for productivity improvement . . . . . . . . . . . 458

Chapter 21 Consulting in total quality management . . . . . . . . . . . . . . . . . . . 463

21.1 Understanding TQM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463
21.2 Cost of quality – quality is free . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467
21.3 Principles and building-blocks of TQM . . . . . . . . . . . . . . . . . . . . . 470
21.4 Implementing TQM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474
21.5 Principal TQM tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 478
21.6 ISO 9000 as a vehicle to TQM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
21.7 Pitfalls and problems of TQM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487
21.8 Impact on management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488
21.9 Consulting competencies for TQM . . . . . . . . . . . . . . . . . . . . . . . . . 489

Chapter 22 Consulting in company transformation . . . . . . . . . . . . . . . . . . . . 491

22.1 What is organizational transformation? . . . . . . . . . . . . . . . . . . . . . . 492
22.2 Preparing for transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
22.3 Strategies and processes of transformation . . . . . . . . . . . . . . . . . . . 495
22.4 Company turnarounds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
22.5 Downsizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
22.6 Business process re-engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
22.7 Outsourcing and insourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509
22.8 Joint ventures for transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . 511
22.9 Mergers and acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
22.10 Networking arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
22.11 Transforming organizational structures . . . . . . . . . . . . . . . . . . . . . . 515
22.12 Ownership restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517
22.13 Privatization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517
22.14 Pitfalls and errors to avoid in transformation . . . . . . . . . . . . . . . . . 519

Chapter 23 Consulting on the social role and responsibility of business . . . 523

23.1 The social dimension of business . . . . . . . . . . . . . . . . . . . . . . . . . . 523
23.2 Current concepts and trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525
23.3 Consulting services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534
23.4 A strategic approach to corporate responsibility . . . . . . . . . . . . . . . 537

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Management consulting

23.5 Consulting in specific functions and areas of business . . . . . . . . . . 544

23.6 Future perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545

Chapter 24 Consulting in small-business management and development . . 547

24.1 Characteristics of small enterprises . . . . . . . . . . . . . . . . . . . . . . . . . 548
24.2 The role and profile of the consultant . . . . . . . . . . . . . . . . . . . . . . . 551
24.3 Consulting assignments in the life-cycle of an enterprise . . . . . . . . 553
24.4 Areas of special concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559
24.5 An enabling environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562
24.6 Innovations in small-business consulting . . . . . . . . . . . . . . . . . . . . 567

Chapter 25 Consulting for the informal sector . . . . . . . . . . . . . . . . . . . . . . . . 575

25.1 What is different about micro-enterprises? . . . . . . . . . . . . . . . . . . . 575
25.2 Management problems of informal-sector entrepreneurs . . . . . . . . 579
25.3 The special skills of micro-enterprise consultants . . . . . . . . . . . . . . 580
25.4 Outreach to micro-enterprises in the informal sector . . . . . . . . . . . 582

Chapter 26 Consulting for the public sector . . . . . . . . . . . . . . . . . . . . . . . . . . 587

26.1 The evolving role of government . . . . . . . . . . . . . . . . . . . . . . . . . . 587
26.2 Understanding the public sector environment . . . . . . . . . . . . . . . . . 589
26.3 Working with public sector clients throughout the
consulting cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
26.4 The service providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597
26.5 Some current challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599

Part IV MANAGING A CONSULTING FIRM

Chapter 27 Fundamentals of management in the consulting profession . . . 607

27.1 The management challenge of the professions . . . . . . . . . . . . . . . . 607
27.2 Managing a professional service . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
27.3 Managing a professional business . . . . . . . . . . . . . . . . . . . . . . . . . . 615
27.4 Achieving excellence professionally and in business . . . . . . . . . . . 620

Chapter 28 The consulting firm’s strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . 623

28.1 The strategic approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623
28.2 The scope of client services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627
28.3 The client base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630
28.4 Growth and expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632
28.5 Going international . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635
28.6 Profile and image of the firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636
28.7 Strategic management in practice . . . . . . . . . . . . . . . . . . . . . . . . . . 638

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 Contents

Chapter 29 Marketing of consulting services . . . . . . . . . . . . . . . . . . . . . . . . . 647

29.1 The marketing approach in consulting . . . . . . . . . . . . . . . . . . . . . . 648
29.2 A client’s perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651
29.3 Techniques for marketing the consulting firm . . . . . . . . . . . . . . . . . 652
29.4 Techniques for marketing consulting assignments . . . . . . . . . . . . . 667
29.5 Marketing to existing clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670
29.6 Managing the marketing process . . . . . . . . . . . . . . . . . . . . . . . . . . . 673

Chapter 30 Costs and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681

30.1 Income-generating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681
30.2 Costing chargeable services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684
30.3 Marketing-policy considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . 685
30.4 Principal fee-setting methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687
30.5 Fair play in fee-setting and billing . . . . . . . . . . . . . . . . . . . . . . . . . . 692
30.6. Towards value billing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 694
30.7 Costing and pricing an assignment . . . . . . . . . . . . . . . . . . . . . . . . . 695
30.8 Billing clients and collecting fees . . . . . . . . . . . . . . . . . . . . . . . . . . 699

Chapter 31 Assignment management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703

31.1 Structuring and scheduling an assignment . . . . . . . . . . . . . . . . . . . 703
31.2 Preparing for an assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 708
31.3 Managing assignment execution . . . . . . . . . . . . . . . . . . . . . . . . . . . 711
31.4 Controlling costs and budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717
31.5 Assignment records and reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 717
31.6 Closing an assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722

Chapter 32 Quality management in consulting . . . . . . . . . . . . . . . . . . . . . . . 723

32.1 What is quality management in consulting? . . . . . . . . . . . . . . . . . . 723
32.2 Key elements of a quality assurance programme . . . . . . . . . . . . . . 727
32.3 Quality certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 733
32.4 Sustaining quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735

Chapter 33 Operational and financial control . . . . . . . . . . . . . . . . . . . . . . . . 737

33.1 Operating workplan and budget . . . . . . . . . . . . . . . . . . . . . . . . . . . 737
33.2 Performance monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741
33.3 Bookkeeping and accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747

Chapter 34 Knowledge management in consulting firms . . . . . . . . . . . . . . . 751

34.1 Drivers for knowledge management in consulting . . . . . . . . . . . . . 751
34.2 Factors inherent in the consulting process . . . . . . . . . . . . . . . . . . . . 753
34.3 A knowledge management programme . . . . . . . . . . . . . . . . . . . . . . 754
34.4 Sharing knowledge with clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . 759

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Management consulting

Chapter 35 Structuring a consulting firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . 763

35.1 Legal forms of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 763
35.2 Management and operations structure . . . . . . . . . . . . . . . . . . . . . . . 768
35.3 IT support and outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775
35.4 Office facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777

Part V DEVELOPING CONSULTANTS AND THE

CONSULTING PROFESSION
Chapter 36 Careers and compensation in consulting . . . . . . . . . . . . . . . . . . . 781
36.1 Personal characteristics of consultants . . . . . . . . . . . . . . . . . . . . . . 781
36.2 Recruitment and selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 784
36.3 Career development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788
36.4 Compensation policies and practices . . . . . . . . . . . . . . . . . . . . . . . . 792
Chapter 37 Training and development of consultants . . . . . . . . . . . . . . . . . . 799
37.1 What should consultants learn? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800
37.2 Training of new consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 805
37.3 Training methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812
37.4 Further training and development of consultants . . . . . . . . . . . . . . 815
37.5 Motivation for consultant development . . . . . . . . . . . . . . . . . . . . . . 818
37.6 Learning options avalable to sole practitioners . . . . . . . . . . . . . . . . 820
Chapter 38 Preparing for the future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 823
38.1 Your market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 824
38.2 Your profession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830
38.3 Your self-development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 832
38.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 833

APPENDICES
Appendix 1 The client’s ten commandments
(Choosing and using consultants) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837
Appendix 2 Associations of management consultants . . . . . . . . . . . . . . . . . . . . 845
Appendix 3 Information and learning sources for consultants . . . . . . . . . . . . . . 851
Appendix 4 Terms of a consulting contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . 857
Appendix 5 Consulting and intellectual property . . . . . . . . . . . . . . . . . . . . . . . . 863
Appendix 6 Using case studies of management consulting . . . . . . . . . . . . . . . . 875
Appendix 7 Writing reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 889
Subject index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 895

xii
 AUTHORS AND
ACKNOWLEDGEMENTS

This book is the result of a collective effort and reflects the experience and
knowledge of the international consulting profession.
The first three editions (published in 1976, 1986 and 1996) were written by
the following co-authors: Michael Bauer, Roland Berger, George Boulden,
Chris Brewster, Chris Cooper, George Cox, James Dey, Alan Gladstone, Colin
Guthrie, Malcolm Harper, John Heptonstall, Hari Johri, George Kanawaty,
James H. Kennedy, Milan Kubr, Frederic Latham, Gordon Lippitt, David H.
Maister, Rebecca Morgan, Leonard Nadler, Philip Neck, Klaus North, Joseph
Prokopenko, J. Geoffrey Rawlinson, Edgar H. Schein, Edward A. Stone,
John Syme, Denis Tindley and John Wallace.
Short contributions (most presented in box form) and other valuable materials
and ideas used in the book were provided by Moïse Allal, William J. Altier,
Maurice C. Ashill, Daniel Bas, Bengt Bjorklund, Kenneth L. Block, Ole Bovin,
Derek Bowland, Joseph J. Brady, Ken Dawson, Gerry Y. Elliot, W. J. C. McEwan,
Praxy Fernandes, Stelan Friberg, Takeyuki Furuhashi, S. R. Ganesh, John E.
Hartshorne, Ed Hendricks, Michael Henriques, Shozo Hibino, Pierre Hidalgo,
Geert Hofstede, Kate Hook, Jean-Marie van Houwe, Osamu Ida, James H.
Kennedy, Václav Klaus, Emile Laboureau, Lauri K. Leppanen, Hans Ake Lilja,
William J. McGinnis, Eiji Mizutani, Klaus Molenaar, Lewis S. Moore, Alex
Morley-Smith, Gerald Nadler, M. S. S. El Namaki, Robert Nelson, Brian
O’Rorke, Graham Perkins, Jean-François Poncet, Alan C. Popham, John Roethle,
Steven E. Sacks, Emmanuel S. Savas, Karl Scholz, P. W. Shay, E. Michael Shays,
Howard L. Shenson, Marko Simoneti, Carl S. Sloane, Sten Söderman, Fritz
Steele, Hedley Thomas, Arthur B. Toan, Arthur N. Turner and W. Trevor Utting.
The author team for the fourth edition, which revised the existing text
and wrote new chapters, included Chris Brewster, Martin Clemensson,
Gerry Finnegan, Alan Gladstone, Jack Hardie, John Heptonstall, Milan Kubr,
Radan Kubr, Mike Malmgren, Klaus North, Joseph Prokopenko, Steven Rochlin,
Birte Schmitz, Edward A. Stone, and Jim Tanburn.
Short contributions, advice and assistance were received from Michael Beer,
Charles Bodwell, Christine Evans-Klock, Robert M. Galford, Gil Gidron,

