What does CMC mean?
What does a management consultant do?
When should you use a management consultant?
Good reasons for using management consultants
Steps to choose a management consultant
What fees can you expect to pay?
How a client can optimise value from a management consultant

What does CMC mean?

CMC stands for Certified Management Consultant. This designation indicates that a management consultant meets the international standards of competence, education, experience, and ethical conduct.

CMC is an international qualification recognised by all 35 member countries of the International Council of Management Consulting Institutes (ICMCI). A minimum of three years consulting experience is required before a person is eligible to become a Certified Management Consultant after being interviewed by a panel of existing CMCs.

The CMC designation was initiated by the Institute of Certified Management Consultants of Canada in 1972, and was adopted by the New Zealand Institute of Management Consultants in 1993.

Therefore, CMC means:

• CMC is the mark of a fully-fledged professional.
• CMC is the international symbol for expertise and commitment, and represents the highest standard in the management consulting profession.
• Only accredited members of an Institute of Management that is itself a member of the ICMCI such as the IMCNZ may use the CMC appellation.
• CMCs in New Zealand are entitled to transfer their qualification to any other member country of the ICMCI, and to practise as a CMC in that country. Member countries include the US, Canada, Australia, and the UK.
• To be a member of the Institute, a consultant must have a proven track record of superior client service and have demonstrated a high level of professional competence before a qualifying panel of their peers.

What does a management consultant do?

Management consultants can be engaged for a wide range of activities. They bring with them technical skills, a breadth of experience, and the ability to deal with the vital human side of change management and implementation.

Typical assignments for management consultants include:

• Reviewing an organisation's corporate objectives and strategy
• Reviewing an organisation's structure and staffing
• Appraising, selecting, and determining the remuneration structure for executives
• Preparing and implementing development programmes
• Improving revenue and profitability
• Increasing cost effectiveness
• Introducing new or better management techniques such as information technology, personnel incentives, asset management, and re-engineering
• Planning and controlling the execution of projects which are outside the normal experience of the organisation's staff.

Consultants have developed their services to meet these and similar needs, when the skills, knowledge, and experience of the organisation are nor appropriate, nor currently available for the concentrated effort needed, or not sufficiently independent for the task.

Management consultants offer a range of qualities which are valuable to managers:

Knowledge: Consultants usually specialise in an identified area of business, such as strategy, Total Quality Management, or marketing. They may also practise in a specific industry, such as food processing, utilities, or tourism.

Experience: Most consultants have had experience as managers and this, together with their consulting experience, makes them highly valuable as advisers.

Objectivity: Consultants can bring to your business an objectivity that you may not be able to achieve with your own people.

When should you use a management consultant?

As New Zealand industry and commerce become more competitive, both nationally and internationally, both the business community and the pub sector are faced with the need for better decision-making in a more complex environment. The pace of change, whether in business, technology, society at large, continues to increase.

Sound decision-making calls for adequate information and a balanced view of the issues. Increasingly this requires a wider range of skills and experience. Specialised knowledge becomes more important. In many instances this expertise is not available within the organisation, or it may not warrant long-term acquisition. At times an independent view is needed.

In these circumstances the matter is often best managed by calling on outside assistance. Management consultants offer professional services specifically designed to meet this need. By using a consultant, the organisation is provided with additional resources. If they are selected and used well, they will make a significant contribution to the organisation's performance.

Good reasons for using management consultants

1. To help instigate and manage change

The business environment is in a constant state of change and only those on the alert for favourable opportunities will stay ahead of the pack. Because change can be threatening to many people, the change process has to be planned and managed carefully. A consultant can help.

2. To help resolve issues

Business issues can be very complex. Often a whole range of diverse but interrelated factors are involved in an issue, and the web of connections may not be readily apparent to the untrained person.

Consultants can help you deal with questions such as these:

• How do we build staff morale?
• How do we overcome behavioural problems to work?
• What computer system is needed to support the business?
• How do we introduce quality assurance programmes?
• How do we turn around a fall in sales?
• Why has there been a decline in productivity?
• How do we overcome our cash-flow crisis?
• What strategic direction should our information systems take?

