How Corporate Governance Impacts Credit Risk
Corporate governance can have a huge impact on credit risk. This is because corporate governance is the set of rules which is used to manage the interests of various stakeholders in the company. However, many times these interests can be incompatible with one another. For instance, when a company is approaching bankruptcy, the interests of […]
The Need for Change Management
In the contemporary business environment, organizations fight the battle of competition by building their adaptive capabilities and preparedness for coping against the pressures of change. In the present scenario, top management give a lot of importance to change management process and the need for being flexible as well as adaptable for tackling the growing environmental […]
Key Risk Indicators
The fourth and last step for risk management suggested by the Bank of International Settlements in its Basel Norms is the continuous monitoring of key risk indicators. Key risk indicators are important metrics that can track the business environment and internal control factors. They can help an organization keep track of a rapidly changing internal […]
Leadership Development Plan
Leadership is a continually evolving skill. By learning more about yourself, your strengths and weaknesses, you can determine your developmental needs and gain a bright idea about the areas in which you need to improve. For encouraging both personal and professional growth of an individual, tailored leadership plans can be developed. Customized plans help in […]
Staff Motivation – Motivation Tips for Employees
Employees are the building blocks of an organization. Organizational success depends on the collective efforts of the employees. The employees will collectively contribute to organizational growth when they are motivated. Below mentioned are some tips for motivating the staff/employees in an organization: Evaluate yourself- In order to motivate, encourage and control your staff’s behaviour, it […]
Many organizations take the help of external consultants in identifying, recommending and implementing change. This article looks at whether there is indeed a case to be made for external consultants to help with the change management programs.
If we look at the reasons why organizations rope in external consultants like McKinsey, BCG and Booze Allen group (among others) we find that they do so mainly because they need an independent and objective perspective on what needs to be changed and how it should be achieved.
For instance, companies like Jaguar, BP and Shell have all relied on external consultants to help them with their change management programs. And, they have been relatively successful in their efforts as can be seen in the way they have transformed themselves in the marketplace.
However, there have been notable failures as well. For instance, the Parry’s group failed spectacularly in its efforts to change its business processes and outlook towards the market. Despite taking the help of external consultants, the company could not transform itself.
So, what is that differentiates whether external consultants succeed or fail to help companies in their change management programs. First, there needs to be cooperation with the consultant from the entire top management and not merely the CEO or a few directors/managers. The point is that the external consultants must not fall prey to the office politics and hence the entire leadership must stand solidly behind them.
Next, there cannot be any information that is withheld from the external consultants. The key to change is that complete information about the organization and its strengths and most importantly, its flaws must be visible and so the external consultants must have the full cooperation of the people who are responsible for implementing their recommendations.
In fact, one of the reasons the CEO or the Board of Directors often take the help of consultants is that they need an objective view of the situation which is unbiased and not tinted by the prejudiced perspective of politicking employees.
The other aspect that makes organizations rely on external consultants is because these consultants have experience in dealing with companies in similar industries and hence can apply their expertise and experience to recommend specific changes.
However, it is the case that consultants can get too close to the management to the point where they are compromised because of their proximity to the powers that be.
Some examples of this include the Arthur Anderson and Enron saga where both the consultants (Anderson Consulting) and Enron became partners in swindling the employees and the people. Closer home, the way in which PWC or Price Waterhouse Coopers was a partner to the Satyam scandal shows that there are downsides to having consultants guide the companies.
In conclusion, consultants bring a fresh perspective to dealing with organizational issues and hence are vital to the change management program. However, there is a need to observe professional rules of conduct and there must be ethical behavior from both sides of the equation.
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