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Management consulting

Charles H. Green, Else Groen, Claude Hoffmann, Osamu Ida, Kennedy

Information Inc., Margot Lobbezoo, David H. Maister, Bruce W. Marcus,
Patrick J. McKenna, Eiji Mizutani, Edgar H. Schein, Karl Scholz, E. Michael
Shays, Gerald A. Simon, Peter Søresen, Arturo Tolentino and Simon White.
Milan Kubr served as team leader and technical editor for all editions of the
book. He is also the principal author. Stylistic and language editing was carried
out by Pat Butler, and the project was overseen by Rosemary Beattie.
There are many colleagues in consulting firms and their associations,
management institutes and business companies, and in the ILO, whose
experience, support and constructive suggestions made the publication of this
book possible. The ILO extends its sincere thanks to all co-authors and
contributors, including those who could not be mentioned by name.

xiv
 FOREWORD

Management consulting has long been recognized as a useful professional

service that helps managers to analyse and solve practical problems faced by
their organizations, improve organizational performance, learn from the
experience of other managers and organizations, and seize new business oppor-
tunities. Hundreds of thousands of private businesses and public organizations
throughout the world have used the services of management consultants,
separately or in combination with training, project management, information
technology consulting, financial advice, legal advice, audit, engineering
consulting and other professional services.
The International Labour Organization (ILO) has been active in manage-
ment and small-business development, and employment promotion since the
early 1950s. Management consulting and the promotion of effective consulting
practices were quickly identified as powerful tools for the ILO’s activities.
Through its technical cooperation projects, the ILO has assisted many member
States to establish local consulting services for the various sectors of the
economy, and to develop management consultants and trainers. At present, the
ILO, through many different programmes, is an important user and developer
of consulting services.
To respond to a pressing demand for a comprehensive, practically oriented
guide to management consulting, three editions of this book were published
between 1976 and 1996. The book quickly became a basic reference work and
learning text on management consulting, published in 12 different language
editions in addition to the English original (Chinese, Czech, French, Hungarian,
Indonesian, Italian, Japanese, Korean, Polish, Portuguese, Romanian and
Spanish), and used worldwide by thousands of management consultants,
educators and clients of consultants. Universities, business schools and manage-
ment institutes in the United States and other countries have used the book in
their management and consulting courses. Many associations and institutes of
management consultants have recommended it to their members as essential
reference and study material.

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Management consulting

However, management consulting is a dynamic and rapidly changing sector

of professional services. To be relevant and useful to clients, consultants have
to keep abreast of economic and social trends, anticipate changes that may
affect their clients’ businesses, and offer advice that helps the client to achieve
and maintain high performance in an increasingly complex, competitive and
difficult environment. The knowledge-based economy is generating growing
demand and creating new opportunities for consultants. Management consult-
ing is affected by information and communication technologies, the Internet,
globalization, market liberalization, major changes in geopolitics, the advent of
regional economic groupings, demographic changes, the progress of education,
shifts in consumer taste and behaviour, the changing role of governments
and the public sector, and numerous other developments. Consultants need to
“reinvent themselves” continuously to be able to advise clients on these
increasingly complex and challenging issues.
As a professional service sector, management consulting also interacts
closely with other professions. This interaction has many facets, including
both cooperation and knowledge transfer in the clients’ interest, and fierce
competition in national and international markets. The borders between profes-
sions are shifting, professional firms merge or split, and new models and
techniques of service delivery emerge.
A fundamental reference text on consulting has to reflect all these
developments and challenges. Therefore the fourth edition of this guide
describes state-of-the-art consulting practices, issues of major concern to
consultants and clients alike, current and emerging trends, and approaches
likely to enhance the value of the services provided by consultants. All the
chapters and appendices of the third edition have been updated. New topics
of growing concern to consultants have been added, including e-business
consulting, consulting in knowledge management and the use of knowledge
management by the consultants themselves, total quality management,
corporate governance, the social role and responsibility of business, company
transformation and renewal, and the public sector. More attention and space are
devoted to key legal aspects of consulting services, such as consultant liability,
contracts and intellectual property issues. A consistently international
perspective has been maintained: like previous editions, this fourth edition aims
to give a true and balanced picture of consulting as it is practised in various parts
of the world.
When ILO first decided to develop and publish a guide to professional
management consulting in the mid-1970s, the literature on the topic was
surprisingly meagre. There were only a few anecdotal pamphlets on the history
and activities of consultants, and several conceptual contributions on inter-
vention methods used in consulting, coming from the behavioural science
circles. In 2002, a bibliographic search using the terms “consultant” or
“management consulting” will produce hundreds of references. Consulting has
become a very popular topic and has been covered by many authors from
varying perspectives.

xvi
 Foreword

The concept of consulting

In this book, management consulting is treated as a method for improving
management and business practices first of all. This method can be used by an
independent private firm, an internal consulting (or similar) unit in a private or
public organization, a management development, productivity or small-enter-
prise development institute, an extension service, or an individual (e.g. a sole
consulting practitioner or a university professor). Even a manager can act as a
consultant if he or she provides advice to peers or subordinates.
At the same time, however, management consulting has been developing
into a profession. Thousands of individuals and organizations have consulting
as their full-time occupation, and strive for professional standards in the quality
of the advice provided, methods of intervention and ethical principles.
Individuals who do some consulting without being full-time members of the
profession can also comply with the profession’s standards and principles, and
should be encouraged and helped to do so.
There is no conflict between these two ways of viewing consulting. Indeed,
consulting as a method and consulting as a profession constitute two sides of
one coin, and a guide such as this has to deal with both sides.
This book describes the consulting approaches and methods applied to
various types of management and business problems, organizations and
environments. There is an extremely wide range of consulting approaches,
techniques, methods, modes and styles. This diversity is one of the exciting
features of management consulting. It means that even clients with very
particular problems and characters can usually find a consultant who fits their
organization and personality. Conversely, consulting also exhibits certain
common principles and methods. Some of them are quite fundamental and are
used by the vast majority of consultants. For example, every consultant must
be able to use interviewing techniques, diagnose the client’s problems and
purposes, structure and plan the work to be done, enlist the client’s collabor-
ation, communicate with the client, share information and knowledge with the
client, and present proposals and conclusions orally and in writing.
Thus, to generalize about consulting and recommend a best way of
approaching it is difficult and risky at best, and can even be misleading and
counterproductive. We have therefore opted for an eclectic approach, trying
to provide a comprehensive and balanced picture of the consulting scene,
including the different methods, styles, modes or techniques used, and pointing
out their advantages and shortcomings. Readers can make their own choice,
consistent with the technical, organizational and human context of the given
organization.
However, to say that the authors of this book have no bias whatsoever for
any approach to consulting would not be correct. We do have a bias, and a
strong one, for consulting in which: (i) the consultant shares knowledge and
expertise with the client instead of trying to hide and withhold it; (ii) the
client participates as closely and intensively as possible in the assignment; and

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Management consulting

(iii) both parties spare no effort to make the assignment a valuable learning
experience. Many different methods and techniques can apply within this
broad concept.

Purpose of the book

The main purpose of this book is to contribute to the upgrading of professional
standards and practices in management consulting and to provide information
and guidance to individuals and organizations wishing to start or improve
consulting activities. The book is an introduction to professional consulting, its
nature, methods, organizational principles, behavioural rules, and training and
development practices. It also suggests guidelines to consultants for operating
in various areas of management. However, it is not intended to replace hand-
books and manuals that deal in depth and detail with management functions and
techniques: for this the reader should refer to special sources.
In a nutshell, the book is intended for:
– new entrants to the consulting profession;
– independent management consultants and consulting firms;
– consulting departments of productivity, management and small-business
development institutes and centres;
– internal management consultants in business companies and governments;
– management teachers, trainers and researchers (who may be part-time
consultants, and whose work is closely related to that of consultants);
– students of management and business administration;
– managers, business people and administrators who wish to use consultants
more effectively, or to apply some consulting skills and approaches in their
own work.
Finally, many principles and techniques described in the book apply to
consulting in general; hence consultants operating in areas other than manage-
ment and business may also find it useful and inspiring.

Terminology
The most common terms used in management consulting in various countries
are explained in the text of the book. But the meaning and use of two basic terms
warrant a definition at this early point:
– the term management consultant is used in the book as a generic term to
apply to all those who perform all or some of the typical consulting functions
in the field of management, on either a full-time or a part-time basis;
– the term client is also used as a generic term to apply to any manager,
administrator or organization using the services of management consultants
in private businesses, public enterprises, government agencies or elsewhere.

xviii
 Foreword

The two terms relate to consultants and clients in general, regardless of their
sex or sectoral, ethnic, country or other characteristics. In referring to these
groups in the text, it has sometimes been necessary to use the masculine gender
for the sake of style, or in quoting other sources; it is however fully appreciated
that in practice there are more and more women among business people,
managers and consultants.
Unless specified otherwise, the term consulting firm applies to any type of
organizational unit whose function is to provide consulting services. This term
is sometimes used interchangeably with the terms consulting unit or consulting
organization. The term consulting process is used as a generic term to describe
the range of activities and the consultant–client interaction in solving the
client’s problems. A particular job done by a consultant for a particular client
is normally called a consulting assignment (project, case, engagement).
The authors are aware of the ongoing debates concerning the changing
scope and focus of consulting, the increasingly blurred borders and progressing
integration between management, business and information technology
consulting, the “intrusions” of other professions in management consulting
(and vice versa) and other developments. These trends are reviewed. However,
we have maintained our preference for calling the object of our writing
“management consulting” rather than turning to a new, not yet widely accepted
and perhaps only temporary denomination.