3. To identify opportunities

Management Consultants can help identify favourable opportunities for your business:

• What new product lines should we adopt?
• What is the best way to improve our productivity?
• What new production techniques should we adopt?
• How do we maximise the benefits of the effective integration of people and technology?
• How do we identify key success factors for penetrating overseas markets?
• How can we become internationally competitive?

4. To help with strategic and business planning

Planning is an essential function in the running of any business and is the driving force behind competitive workplace change. Any planning activity should take into consideration certain factors, such as your competitors' and your company's strengths and weaknesses. Consultants can help you identify your strategic advantages, using the latest management techniques, to realise the full potential of your business.

5. Special functions

Consultants can provide you with an objective and independent opinion.

Two examples:

• An impartial appraisal of a proposal by a consultant with no vested interest in your organisation can lend credibility to a proposal or, conversely, demonstrate the difficulties likely to eventuate.
• A consultant can be employed to investigate sensitive issues which, if handled internally, could cause tension between staff.

Steps to choose a management consultant

1. Define the task and prepare the Terms of Reference

Before talking to a consultant it is essential that you define the job as you see it, preferably in writing. This scoping document, known as the Terms of Reference, is essential both to clarify your needs and also to select the most appropriate consultant.

The Terms of Reference should cover:

• The purpose of the assignment
• The tasks to be carried out
• The outcome expected
• The role that the consultant will play
• The scope of the assignment
  Do you need a strategic plan outlining the options, or a business plan detailing how to implement them?
• The budget range
  While it is not essential, giving an indicative budget will enable the consultant to prepare a relevant and therefore useful proposal.
• Change management
  During the assignment, evidence may come to light that necessitates a change in direction. There should be some flexibility to amend the scope, and probably the price of the contract, mid-stream. Most assignments are let on a fixed-price basis.
• The timetable
  State when the assignment should be completed, and when critical milestones should be achieved.
• The criteria for selection
  What are the qualities you are seeking in the consultant? Develop a weighting system of the attributes you require to rank the candidates and to select the most appropriate consultant.

2. Short-list the most suitable consultants

Before issuing the Terms of Reference and requesting a proposal, you should develop a short-list of consulting firms. You must assess which factors are important and select accordingly. Many consultancy assignments
are based on personal relationships, but you should ask these questions:

• How long has the firm been in business?
• What is the scale of its operations?
• Does it have the experience, competence, and resources to handle your assignment?
• What calibre of staff does it employ? How many are CMC-qualified?
• What are the credentials and reputation of the individuals proposed
• What sort of training does it give its staff?
• Is it familiar with the best international management practices and experienced in adapting these to local requirements?
• Can it introduce changes smoothly and effectively?
• What kind of clients has it served?
• What do its clients say about it?
• What level of indemnity insurance does the firm carry?

After the short-list has been drawn up, invite the short-listed firms to submit a proposal based on the Terms of Reference. Each firm will require time with you to discuss the task before they submit their proposal. It is important that this process be impartial.

3. Review the proposals

A proposal should set out the problem or area under consideration in sufficient detail to establish:

• The diagnostic approach
• The necessary work programme
• The expected benefits
• Estimates of time and cost
• The qualifications of the consultant who will undertake the work

The proposal should indicate whether the consultant has understood the situation and whether the approach is appropriate and represents a sound business proposition. You must assure yourself that the firm has the capability to see the project through to a satisfactory conclusion.

4. Select the right consultant

The proposal will nominate the individual consultant or consultants who will undertake the work. The individuals making up the consulting ream will be critical to the assignment success. It is important that you interview them prior to selection.

Remember that written proposals may not always give an accurate picture of the tenderer's suitability.

Consultants often indicate the methodology the consultant would use if given the work. This can be a valuable source of ideas for you, and at this stage no charge has been made.

In evaluating proposals you should consider:

• The quality of the proposal document
  Has the consultant gone to some effort to prepare it?
• The content of the proposal
  Does it address the Terms of Reference? Are the ideas presented both interesting and constructive?
• The methodology for the assignment
• Is it feasible? Is there a reference to a previous assignment?
  References for contact and verification of previous work
  The suitability of the person or team to carry out the task
  Ensure that the person or people promised will actually do the work, and that they are compatible with you and your team; and similarly for subcontracted consultants where they are to play a significant role. In evaluating the individuals the important factors are: qualifications and track record experience in your particular industry and specialty reference checks with previous clients personality fit with your organisation.
• The time-frame Is it practical and achievable?
• The fee.
  Do not immediately discard proposals on cost alone. There may be room for negotiation on a very good but highly priced proposal.