Plan of the book

The guide is divided into 38 chapters, grouped in 5 parts, followed by
7 appendices.
Part I (Chapters 1–6) presents an overall view of the consulting method and
profession. Emphasis is placed on the consultant–client relationship, on the role
and intervention methods of management consultants in the process of change,
and on the principles of professional ethics.
Part II (Chapters 7–11) is a systematic review of the consulting process,
divided into five major phases: entry, diagnosis, action planning, imple-
mentation and termination.
Part III (Chapters 12–26) provides an introduction to consulting in various
areas of management and in some specific sectors. The areas covered are
general management and corporate strategy, information technology, finance,
marketing, e-business, operations, human resources, knowledge management,
productivity and performance improvement, quality management, company
transformation and renewal, and the social role and responsibility of business.
The sectors covered include small businesses, informal sector enterprises and
the public sector.
Part IV (Chapters 27–35) deals with the management of consulting
processes and firms. The main aspects examined are the nature of management
in the professions and in consulting, the strategy of consulting firms, marketing
of consulting services, costs and fees, assignment management, quality

xix
Management consulting

management and assurance, operational and financial control, knowledge

management in consulting, and structuring of consulting firms.
Part V (Chapters 36–38) focuses on careers and remuneration in consulting,
the training and development of consultants, and future perspectives of the
consulting profession.
The appendices provide selected information supplementing the main text,
as well as material and guidelines for a deeper study of consulting methods and
processes discussed in various parts of the book:
● Appendix 1 is a concise guide addressed to clients and summarizing the
main principles of choosing and using consultants.
● Appendix 2 lists international and national organizations in the consulting
profession.
● Appendix 3 is a guide to information and learning sources that are
particularly useful to consultants, including a number of Internet-based
sources.
● Appendix 4 discusses the key points of consulting contracts, including
critical legal aspects.
● Appendix 5 is a primer on current trends and issues in intellectual property.
● Appendix 6 suggests how the case method can be used in consultants’
training and learning.
● Appendix 7 summarizes the main principles of report-writing.

xx
 ABBREVIATIONS AND ACRONYMS

ADR alternative dispute resolution

AI artificial intelligence
AMCF Association of Management Consulting Firms
APO Asian Productivity Organization
APS advanced planning system
ASEAN Association of South-East Asian Nations
ASP application service provider

BDS business development services

BPI business process improvement
BPR business process re-engineering

CAD computer-aided design

CAM computer-aided manufacturing
CEO chief executive officer
CMC certified management consultant
COQ cost of quality
CPM critical path method
CRM customer relationship management
CTM Community Trade Mark
CVA customer value added

DCF discounted cash flow

DOE design of experiments
DPMO defects per million opportunities

ECB European Central Bank

ECU European currency unit
EDI electronic data interchange

xxi
Management consulting

EDP electronic data processing

EFT electronic funds transfer
EPOS electronic point of sale (system)
ERM exchange rate mechanism
ERP enterprise resource planning
EU European Union

FEACO European Federation of Management Consulting Associations

FIDIC Fédération Internationale des Ingénieurs Conseils

GDP gross domestic product

GNP gross national product
GRI global reporting initiative

HR human resources
HRD human resource development
HRM human resource management
HTML hypertext markup language
ICAAN Internet Corporation for Assigned Names and Numbers
ICF International Coaching Federation
ICMCI International Council of Management Consulting Institutes
ICT information and communications technology
ILO International Labour Organization
IPO initial public offering
IRR internal rate of return
ISO International Organization for Standardization
IT information technology

JIT just in time

KM knowledge management

LIBOR London inter-bank offered rate

MAS management advisory services

MBA Master of Business Administration
MBO management by objectives
MEOST multiple environment overstress test
MNC multinational corporation
MTN medium-term note

NAFTA North American Free Trade Agreement

NGO nongovernmental organization
NOAC next operation as customer
NPV net present value

xxii
 Abbreviations and acronyms

OD organization(al) development
OECD Organisation for Economic Co-operation and Development
OEM original equipment manufacturer

PDA personal digital assistant

PDCA plan–do–check–act
P/E price/earnings ratio
PERT programme evaluation and review technique
PIP productivity improvement programme
PR public relations
PSA professional service automation

QA quality assurance
QC quality control
QFD quality function deployment
QM quality management
QMS quality management system

R&D research and development

ROIC return on invested capital

SAP Systeme, Anwendungen, Produkte in der Datenverarbeitung

(systems, applications and products in data-processing)
SBU strategic business unit
SEC Securities and Exchange Commission (United States)
SLA service-level agreement
SQC statistical quality control

TEI total employee involvement

TPM total productive maintenance
TQM total quality management
TRM total responsibility management

UN United Nations

WACC weighted average cost of capital

WIPO World Intellectual Property Organization
WTO World Trade Organization

XML extended markup language

xxiii
 PART I

MANAGEMENT CONSULTING
IN PERSPECTIVE
NATURE AND PURPOSE OF
MANAGEMENT CONSULTING 1
1.1 What is consulting?
There are many definitions of consulting, and of its application to problems and
challenges faced by management, i.e. of management consulting. Setting aside
stylistic and semantic differences, two basic approaches to consulting emerge.
The first approach takes a broad functional view of consulting. Fritz Steele
defines consulting in this way: “… any form of providing help on the content,
process, or structure of a task or series of tasks, where the consultant is not
actually responsible for doing the task itself but is helping those who are.”1 Peter
Block suggests that “You are consulting any time you are trying to change or
improve a situation but have no direct control over the implementation… Most
people in staff roles in organizations are really consultants even if they don’t
officially call themselves consultants.”2 These and similar definitions
emphasize that consultants are helpers, or enablers, and assume that such help
can be provided by people in various positions. Thus, a manager can also act as
a consultant if he or she gives advice and help to a fellow manager, or even to
subordinates rather than directing and issuing orders to them.
The second approach views consulting as a special professional service and
emphasizes a number of characteristics that such a service must possess.
According to Larry Greiner and Robert Metzger, “management consulting is an
advisory service contracted for and provided to organizations by specially trained
and qualified persons who assist, in an objective and independent manner, the
client organization to identify management problems, analyze such problems,
recommend solutions to these problems, and help, when requested, in the imple-
mentation of solutions”.3 Similar more or less detailed definitions are used by
other authors and by professional associations and institutes of management
consultants. According to the International Council of Management Consulting
Institutes (ICMCI), for example, “management consulting is the provision of
independent advice and assistance about the process of management to clients
with management responsibilities”.4

3
Management consulting

We regard the two approaches as complementary rather than conflicting.

Management consulting can be viewed either as a professional service, or
as a method of providing practical advice and help. There is no doubt that
management consulting has developed into a specific sector of professional
activity and should be treated as such. At the same time, it is also a method of
assisting organizations and executives to improve management and business
practices, as well as individual and organizational performance. The method
can be, and is, applied not only by full-time consultants, but also by many
other technically competent persons whose main occupation may be teaching,
training, research, systems development, project development and evaluation,
technical assistance to developing countries, and so on. To be effective, these
people need to master consulting tools and skills, and to observe the
fundamental behavioural rules of professional consulting.
In our book, we have chosen to address the needs of both these target
populations. Although it has been written primarily about and for professional
management consultants, the needs of other people who intervene in a con-
sulting capacity, even though they are not full-time consultants, are borne
in mind.
We start by reviewing the basic characteristics of management consulting.
The key question is: what principles and approaches allow consulting to be a
professional service that provides added value to clients?

Adding value by transferring knowledge

Whether practised as a full-time occupation or an ad hoc service, management
consulting can be described as transferring to clients knowledge required for
managing and operating businesses and other organizations. To provide added
value to clients, this knowledge must help the clients to be more effective in
running and developing their business, public administration agency or other
non-profit organization.
Thus the quintessential nature of consulting is to create, transfer, share and
apply management and business knowledge. “What is unique to management
is that from the very beginning the consultant played a key role in the develop-
ment of the practice, the knowledge and the profession of management”, wrote
Peter Drucker.5 The term knowledge, as used here and in most of the literature
on knowledge management, encompasses experience, expertise, skills, know-
how and competencies in addition to theoretical knowledge. Thus, knowledge
transfer is concerned not only with the knowledge and understanding of facts
and realities, but also with approaches, methods and capabilities required
for the effective application of knowledge in particular economic, business,
institutional, cultural, administrative or organizational environments.
Management consultants can assume their roles in knowledge transfer
because they have accumulated, through study and practical experience, con-
siderable knowledge of effective ways of acting in various management
situations. They have learned how to discern general trends and understand

4
 Nature and purpose of management consulting

changes in the environment, identify common causes of problems with a good

chance of finding appropriate solutions, and see and seize new opportunities.
Clearly, management consultants cannot acquire such capabilities by
theoretical study only, although this continues to be an essential source of new
knowledge during their whole career. They learn from the experience of their
colleagues and from the consulting firm’s accumulated know-how. However,
experience and know-how concerning management and business practices
come mainly from working with clients. “Every consultant knows that his
clients are his teachers and that he lives off their knowledge. The consultant
does not know more. But he has seen more.”6 Thus, knowledge transfer is a
two-way process: in enhancing their clients’ knowledge and capacity to act
effectively, the consultants learn from them and enhance their own knowledge
and capacity to advise their clients, current and future, more effectively, in new
situations and on new issues.
The fields of knowledge embraced by management consulting relate to two
critical dimensions of client organizations:
● The technical dimension, which concerns the nature of the management or
business processes and problems faced by the client and the way in which
these problems can be analysed and resolved.
● The human dimension, i.e. interpersonal relationships in the client organiz-
ation, people’s feelings about the problem at hand and their interest in
improving the current situation, and the interpersonal relationship between
the consultant and the client.
For methodological reasons, our guide will often deal separately with these
two dimensions. In real life they are not separated: technical and human issues
of management and business are always interwoven. In consulting, it is
essential to be aware of these two sides of problems in organizations, but mere
awareness is not enough. Ideally, the consultant should choose approaches and
methods that uncover and help understand both the technical and the human
issues involved, and that help the client to act on both of them. In practice,
however, many consultants tend to be concerned more with one or the other
dimension of client organizations.
It is even possible to discern two types of consulting. The first type is
predominantly technical. Its protagonists are technicians competent in
providing advice on business processes, strategies, structures, systems, tech-
nology, resource allocation and utilization, and similar tangible, quantifiable
and measurable issues in areas such as production, finance and accounting.
The consultants’ knowledge backgrounds may be in technology, industrial
engineering, computer science, statistics, mathematics, operations research,
business economics, accounting, or other areas. Such consultants tend to treat
the client’s problems as mainly technical and systems problems, e.g. the client
needs a better cost control system, better information on customers’ require-
ments and complaints, a stable network of reliable subcontractors, a strategy
for the next five years, or a feasibility study for a merger.

5
Management consulting

Box 1.1 On giving and receiving advice

“Every man, however wise, needs the advice of some sagacious friend in the
affairs of life.”
Plautus

“To accept good advice is but to increase one’s own ability.” Goethe

“Many receive advice: few profit by it.” Publius Syrus

“To profit from good advice requires more wisdom than to give it.” John Collins

“Men give away nothing so liberally as their advice.” La Rochefoucauld

“Never give advice in a crowd.” Arabian proverb

“We give advice by the bucket, but take it by the grain.” William Alger

“Do not have the conceit to offer your advice to people who are far greater than
you in every respect.”
Rabindranath Tagore

“Harsh counsels have no effect; they are like hammers which are always
repulsed by the anvil.”
Helvetius

“Good counsellors lack no clients.” Shakespeare

“Advice is like mushrooms. The wrong kind can prove fatal.” Unknown

“The greatest trust between man and man is the trust of giving counsel.”
Francis Bacon

“Free advice is often overpriced.” Unknown

Selected by James H. Kennedy.

The second type focuses on the human side of organizations. Its roots are
in behavioural sciences and its doctrine is that, whatever the client thinks and
tells the consultant, there is always a human problem behind any
organizational problem, whether technical or financial. If human problems can
be understood and resolved in ways that motivate, energize and empower
people, and that make individuals and teams more effective in using their
knowledge and experience, all other problems will be resolved, or at least their
solution will be greatly facilitated.

6
 Nature and purpose of management consulting

Organization development (OD) and human resource development (HRD)

consultants are typical representatives of this second type. Their share in the
whole consulting industry has been relatively small, but their influence has been
out of proportion to their numbers. As distinct from the previous group, the
behavioural scientists have been active not only in consulting but also in writing
extensively about their approaches and experiences. Most of the writing on
consulting concepts and methodologies comes from this group.

Advice and assistance

Consulting is essentially an advisory service. This means that, in principle,
consultants are not used to run organizations or to take decisions on behalf of
the managers. They have no direct authority to decide on or implement changes.
Their responsibility is for the quality and integrity of their advice; the clients
carry all the responsibilities that accrue from taking it.
Of course, in the practice of consulting there are many variations and
degrees of “advice”. Not only to give the right advice, but to give it in the right
way, to the right people and at the right time – these are the critical skills and
art of a consultant. Above all, the consultant’s art consists in “getting things
done when you are not in charge”.7 The client in turn needs to become skilful
in taking and using the consultant’s advice and avoiding misunderstanding on
who is responsible for what.
In explaining the nature of consulting we also use the term “help” or
“assistance”. To be useful to the client and help the client to achieve results, the
consultant often needs to do more than give “pure” advice, i.e. suggestions and
recommendations that the client may choose to accept and apply, or ignore. In
current consulting practice there is a general tendency to extend advice over the
whole change cycle, i.e. the client uses the consultant’s services for as long as
necessary while implementing what the consultant has advised. Furthermore, in
addition to advising clients, many consultants do other things that are closely
related and complementary to their advisory roles, such as training, encouraging
and morally supporting the client, negotiating on behalf of the client, or
performing certain activities in the client organization together with its staff.
The term “assistance” can also cover services that are not consulting per se,
or at best are on the borderline between consulting and other professional and
business services. Outsourcing provides a good example. Currently many
firms in management and information technology (IT) consulting also provide
services, such as information processing, bookkeeping, record-keeping,
marketing, selling, distribution, advertising, recruitment, research, and design
on a long-term contract basis.

The consultant’s independence

Independence is a salient feature of consulting. A consultant must be in a
position to make an unbiased assessment of any situation, tell the truth, and

7
Management consulting

recommend frankly and objectively what the client organization needs to do

without having any second thoughts on how this might affect the consultant’s
own interests. This detachment of the consultant has many facets and can be a
tricky matter in certain cases.
Technical independence means that the consultant is in a position to
formulate a technical opinion and provide advice independently of what the
client believes, or wishes to hear.
Financial independence means that the consultant has no financial interest
in the course of action taken by the client, e.g. in a decision to invest in another
company or to purchase a particular computer system. The desire to get more
business from the client in the future must not affect the objectivity of the advice
provided in the current assignment.
Administrative independence implies that the consultant is not the client’s
subordinate and cannot be affected by his or her administrative decisions. While
this does not present a problem to autonomous consulting organizations, it may
be a rather complex, although not insurmountable, problem in internal
consulting (see section 2.6).
Political independence means that neither the client organization’s
management nor its employees can influence the consultant using political
power and connections, political party membership, club membership and
similar influences.
Emotional independence means that the consultant preserves personal
detachment and objectivity, irrespective of empathy, friendship, mutual trust,
emotional affinities and other personal pressures that may exist at the beginning
or develop in the course of an assignment.
It could be argued that absolute independence is a fiction and that no
professional adviser can claim to be totally independent from his or her
client, and from various interests and objectives pursued by the consulting
firm. After all, consultants do depend on clients to get recruited, correctly
paid for their work, used again for other work and recommended to other
clients. Getting a great amount of work from one client tends to create
dependence on this client. Income from non-consulting services is very
important to some consultants but may weaken independence. Conversely,
clients have no legal obligation to use consultants and can choose them
freely. They sometimes attach less importance to individual consultants’
independence than to their technical competence and personal integrity.
These are valid points and consultants cannot ignore them. Yet the beauty and
strength of free professions is in independence. Sacrificing independence and
objectivity for short-term benefits may be tempting but risky and self-
defeating from a longer-term perspective (see also section 6.2).

Consulting as a temporary service

Consulting is a temporary service. Clients turn to consultants for help to be
provided over a limited period of time, in areas where they lack technical

8
 Nature and purpose of management consulting

expertise, or where additional professional support is temporarily required.

This may even be in areas where the requisite skills are available in the
organization, but managers or staff specialists cannot be released for a major
problem or project. Consultants can not only provide the expertise required,
and give undivided, 100 per cent attention to the problem at hand, but will
leave the organization once the job is completed. Even if the relationship
is excellent and extends over a long period, the client always retains the right
to discontinue it.

Consulting as a business
A practitioner who does management consulting for a living has to charge a fee
for all the work done for clients. Consulting firms are sellers of professional
services and clients are buyers. In addition to being professional service
organizations, consulting firms are also businesses.
A consulting assignment must therefore be not only a technically justified
activity, but also a financially feasible and profitable commercial undertaking
according to both the client’s and the consultant’s criteria. From the client’s
point of view, the benefits obtained should exceed the costs incurred, including
the fee paid to the consultant and other costs to the client such as staff time or
the purchase of new computer programs. From the consultant’s point of view,
consulting must be a profitable activity as measured by normally applied
criteria. This will be examined in detail in Part IV.
In certain cases, the fee paid by the client will not cover the full cost of the
consulting service received. As we shall see later, consulting may be subsidized
as a result of government economic policy or for another reason, which may be
economic, commercial, political or social. For instance, an institution may
provide consulting in conjunction with training and subsidize it from the income
earned from training; a not-for-profit social organization may provide consult-
ing and counselling as a fully or partially subsidized service to potential
entrepreneurs in underprivileged social groups or neglected regions.

What should not be required from consulting

There is an abundance of case histories of successful assignments carried out
by some of the world’s best management consultancies in order to rescue
companies facing bankruptcy, or to give new life to ageing firms. They have
created a reputation that suggests that some consulting firms can resolve
virtually any management difficulty. This is exaggerated. There are situations
where nobody can help. And even if help is possible, it would be unrealistic and
unfair to expect consultants to work miracles.
Also, the consultant should never be expected to take a problem away from
the client, on to his or her own shoulders. A consultant’s presence and inter-
vention may provide considerable relief to a troubled client, but they will not
liberate the client from inherent managerial responsibility for decisions and

9
Management consulting

their consequences. If – as sometimes occurs – a consultant agrees to run a

client’s business and make decisions on his or her behalf, he or she stops being
a consultant for that activity and period of time.
As mentioned earlier, consulting does not have to be a full-time occupation.
If other professional criteria are met, it is not important whether the consultant
is primarily (and for most of the time) a business school professor, a researcher,
a retired executive or any other sort of worker. Also, if quality and independ-
ence are assured, consulting does not have to be an external service.

Our definition
Following this short discussion of the basic characteristics of management
consulting, we offer the following definition:

Management consulting is an independent professional advisory service assisting

managers and organizations to achieve organizational purposes and objectives by
solving management and business problems, identifying and seizing new
opportunities, enhancing learning and implementing changes.

We have chosen a definition that omits certain characteristics that are not
common to all consulting, such as “external” service, or service by “specially
trained” persons. Conversely, our definition includes the fundamental, or
generic, purposes of consulting that are discussed in the next section.

1.2 Why are consultants used?

Five generic purposes
A manager may turn to a consultant if he or she perceives a need for help from
an independent professional and feels that the consultant will be the right source
of this help. But what sort of help are we talking about? What can be the purpose
of using a consultant?
Consulting purposes can be looked at from several angles and described in
various ways. Let us look first at five broad, or generic, purposes pursued by
clients in using consultants, irrespective of the field of intervention and the
specific intervention method used (figure 1.1):
– achieving organizational purposes and objectives;
– solving management and business problems;
– identifying and seizing new opportunities;
– enhancing learning;
– implementing changes.

10
 Nature and purpose of management consulting

Figure 1.1 Generic consulting purposes

Achieving
organizational
purposes and objectives

Solving Identifying Enhancing Implementing

management and learning changes
and seizing
business new
problems opportunities

Achieving organizational purposes and objectives

All consulting to management and business tends to pursue a general and
overriding purpose of helping clients to achieve their business, social or other
goals. These goals may be defined in various ways: sectoral leadership,
competitive advantage, customer satisfaction, achieving total quality or pro-
ductivity, corporate excellence, high performance, profitability, improved
business results, effectiveness, growth, etc. Different concepts and terms reflect
the thinking and the priorities of both clients and consultants, the current state of
the art of management and consulting, and even fashion. Different purposes will
be stressed in commercial enterprises, public services and social organizations.
The time horizon of a consultancy will differ from case to case. Yet the common
denominator remains the same: consulting has to add value to the client
organization, and this value should be a tangible and measurable contribution to
achieving the client’s principal purposes.

11
Management consulting

This global purpose of management consulting provides a rationale and a

sense of direction for all consulting work. What would be the sense of
organizational learning or costly and risky restructuring if the client organization
could not get closer to its principal goals? What would be the use of successfully
solving a few seemingly pressing management problems if “like the mythological
hydra that grows two heads for every one cut off, the solutions we develop are
often rapidly overwhelmed by a plethora of new problems”?8
The purpose of achieving the client organization’s goals assumes that the
client has defined such goals. In some organizations this is not the case, and
management operates without any perspective, goal or sense of mission. The
consultant’s main contribution may well be in helping the client to develop a
vision of the future, set ambitious but realistic goals, develop a strategy, focus
on results, and start viewing current problems and opportunities in the light of
longer-term and more fundamental organizational goals.
Consultants must appreciate that client organizations may be pursuing
different sorts of goals. At times, the objective of a consultancy may be to advise
the client on how to maintain the status quo or even how to get out of business.