5. Engage the consultant

In engaging a consultant you are entering into a commercial contract in much the same way as if you were purchasing goods or services.

There are several ways of expressing the contract. You may draw up a commercial contract specifically for the purpose, in which case the Terms of Reference would form a part of the contract. But the most common means of expressing the contract is by acceptance of the consultant's proposal. Most consulting firms have a standard Terms of Business document that could constitute a default contract, but you need to be sure that you are comfortable with its contents.

Two points should be noted:

• The Terms of Reference principally describes the task to be done, and may not cover all the legal aspects
• In the absence of formal documentation such as a Terms of Business document, any dispute would have to be resolved on the basis of the Terms of Reference alone. Inadequate documentation may make resolution difficult, If in doubt, consult your legal adviser.

Regardless of the manner in which the contract is expressed, the items which ought to be considered for inclusion are:

• The Terms of Reference
• The fee and payment arrangements
• The time-frame for completion of the job, achievement of milestones, and review dates
• The circumstances under which the contract may be amended or terminated
• Copyright issues, that is, the title and ownership of material, including intellectual property
• Confidentiality aspects
• The consultant's use of your people and resources
• Professional liability

It is worth remembering that the purchase of a professional service is finalised only when the assignment is completed to the satisfaction of both parties. Engaging a consultant is only the beginning of the process.

6. Manage the assignment to get the best results

Both parties have a big stake in the success of the project. You want to ensure that your organisarion gets value for money. The consulting firm wants to do an excellent job that will further enhance its reputation.

To manage the assignment through to a successful conclusion, ensure that:

• There are clear, written Terms of Reference which have been agreed to by all parties before the work is begun.
• Any changes to the Terms of Reference agreed during the project are recorded in writing, so both parties always know clearly what is to be done and what is expected of them.
• A senior member of management (sometimes aided by a steering committee) is responsible for the project.
• You provide adequate facilities and staff to work with the consultant, make the necessary decisions within a reasonable time, brief all staff likely to be affected, and generally support the assignment through to a successful conclusion.
• The executive responsible for the project agrees a reporting procedure with the consultant so the project is under systematic, regular review and timely action can be taken to resolve any problems.

Some time after completion, the project should be evaluated in terms of the results achieved, the lessons learned, and the scope for extending the benefits to the other parts of the organisation. When the fundamental reason for using consultants is to adapt to change, success also means having stimulated your staff to accept and adopt the new ideas and approaches.

What fees can you expect to pay?

Consultants' charges usually comprise two parts: a professional fee, and any direct out-of-pocket expenses associated with the project.

Fees are generally based on the time spent by the consultant on the project. In some cases the total fee quoted is an estimate because the project, being a joint effort by the client and the consultant, is nor completely under the consultant's control. Moreover, the exact amount of work cannot always be quantified at the beginning. In some cases the consultant can quote a fixed charge, or a fixed basis of charging for the work done.

To ensure that the comparison of consultants' fees does not overwhelm the selection process, you may ask for proposals to be submitted in two parts, that is, with the fee component in a separate sealed envelope. This enables you to review the essential merits of a proposal without cost considerations clouding the issue.

Management consulting fees are similar to those of other professional firms which employ staff of high calibre. Consulting firms have to provide attractive remuneration for top-level staff, as well as substantial research, training, and information services to ensure that their capabilities are equal to the best international standards.

It is not possible to provide high-quality professional services at a low fee. Experience shows that apparently cheap professional services very seldom give value for money. An unsuccessful consulting project is expensive at any price.

How a client can optimise value from a management consultant 

Check the article, 'How to Get Value from a Management Consultant' by E. Michael Shays, CMC FMIC on the EMS Network website at http://www.emsnetwork.com/Articles/HowtoGetValue.htm.  Michael is an exceptionally capable consultant as well as being Executive Director of ICMCI.