Solving management and business problems

Helping managers and other decision-makers with problem-solving is probably
the most frequently mentioned purpose of consulting. The consultant’s task is
described as professional assistance in identifying, diagnosing and solving
problems concerning various areas and aspects of management and business.
Within a business firm, a “problem” justifying the use of a consultant can
result from any of the following (and readers can undoubtedly think of many
other causes):
complaining clients high staff turnover
poor business results unrealistic self-image
unexpected loss lack of cash
natural disaster idle resources
loss of important market pressure of competition
lack of perspective failure to meet targets
obsolete control system lack of self-confidence
wrong investment choice excess of self-confidence
missed opportunity slowness of action
reluctance to change internal conflicts
The reader should be aware of the different uses of the term “problem” and
of their practical implications. If “problem” is used to mean only mistake, failure,
shortcoming or missed opportunity, the client’s and the consultant’s perspective
will tend to be essentially backward-looking and narrow, and the focus will be
on corrective action (with implied criticism and determination of responsibilities).
The term “problem” can also be used as a more general concept to describe
a situation where there is a difference or discrepancy between what is actually

12
 Nature and purpose of management consulting

happening or will be happening and what should be happening. In this

definition, a problem is described in relative terms, i.e. as a difference between
two situations. In addition, someone has to be concerned about this difference
and aim to overcome or reduce it. The problem must “belong” to someone –
there must be a “problem owner”.
Frequently the current situation of the client organization is compared with a
situation that existed in the past. If there has been a deterioration such as falling
sales or profits, the problem is defined as a need to restore the original condition.
This explains why consultants are sometimes called “troubleshooters”, “company
doctors” or “business healers”.
Alternatively, the current situation may be compared with some standard
(benchmark). The problem is then defined as the need to meet or surpass the
standard, e.g. a competitor’s product quality, range of models offered or after-
sales service.
In this sense, even a successful and forward-looking company that has been
pursuing and achieving ambitious business objectives may have “problems” –
a desire to further enhance its competitive advantage, to become a sector leader,
not to miss a new marketing opportunity, to identify a new business partner, to
explore an emerging technology, and so on.
In this guide, the term “problem” will be used in this second way – as a
generic term describing a client’s dissatisfaction with the difference between
any comparable (but mainly between existing and desirable) situations in the
organization. Thus, some of the problems will be related to past errors and
shortcomings that need to be redressed; many others will concern perspectives,
opportunities and strategies for improving the business in the future.
A correct definition of the problem to be resolved, and the purpose to be
achieved by the consultancy, is critical. Experienced consultants warn against
accepting the client’s perception of the problem at face value. If the problem has
been wrongly defined or misjudged, the consultant will be caught in a trap. He
or she will then work on the wrong problem, or the problem and potential
benefits from its solution may not justify the consultant’s intervention and the
costs incurred. To avoid this, most consultants insist on making their own
independent assessment of the problem presented to them by the client, and on
developing an agreed definition in discussion and collaboration with the client.
The purpose of the consultant’s intervention provides a perspective for deal-
ing with particular problems (see box 1.2). It could be argued that “the purpose is
to solve the client’s problem”, but this provides little insight. It has been observed
that “effective leaders and problem solvers always placed every problem into a
larger context”.9 This implies getting answers to a number of questions about the
purposes of the client organization and its key constituents, the focus and the sig-
nificance of the proposed assignment, and the immediate and ultimate benefits to
be obtained by the client if the current problem is resolved. In this way, it will be
possible to select the “focus purpose”,10 avoiding purposes that are too narrow, as
well as those that are too wide and distant to be tackled by the client at present.
However, these wider and longer-term purposes ought to be kept in mind in order

13
Management consulting

Box 1.2 Define the purpose, not the problem

The way consultants define a problem is critical to the quality of the solution. If
they define the problem in terms of its origin or cause, they will tend to focus on
who or what is to blame. This is likely to be a fruitless exercise, and can actually
get in the way of finding the best solution. It can also discourage staff from taking
initiative, in order to avoid being blamed in the future. Rather, management
consultants can achieve breakthroughs for their clients by focusing on a series of
incrementally larger purposes to be achieved.
Narrow consulting approaches – focusing on the problem, starting with data
collection, copying others, taking the first solution that can be made to work,
failing to involve others – create problems of their own. These approaches lead to
excess costs and time, early obsolescence of solutions, wasted resources and
repetition of work in the consulting process.
Breakthrough thinking provides a more effective approach. It is not a step-
by-step process but involves seven ways of thinking about problems and their
solutions, based on the following principles:
(1) The uniqueness principle: Whatever the apparent similarities, each problem
is unique and requires an approach based on the particular context.
(2) The purposes principle: Focusing on expanding purposes helps strip away
non-essential aspects and avoid working on the wrong problem.
(3) The solution-after-next principle: Innovation can be stimulated and solutions
made more effective by working backwards from an ideal target solution.
Having a target solution in the future gives direction to short-term solutions and
infuses them with larger purposes.
(4) The systems principle: Every problem is part of a larger system of problems,
and solving one problem inevitably leads to another. Having a clear framework
of the elements and dimensions that comprise a solution ensures its
workability and facilitates implementation.
(5) The limited information collection principle: Excessive data gathering may
create expertise in the problem area, but knowing too much detail may prevent
the discovery of some excellent alternative solutions. Always determine the
expanded purposes of any proposed information collection before doing it.
(6) The people design principle: Those who will implement and use the solution
should be intimately and continuously involved in its development by being
involved in the first five principles. Also, in designing a solution to be
implemented by other people, include only the critical details in order to allow
some flexibility during its application.
(7) The betterment time-line principle: The only way to preserve the vitality of a
solution is to build in and then monitor a programme of continual change to
achieve larger purposes and move towards target solutions.

Author: E. Michael Shays. A detailed discussion can be found in D. Nadler and S. Hibino: Breakthrough
thinking: The seven principles of creative problem solving (Rocklin, CA, Prima Publishing, 1994).

14
 Nature and purpose of management consulting

to place the client’s problem in a proper time perspective and seek solutions that
will not block the path to the future.
Consulting that is confined to corrective measures, aimed at restoring a past
situation or attaining a standard already met by other organizations, may
produce significant and urgently needed benefits. A crisis may be avoided,
negative developments may be arrested and the client’s business may survive.
Yet merely ensuring a return to a previously existing situation or catching up
with competition gives the client no competitive advantage, and little additional
competence or strength for coping with new situations and achieving superior
performance in the future.

Identifying and seizing new opportunities

Most consultants feel that they can offer much more than simply helping
organizations to get out of difficulties. This has been recognized by many
business corporations and other organizations that are well managed, successful
and ambitious. While they may at times call on a consultant to track back
deviations that have taken place, and find and correct the reasons for them, they
usually prefer to use consultants for identifying and taking new opportunities.
They regard consulting firms as a source of valuable information and ideas that
can be turned into a wide range of initiatives, innovations and improvements in
any area or function of business: developing new markets and products;
assessing and using state-of-the-art technologies; improving quality; becoming
more useful to customers; developing and motivating staff; optimizing the use
of financial resources; finding new business contacts (and contracts), and so on.
Experience shows that even strong and important corporations have
developed many ideas for action and have seized major business opportunities
with the help of consultants. Consulting in e-commerce and e-business is a case
in point: its purpose has not usually been to solve existing problems, but to help
clients to see and take major new opportunities that can be exploited by
adopting new approaches to doing business.

Enhancing learning
“The only work that is really worth doing as a consultant is that which educates
– which teaches clients and their staff to manage better for themselves”, said
Lyndon Urwick, one of the main contributors to the development of pro-
fessional management consulting. In the modern concept of consulting this
dimension is omnipresent. Many clients turn to consultants, not only to find a
solution to one distinct problem, but also to acquire the consultant’s special
technical knowledge (e.g. in environmental analysis, business restructuring or
quality management) and the methods used in assessing organizations,
identifying problems and opportunities, developing improvements and imple-
menting changes (interviewing, diagnosis, communication, persuasion, feedback,
evaluation and similar skills).

15
Management consulting

Consulting assignments become learning assignments. The purpose is to

empower the client by bringing new competence into the organization and
helping managers and staff to learn from their own and the consultant’s
experience. It is often stressed that in this way organizations are helped to help
themselves and become learning organizations. As already mentioned, this is a
two-way exchange, since by helping clients to learn from experience a manage-
ment consultant enhances his or her own knowledge and competence.
The learning effect of consulting is probably the most important and durable
one. The choice of the consulting methods and the degree of the client’s involve-
ment can increase or reduce this effect. We shall, therefore, pay considerable
attention to these questions in our guide.

Implementing changes
“Change agent” is another label frequently given to consultants. They are proud
to be referred to in this way since this is a reflection of another general purpose
of consulting: helping client organizations to understand change, live with change
and make changes needed to survive and be successful in an environment where
continuous change is the only constant. The importance of this consulting purpose
has considerably increased in the current period owing to the complexity and pace
of environmental changes, the need to keep informed about changes that may
affect the organization and to think constantly of possible implications, the speed
with which organizations have to adapt, and the increased demands on people’s
flexibility and ability to cope with change.

1.3 How are consultants used? Ten principal ways

In pursuing the generic purposes outlined in the previous section, consultants can
intervene in many different ways. Both clients and consultants can choose among
so many alternatives that trying to give an exhaustive and complete picture of these
alternatives would be an impossible task. However, most of the consulting
assistance to management will be given in one or more of the following ten ways:
● providing information;
● providing specialist resources;
● establishing business contacts and linkages;
● providing expert opinion;
● doing diagnostic work;
● developing action proposals;
● developing systems and methods;
● planning and managing organizational changes;
● training and developing management and staff;
● counselling and coaching.

16
 Nature and purpose of management consulting

Providing information
Better, more complete and more relevant information is often the main or
only thing that a client needs to make the right decision. It may be inform-
ation on markets, customers, sector trends, raw materials, suppliers,
competitors, potential partners, sources of engineering expertise, government
policies and regulations, or other. The consulting firm may have this inform-
ation in its files, or know where and how to find it. Information gathering and
analysis may be the only or the main objective of an assignment. Finally, any
consulting assignment will have an information dimension and function.
There is no consulting that does not involve working with and providing
information.
In providing information, a delicate question of confidentiality may be
faced. Consultants have to distinguish between information that can be
provided to a client because it is publicly available or has been gathered and
developed specifically for that client, and information developed for previous
clients or obtained from private sources, which may need to be treated as
confidential.

Providing specialist resources

A consultant can be used to supplement the client organization’s staff. Usually
such consultants will be specialists in areas where the client is looking for short-
term expertise, or wants to avoid recruiting a new employee. Some clients,
mainly in the public sector, use consultants in this way to bypass restrictive
regulations preventing them from recruiting new staff and/or to avoid keeping
expensive specialists on the payroll. Other clients may have been forced to cut
down their technical departments and find it convenient to recruit short-term
specialists from consulting firms.
A special case is “interim management”. Recently this way of using con-
sultants has become more widespread and some client firms may “borrow” staff
members of consulting firms to occupy a position in their management
hierarchy on a temporary basis.

Establishing business contacts and linkages

Many clients turn to consultants in their search for new business contacts,
agents, representatives, suppliers, subcontractors, joint-venture and merger
partners, companies for acquisition, business and professional networks,
sources of funding, additional investors and so forth. The consultant’s task may
involve identifying one or more suitable candidates (people or organizations),
presenting their names to the client, assessing their suitability, recommending
a choice, defining and negotiating conditions of an alliance or business deal,
and acting as intermediary in implementation. Often these contacts will be in
sectors or countries not sufficiently known to the client.

17
Management consulting

Providing expert opinion

Various activities fall under this heading. The consultant may be approached to
provide expert opinion in cases where the client can choose among several
alternatives and seeks impartial and independent third-party advice before
taking the decision. Consultants may be invited to act as an expert witness
(testifying expert) in lawsuits or arbitrations calling for specialized knowledge.
Conversely, expert opinion can be provided in a totally informal way. This
is the case when decision-makers use consultants as a sounding-board without
asking for a formal report. It should be stressed that any consultancy involving
assessment and choice will engage the consultant’s expert opinion, in particular
if management decisions risk being affected by shortage of information,
company myopia, lack of expertise, emotions or vested interests.

Doing diagnostic work

Diagnostic skills and instruments are among the consultant’s principal assets.
Clients use consultants for a wide range of diagnostic tasks concerning the
organization’s strengths and weaknesses, positive and negative trends, potential
for improvement, barriers to change, competitive position, underutilized
resources, technical or human problems requiring management’s attention and
so on. Diagnostic work may concern the entire business or a part – a depart-
ment, sector, function, process, product line, information system, organizational
structure or other.

Developing action proposals

Effectively completed diagnostic work may be followed by the development of
specific action proposals in an area that was diagnosed. The consultant may be
asked to do the whole job, share the task with the client or act as an adviser to
a client who has chosen to develop new proposals with his or her own resources.
Action proposals may involve one or more alternatives. Also, the consultant
may be asked to present alternatives with or without recommendations on the
course of action to be taken by the client.

Developing systems and methods

A major portion of all consulting services concerns systems and methods in
areas such as management information, business planning, operations
scheduling and control, business process integration and management,
inventory control, client order processing, sales, personnel records,
compensation, and social benefits. Traditionally, many consulting firms have
developed one or more of these areas as special lines of expertise. The systems
may be custom-made or standard. The consultant may take full responsibility
for choosing the most appropriate system, establishing its feasibility, adapting

18
 Nature and purpose of management consulting

it to the client’s conditions and putting it into effect in collaboration with the
client’s staff. Alternatively, clients may play a more active role in developing
and adapting the system with the consultant’s support. Many organizations
prefer to retain the consultant until the system has been “debugged”, becomes
operational and achieves the promised performance.
In today’s consulting, most of the systems provided are computerized, and
their development, design and application require a combination of manage-
ment and information technology consulting. A great amount of new systems
development and installation is in the fields of e-commerce and e-business
(see Chapter 16).

Planning and managing organizational changes

A fairly common case is that of a client who possesses the technical and
managerial expertise to run the organization, but has difficulties and feels
insecure when organizational changes are anticipated and cannot be avoided.
Often these changes will put a lot of strain on people, since deeply rooted
relationships, work habits and individual or group interests will be affected. In
such situations, the special expertise sought from a consultant would be in
change management – in identifying the need for change, developing a change
strategy and plan, choosing and applying the right approaches to encourage
change and overcome barriers to change, monitoring the change process,
evaluating the progress made and results obtained, and adjusting the approach
taken by management at all stages of the change cycle.

Box 1.3 Should consultants justify management decisions?

From time to time consultants may be approached with a request to undertake

assignments and submit reports so that a manager can justify a decision by
referring to an external consultant’s recommendations. In other words, a manager
may have determined his or her aims and have reached a personal decision, but
wants to be able to say that he or she is putting into effect suggestions made or
endorsed by an independent and respected professional adviser.

This can turn out to be another straightforward and correct case of providing
expert opinion. It can also be a trap. A consultant who accepts such an assign-
ment may be pulled into the hidden and intricate world of in-company politics. His
or her report will have a political role in addition to the technical message it carries.
This role may be constructive and useful if a manager is facing strong resistance
to changes that are inevitable, and needs to refer to the consultant’s authority. It
can also happen that a consultant produces a report that will be misused for
promoting vested individual or group interests. Independent and impartial assess-
ment of every situation will help the consultant to avoid being used as a
scapegoat.

19
Management consulting

The consultant may provide expertise and advice both on specific methods
and techniques that are being changed, and on how to deal with interpersonal
relations, conflicts, motivation, team building, and other issues in the
organizational and human behaviour field. The weight given to behavioural
skills will be greater in assignments where change will put a lot of strain on
people, resistance to change can be expected and management feels that its own
change management skills are inadequate. In addition to behavioural skills,
which are sometimes referred to as “soft” skills, the consultant may also provide
help in the “hard” skills area: effective scheduling of change; sequencing;
coordination; redefining structures; responsibilities and relationships; reallocat-
ing resources; adjusting recording and control systems; preventing gaps and
disorder caused by poor monitoring of change operations; ensuring smooth
transition from old to new work arrangements, costing the project and
measuring the results, etc.

Training and developing management and staff

While learning is a general purpose inherent in all consulting, training and
development of managers or staff may be a distinct client service provided
separately or in conjunction with and in support of other services.
The client and his or her staff will need to be trained in the new methods and
techniques provided by the consultant, so that they become autonomous in
using and improving them. There are many ways in which diagnosis, advice,
systems development and training can be combined in consulting practice.
Training can be an alternative to the interventions and ways of using con-
sultants described above. Rather than asking a consultant to work on a specific
diagnostic, problem-solving or change management assignment, the client may
prefer the consultant to prepare and conduct a course or a workshop for
managers and/or staff on the subject. For example, instead of requesting the
consultant to identify specific productivity improvement measures and present
a productivity improvement programme, he or she may be asked to organize a
set of workshops on productivity diagnosis and improvement.

Counselling and coaching

Management consultants can render an excellent service to managers and
entrepreneurs who need strictly personal feedback and relaxed friendly advice
on their leadership style, behaviour, work habits, relations with colleagues,
weaknesses that could be damaging to the business (such as the reluctance to
make decisions or the failure to seek the advice of collaborators) and personal
qualities that need to be well utilized. Personal counselling is necessarily a one-
to-one relationship based on trust and respect. It can be informal and should be
fully confidential. Coaching, or executive coaching, pursues similar purposes
(see section 3.7). Despite its obvious potential, few consultants offer such a
service to clients and few clients ask for it.

20
 Nature and purpose of management consulting

1.4 The consulting process

An overview
During a typical consulting intervention, the consultant and the client undertake
a set of activities required for achieving the desired purposes and changes. These
activities are normally known as “the consulting process”. This process has a clear
beginning (the relationship is established and work starts) and end (the consultant
departs). Between these two points the process can be subdivided into several
phases, which helps both the consultant and the client to be systematic and
methodical, proceeding from phase to phase, and from operation to operation.
Many different ways of subdividing the consulting process, or cycle, into
major phases can be found in the literature. Various authors suggest models
ranging from three to ten phases.11 We have chosen a simple five-phase model,
comprising entry, diagnosis, action planning, implementation and termination.
This model, shown in figure 1.2, will be used consistently in our book. Obviously,
Figure 1.2 Phases of the consulting process

• First contacts with clients

• Preliminary problem diagnosis
1. Entry • Assignment planning
• Assignment proposals to client
• Consulting contract

• Purpose analysis
• Problem analysis
2. Diagnosis • Fact finding
• Fact analysis and synthesis
• Feedback to client

• Developing solutions
3. Action planning • Evaluating alternatives
• Proposals to client
• Planning for implementation

• Assisting with implementation

4. Implementation • Adjusting proposals
• Training

• Evaluation
• Final report
5. Termination • Settling commitments
• Plans for follow-up
• Withdrawal

21
Management consulting

a universal model cannot be applied blindly to all situations, but it provides a good
framework for explaining what consultants actually do and for structuring and
planning particular assignments and projects.
When applying the model to a concrete situation it is possible to omit one
or more phases or let some phases overlap, e.g. implementation may start before
action planning is completed, or a detailed diagnosis may not be necessary or
can be integrated with the development of proposals. It may be useful to work
backwards from a later to an earlier stage. Thus evaluation can serve not only
for a final assessment of the results of the assignment and of benefits drawn
from change (termination phase) but also for deciding whether to move back
and take a different approach.
Every phase can be broken down into several subphases or parallel
activities. The whole model has to be applied flexibly and with a great deal of
imagination. The consulting process can be viewed as a variant of the change
process (Chapter 4), one in which change is planned, managed and imple-
mented with a consultant’s help. The reader may have seen various models of
planned organizational change and may be interested in comparing them with
the model in figure 1.2.
The consulting process will be examined in detail in Chapters 7–11, but at
this point it will be helpful to have short descriptions of its five basic phases.

Entry
In the entry phase the consultant starts working with a client. This phase includes
their first contacts, discussions on what the client would like to achieve or change
in his or her organization and how the consultant might help, the clarification of
their respective roles, the preparation of an assignment plan based on preliminary
problem analysis, and the negotiation and agreement of a consulting contract.
This is a preparatory and planning phase. It is often emphasized that this phase
lays the foundations for everything that will follow, since the subsequent phases
will be strongly influenced by the quality of conceptual work done, and by the kind
of relationship that the consultant establishes with the client at the very beginning.
In this initial phase, it can also happen that an assignment proposal is not
prepared to the client’s satisfaction and no contract is agreed, or that several
consultants are contacted and invited to present proposals but only one of them
is selected for the assignment.

Diagnosis
The second phase is an in-depth diagnosis of the problem to be solved. During
this phase the consultant and the client cooperate in identifying the sort of change
required, defining in detail the purposes to be achieved by the assignment, and
assessing the client’s performance, resources, needs and perspectives. Is the
fundamental change problem technological, organizational, informational,
psychological or other? If it has all these dimensions, which is the crucial one?

22
Discovering Diverse Content Through
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The Project Gutenberg eBook of Nick Carter Stories
No. 155, August 28, 1915: The Gordon Elopement; or,
Nick Carter's Three of a Kind
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Title: Nick Carter Stories No. 155, August 28, 1915: The Gordon
Elopement; or, Nick Carter's Three of a Kind

Author: Nicholas Carter

Bertram Lebhar

Release date: May 17, 2022 [eBook #68108]

Language: English

Original publication: United States: Street & Smaith, 1914

Credits: David Edwards, Chuck Greif and the Online Distributed

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*** START OF THE PROJECT GUTENBERG EBOOK NICK

CARTER STORIES NO. 155, AUGUST 28, 1915: THE GORDON
ELOPEMENT; OR, NICK CARTER'S THREE OF A KIND ***
Issued Weekly. Entered as Second-class Matter at the New York Post Office,
by Street & Smith, 79-89 Seventh Ave., New York.
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No. 155. August 28, 1915. Price Five Cents.
THE GORDON ELOPEMENT;

Or, NICK CARTER’S THREE OF A KIND.

Edited by CHICKERING CARTER.

 CHAPTER I.

AN OPEN QUESTION.

Nick Carter did not interrupt the sobbing girl. He listened patiently, grave
and attentive, letting her run on in broken, desultory phrases, until her first
paroxism of grief immediately following his arrival should abate sufficiently
for her to tell him connectedly what had occurred.
“They may say what they will—what they will, Mr. Carter, but I cannot
believe it, will not believe it,” she tearfully declared. “My faith in him is
unshaken. He is incapable of such deceit, such cruelty, such terrible
treachery. He is the victim of a plot, a hideous conspiracy, or some terrible
crime—oh, I am sure of it! He would not betray me in this way, not for life
itself! I know he would not. Arthur is above such duplicity, such terrible
——”
Nick now checked her with a gesture.
“I agree with you, Miss Strickland,” he said kindly. “Arthur Gordon is, in
my opinion, a thoroughly honorable man. As you are so sure of it, too, and
that he is the victim of a conspiracy, you best can serve him by subduing
your agitation, and telling me precisely what has occurred. I can do nothing,
nor form any opinion of the case, until I know all of the circumstances.”
“Mr. Carter is right, Wilhelmina,” said her elderly uncle, Mr. Rudolph
Strickland. “It is very kind of him to come out here, with his assistant, this
morning. Dry your eyes, therefore, or let me talk with him. I can inform him,
Mina, better than you.”
“Do so, Mr. Strickland,” said Nick, turning to him. “What has befallen
Arthur Gordon, as far as you know?”
The scene of this interview, which was the beginning of one of the most
extraordinary criminal cases in the career of the famous detective, was the
library of a new and exceedingly fine wooden residence in one of the most
beautiful rural sections of the Bronx.
The hour was about ten o’clock, on a charming May morning, nearly
seven months since Nick Carter first met these people, and recovered for Mr.
Rudolph Strickland the costly art treasures stolen from the Fifth Avenue flat,
in which he then resided, resulting also in the arrest of the notorious
European crook, Mortimer Deland, together with a gang of local
confederates.
Nick had frequently met Arthur Gordon since then, and he knew that this
wealthy young banker and broker of Wall Street was contemplating
matrimony, but he was ignorant of many of the particulars which Mr.
Strickland hastened to impart.
“This is Mr. Gordon’s new house,” said he, “though he already has
deeded the entire estate to Wilhelmina, who soon is to be his wife.”
“We were to be married next Wednesday evening,” put in the girl more
calmly.
“This is to be their home, Mr. Carter, and I am to live with them,” Mr.
Strickland continued. “Both insist that I shall dwell no longer alone in the
flat I recently occupied.”
“You now are living here, I infer,” Nick remarked.
“Only Mina and I, aside from our several servants.”
“I see.”
“It was Arthur’s wish that the wedding should take place in the home he
is to occupy. So he bought this fine estate of several acres and then built and
furnished this beautiful residence. It was completed nearly three weeks ago.”
“It certainly is a fine place and a fine house,” Nick admitted, glancing
around.
“I since have been living here with Mina, while she has been making
preparations for the wedding,” Strickland went on. “Mr. Gordon has been
living at home with his parents, in Riverside Drive, all the while, but he has
been coming out here each afternoon after business hours to direct the
laborers who still are at work on various parts of the estate.”
“Was he here yesterday afternoon?” Nick inquired.
“Yes, until nearly six o’clock.”
“And then?”
“We supposed he would return to dinner at that time, as usual, and we
sent one of the servants to call him from the golf links, where he went to
supervise the work of some of the laborers. The servant returned in a few
moments and stated that Mr. Gordon had gone.”
“Gone where?”
 “That’s the question,” said Mr. Strickland. “I am stating the
circumstances in the order they occurred, that you may be better able to
determine whether——”
“Oh, you are too slow, Uncle Rudolph,” cried Wilhelmina, interrupting.
“I cannot endure this suspense. Here, Mr. Carter, read this! It came by mail
this morning. It will tell you, in a nutshell, what is said to have occurred; but
I cannot believe it, will not believe it. They say—— Oh, Mr. Carter, they say
that Arthur Gordon has deserted me, and eloped with his handsome
stenographer!”
Nick had heard of such cases. He did not reply to the grief-stricken girl,
nor make any comments. He took a letter which she, starting up while
speaking, hurriedly brought from the library table and tendered with
trembling hand.
It was a typewritten letter, on paper bearing the printed business heading
of the missing banker, also the date of the previous day. It read as follows:
“My Dear Mina: I am writing you a few lines before leaving my office,
on a subject which, though I am to see you within an hour, I have not the
heart or courage to discuss with you in person.
“This is a late day, indeed, for me to discover that it is best for us to part
permanently; that I would do you a far greater wrong in making you my
wife, than in taking the step I am about to take. Conditions have arisen that
make it imperative, however, and I can see no wise, or even possible,
alternative. I shall be far away when you read this, and it is my intention
never to return. I cannot ask you to forgive me. My only hope is that you can
forget me, and in time find one more worthy of you.
“You already have the deed of the new place, which, with all it contains, I
hope you will keep in part amendment of the wrong I have done you. Do
please try to forget me.
Arthur Gordon.”
Nick Carter’s grave, clean-cut face, on which Mina Strickland’s tearful
blue eyes were anxiously riveted, underwent no change while he read the
letter. He handed it to Patsy Garvan, his junior assistant, who had
accompanied him there, saying quietly:
“Read it, Patsy. The case evidently is one that we must investigate.”
Patsy obeyed, without replying.
 “Please tell me at once, Mr. Carter,” Mina pleaded. “Do you think that
——”
“That Arthur Gordon wrote it?” Nick interposed, turning to her.
“Yes.”
“Frankly, Miss Strickland, I do not.”
“Oh, thank Heaven for that!” cried the girl. “Your opinion is worth more
to me than that of all the world. It must be, then, that he is the victim of
——”
“Stop a moment,” Nick again interrupted. “My opinion will be worth
more after I know all of the circumstances. It now is based only upon the
fact that all this is very unlike Arthur Gordon.”
“It is, indeed.”
“Let me question you. That will be the quickest way to bring out the
salient points,” said Nick. “Answer as briefly as possible. You received the
letter this morning?”
“Yes, sir,” said Mina, eager to proceed.
“The written signature is like Gordon’s?”
“Precisely.”
“You have had other letters from him, of course?”
“Yes, many, Mr. Carter.”
“Were they usually typewritten?”
“No, no, very rarely. He nearly always used a pen.”
“Do you know whether he can use a typewriter skillfully, or even easily?”
“I don’t think so,” said Mina. “I think he dictates all of his typewritten
letters.”
“I doubt very much, nevertheless, that he would have dictated such a
letter as this,” said Nick, when Patsy returned it to him.
“That’s true, chief, for fair.”
“Bear in mind, Mr. Carter, that it would have been dictated to the girl
with whom he is said to have eloped,” put in Mr. Strickland suggestively.
“Admitting that, even, he would have been much more likely to have
written so personal and private a letter,” Nick replied. “Who is his
stenographer?”
“Her name is Pauline Perrot,” said Mina.
 “A French girl?”
“Of French extraction, I think.”
“You have seen her?”
“Yes. She has been out here twice in the past ten days with Mr. Gordon.
She boards in Fordham, through which he passes when coming out here with
his touring car. He has, for that reason, frequently taken her home from his
office when on his way here.”
“Is she a very attractive girl?” Nick inquired.
“I don’t think so,” said Mina, with brows knitting. “She is tall and dark,
with black hair, and eyes that frighten me. I tremble when she looks at me.
She fills me with awe, and—— Oh, Mr. Carter, I have felt sure there was
something wrong, some calamity coming, though I could not imagine what.
A cloud has been hanging over me ever since I first saw Pauline Perrot.”
“How long has she been in Gordon’s employ?”
“Four or five months, I think.”
“Have you suspected her of other than business relations with him?”
“Not for a moment,” cried Mina. “Nor do I now believe him guilty of
anything wrong. I feel sure he is the victim of a plot, a conspiracy, or——”
“One moment,” said Nick. “Did he come out here with his touring car
yesterday afternoon?”
“He did, but sent his chauffeur home with it. I wondered at that, Mr.
Carter, for he never had done so before, nor did he offer any explanation.”
“And you did not question him?”
“No, sir.”
“Did he appear as usual?”
“Not quite,” Wilhelmina admitted.
“In what way was he different?”
“He was more serious and self-absorbed, as if he had something on his
mind. He remained with us only a short time, then said he was going out to
see how the work on the links was progressing. He added that he would
return a little later. That was the last I saw of him,” Mina concluded, with a
sob.
“There is much more to this, Mr. Carter,” said Mr. Strickland. “I went out
to seek him, or make further inquiries concerning him, after our servant
stated that he had gone.”
“What did you learn?”
“I was told by one of the workmen that he left the links about five
o’clock. When last seen by them he was walking south toward a woodland
road in that locality. I continued my search in that direction, and I soon met
two women who had seen him.”
“Women you knew?”
“Yes, two sisters, Mary and Ellen Dawson. They could not be mistaken,
for both were employed here by Mr. Gordon to help clean and settle this
house.”
“Ah, I see,” Nick nodded. “When and where did they see him?”
“About ten minutes before, at the juncture of a crossroad half a mile from
where I met them,” Mr. Strickland went on. “He then was talking with
Pauline Perrot. Both of the Dawson women have seen her here, and both
immediately recognized her.”
“There evidently was a rendezvous,” said Nick.
“I think so,” Mr. Strickland agreed. “Gordon then had a leather suit case,
but the women did not know whether it belonged to him or his companion.
She was clad in a dark-green traveling costume. When Gordon saw the two
women approaching, he hurried away with Miss Perrot, as if anxious to
avoid recognition.”
“In which direction did they go?”
“East, through the crossroad.”
“Did you continue your search?”
“I did not, Mr. Carter, for I supposed that Arthur had unexpected business
to look after, having been sought by his stenographer, as I then inferred, and
that he would return during the evening, or telephone to us.”
“Have you telephoned to his residence this morning?”
“Yes, indeed. He was not at home last night, nor can his parents explain
his absence. They supposed he spent the night here.”
“Have you telephoned to his Wall Street office?”
“I have, of course—about half an hour ago,” said Mr. Strickland.
“With what result?”
 “Only two of the clerks then were there. They could give me no
information, but I directed them to call me up at once, if Mr. Gordon came
in. I have no hope of that, however, in view of the letter Mina has received.”
“It does not, indeed, seem probable,” Nick allowed.
“Added to all this,” said Mr. Strickland, “there now are rumors, probably
resulting from the gossip of the Dawson women, that Gordon has eloped
with Pauline Perrot. If she is not in his office at her customary hour, ten
o’clock, I shall begin to fear——”
Mr. Strickland was interrupted by the ringing of a telephone on a stand in
one corner, and Wilhelmina uttered a cry, and ran to the instrument.
“Wait!” Nick exclaimed. “Let me answer it.”
The girl obeyed without a remonstrance, if not quite willingly.
“Well?” queried Nick over the wire.
The response came in quick, agitated tones:
“Hello! I want Mr. Gordon, if he is there, or Mr. Strickland. Hurry!”
“Mr. Gordon is not here. Who are you?”
“Mr. Beckwith, his cashier. Where can I communicate with Mr. Gordon?
Do you know? He was not at home last night. I have just called up his
residence. I must find him, or——”
“One moment, Mr. Beckwith,” Nick interrupted. “This is Nick Carter
talking.”
“Nick Carter! Good heavens! What has occurred out there?”
“Tell me, instead, what is wrong in Gordon’s office, that you are so
disturbed.”
“Wrong enough!” came the quick reply. “Cash, bonds, and securities,
aggregating sixty thousand dollars, are missing from the vault. Unless Mr.
Gordon removed them——”
“Wait!” Nick commanded a bit sharply. “Is Pauline Perrot there?”
“She is not. She has not come in yet.”
Nick glanced at a French clock on the mantel.
It struck the half hour at that moment, a single stroke, like a sudden death
knell—the half after ten.
 CHAPTER II.

THE MAN WHO ESCAPED.

Nick Carter decided instantly what must be done, also not done. He
continued talking with Beckwith without a perceptible pause.
Nick questioned him briefly, obtained Pauline Perrot’s Fordham address,
and he then directed him to give no publicity to the matter, but to await the
arrival of Chick Carter, his chief assistant, whom he would immediately send
to Gordon’s office to investigate the case.
Nick then called up the library in his Madison Avenue house and talked
with Chick. He gave him a brief outline of the circumstances, together with
such instructions as were necessary, and he then directed him to report in
person at Gordon’s residence in the Bronx.
“It will take him a couple of hours at least,” he remarked to Patsy, after
hanging up the receiver. “We can get in our work elsewhere, in the
meantime, and return before he arrives.”
Naturally, of course, several pertinent questions had arisen in Nick’s
mind, and which could not consistently be ignored, in spite of his high
opinion of Arthur Gordon.
Was he really the writer of the letter received by Mina Strickland? Had
conditions really arisen which made imperative the course he said he was
about to shape?
Had he realized at that late day, indeed, that he was not as deeply in love
with Wilhelmina as he had supposed? Had he, too, become helplessly
infatuated with Pauline Perrot, and as an only desperate resort determined to
desert Miss Strickland and elope with the stenographer?
Was it he, in that case, who had taken the cash, bonds, and securities from
the vault in his office? Had he sacrificed all but that small part of his fortune,
to say nothing of character, friends, and family, for a mad love for another
woman?
In view of the fact that Gordon had been acting voluntarily, and in a
measure had deceived the Stricklands as to his intentions the previous
afternoon, Nick could not but give the foregoing questions serious
consideration. He had, as observed before, known of such cases. They were
common enough, in fact, and what man has done, man may do.
Nick’s face reflected none of his thoughts, however, when he turned from
the telephone and stated what he had learned; and the effect upon
Wilhelmina was about what he was anticipating.
“Good heavens, is it possible?” she exclaimed, ghastly with increasing
apprehensions. “All that money gone from his vault? Don’t keep me in
suspense, Mr. Carter. Tell me just what you think about it. Tell me——”
“I must look deeper into the matter, Miss Strickland, before I can tell you
anything definite,” Nick interposed evasively. “I have not changed my
opinion, such as it was, and I will lose no time in sifting the matter to the
bottom. Try to be patient until I have done so.”
“I will try, Mr. Carter, at least,” she replied. “But all this must be the
culmination of the terrible secret dread I have been feeling.”
“Secret dread?”
“I say that only because I have not mentioned it to any one, being unable
to ascribe a definite cause for it,” Mina explained. “But it has been hanging
over me like a depressing cloud ever since I first saw Pauline Perrot—ever
since, in fact, the escape of that terrible criminal, Mortimer Deland, from the
prison hospital.”
“Yes, I remember,” said Nick, regarding her more intently.
“You were employed by Arthur, you remember, to run him down,” she
went on. “I have heard that Mortimer Deland never forgets, nor ever
forgives. Since that extraordinary escape, Mr. Carter, I have lived in fear of
him, for fear that he might attempt to kill Mr. Gordon, or in some terrible
way avenge——”
“Pshaw!” Nick checked her kindly. “Put Deland out of your head. It is
unfortunate, of course, that he fooled the hospital guards, and contrived to
give them the slip.”
“Unfortunate, indeed.”
“But as far as seeking vengeance goes, it is much more probable that he
immediately fled to Europe, whence he came,” Nick added. “Besides, I am
the man he would seek, and not Gordon, for it was I who cornered and
convicted him. There is no occasion for those apprehensions, Miss
Strickland.”
 “I hope not, I’m sure,” said Mina. “You are going?”
Nick had taken his hat from a table on which he had placed it.
“Yes,” he replied. “I will return in a couple of hours, however, and Chick
may arrive in the meantime. We will leave no stone unturned to ferret out the
truth.”
He led the way out to his touring car, in which Danny, his chauffeur, had
been waiting in front of the house.
“To Fordham, Danny,” he directed. “Let her go lively.”
“Why to Fordham, chief?” questioned Patsy, when both were seated in
the tonneau and the car was speeding down the long driveway to the rural
road.
“To inspect Pauline Perrot’s apartments and interview her landlady,” said
Nick, with rather ominous intonation.
“Do you suspect her of being a crook?”
“I think she is back of this whole business, Patsy, of whatever it consists.”
“Gee, that looks like a cinch!” declared Patsy. “Either she is playing a
deep game, chief, and working it out with wonderful success, or Gordon has
lost his head completely and bolted with the woman.”
“The last may possibly be true, since other men have been equally
foolish,” said Nick. “I find it hard to believe of Arthur Gordon, however.”
“That goes, too.”
“I doubt very much that he would have gone so far as to buy a big estate,
build and furnish a fine residence, and then bolt with a girl he has known
less than six months.”
“But he evidently met her voluntarily yesterday afternoon.”
“She may have wheedled him into doing so.”
“But how, if Gordon did not remove them, could she have got the bonds
and securities from his vault?”
“Chick will try to find out. I have left that to him, and given him all of the
necessary points. It is useless for us to speculate upon it.”
“Gee, it’s surely some case, chief, and likely to become a difficult one,”
said Patsy. “It’s odd, too, that Miss Strickland has felt so apprehensive of
deviltry by Mortimer Deland since his escape.”
“That’s like a girl of her sensitive nature.”
 “For all that, chief, Deland must be a mighty slick gink, or he never could
have given the hospital guards the slip in female attire, to say nothing of
having contrived to secretly get the garments. That whole business is still a
mystery.”
“And likely to continue one,” said Nick. “It looked to me like bribery,
Patsy, rather than cleverness on Deland’s part, and the bribery of a prison
official is difficult to expose.”
“That’s right, too.”
“It was no fault of ours, however, for we did our part when we rounded
up the rascals,” Nick added. “Take the road to the left, Danny. I’ll give you
the street and number after we hit the town.”
 CHAPTER III.

CONFIRMATORY EVIDENCE.

It was eleven o’clock when the touring car containing the detectives
stopped in front of an attractive wooden residence in a quiet and very
reputable section of Fordham.
Nick directed Patsy to accompany him, while Danny waited in the car,
and his ring brought an elderly, refined-looking woman to the door, whom
Nick at first supposed was one of the boarders.
“I wish to see Mrs. Lord, the landlady,” he informed her.
“I am Mrs. Lord, sir,” was the reply, smiling. “Will you walk in?”
“Yes, thank you. I wish to inquire about one of your boarders.”
“One of them!” The woman laughed lightly. “I have only one, sir, and I
consented to take her only to slightly increase my limited income. I do not
keep what might be more properly termed a boarding house. What Miss
Perrot pays me enables me to keep an extra servant, which relieves me of
most of the housework. Will you be seated, gentlemen?”
They had followed her into a neatly furnished parlor, and Nick now saw
plainly that she was an unassuming and thoroughly honest woman, one upon
whom a crafty person could very easily impose. He reasoned, too, that that
might be why Pauline Perrot was established there.
“Your boarder is Miss Perrot?” he said inquiringly.
“Yes, sir.”
“Is she at home?”
“Oh, no, she never is here at this hour,” said the landlady. “She is
employed as a stenographer by a New York banker, Mr. Arthur Gordon. But
she now is away on a visit. She will be gone about a week.”
“Gee! that’s sure to be the longest week on record,” thought Patsy.
“When did she go, Mrs. Lord?” Nick inquired.
“She left from her office yesterday, sir, but she sent her trunk away two
days ago.”
“Why did she send her trunk in advance?”
 “I don’t know, sir. I did not inquire.”
“Did you know Miss Perrot before she came to board here?”
“I did not, sir. She was a stranger.”
“Do you now know anything definite about her?”
“Only what she has told me.”
“I’m afraid that is not very reliable.”
“Dear me! What do you mean?” Mrs. Lord exclaimed apprehensively.
“Who are you, sir, that you question me in this way about her?”
“My name is Carter. I am a detective,” Nick now informed her. “Mr.
Gordon is mysteriously missing, also a considerable fortune from his office
safe. Miss Perrot is suspected of——”
“Not of having robbed Mr. Gordon?” interrupted the landlady
incredulously. “Oh, I cannot believe that, sir! She has repeatedly told me that
Mr. Gordon was quite likely to marry her.”
“I would not take much stock in what she has told you,” Nick dryly
advised. “Nor do I think it probable that she will ever return here.”
“Well, well, you amaze me!”
“Has she been receiving any visitors while here?”
“No, sir, never!” said Mrs. Lord emphatically. “I often have wondered at
that. She has no mail, nor appears to have any friends, except Mr. Gordon.
He frequently has brought her home from his office, but he never came in.”
“Did she go out evenings?”
“Yes, occasionally. But she always returned at a reasonable hour, and
always alone.”
“I wish to inspect her room, Mrs. Lord,” said Nick. “This is a very
serious matter, or I would not make the request.”
“If all you have told me is true, sir, I cannot consistently refuse,” was the
reply. “I will show you the way.”
Both Nick and Patsy followed her upstairs and into an attractively
furnished front chamber.
“Everything is in order, Mr. Carter, but I have deferred sweeping and
cleaning the room until the day before I expected Miss Perrot to return,” she
said, when they entered.
 “We will disturb nothing,” Nick replied. “Has she sent away all of her
garments?”
“I cannot say, Mr. Carter. I have not looked.”
“I will do so, then, with your permission,” Nick remarked.
He did not wait for a reply, but at once began a thorough inspection of the
room. In the wardrobe closet were some partly worn garments, two shirt
waists, a blue woolen skirt, an Eton jacket, and a single pair of button boots
on the floor.
Nick examined all of these very carefully, hoping to find some suggestive
mark on one of them, or evidence of some significance, but the examination
proved entirely futile. They were no different from the garments of a
thousand and one other young women.
The drawer of the dressing stand was empty, while the china trays on top
contained only a few hairpins, a plated stickpin of no great value, and a few
equally insignificant articles.
In one of the bureau drawers, however, Nick found a quantity of
underwear, including two pairs of stockings, of all of which he at first made
only a cursory examination. He soon noticed one curious fact, however, and
remarked to Patsy:
“By Jove, this is strange!”
“What’s that, chief?” questioned Patsy, joining him at the bureau.
“All of this underwear is new,” Nick pointed out. “Not a piece of it has
been worn.”
“You’re right, chief.” Patsy peered into the drawer. “That’s plain
enough.”
“But why it was left here is not so plain,” said Nick. “A girl going away
on a visit usually takes her best garments in preference to those she has
worn.”
“That’s right, too, chief,” Patsy agreed. “But she may be well supplied.”
“I’m not at all sure that that explains it,” Nick replied dryly. “What have
you there?”
“Fragments of a letter from the waste basket, also the torn envelope in
which it came,” said Patsy. “It is written in French.”
“I thought you said, Mrs. Lord, that Miss Perrot has received no letters
while here?” said Nick, turning to the waiting landlady. “My assistant has