The Role of Government in Developing the Management Consulting Industry in Countries

Abstract

Nowadays the rapid change of competitive world driving many companies and organizations to find a way to well- developing their process, improving their plans and programs and increasing capabilities and enhancing their performance to have more effective result and benefits in the business activities. Management consultancy industry is a major part influences in the business activities of any kind of organization, the phenomenon of management consulting can help the organization to improve their business through the effectively analysing their programs for improvement the quality and quantity performance of process, with wide range of new designs and methods such as re- engineering, growth share market, redeveloping the system and process, cost reduction, optimization or core competencies. For achieving this aim the government as a key element in country can help and plays a vital role in improving the management consultancy industry. Government as the role of a manager and trustee can be a responsible to create and increase the management consulting institutions with the aim of effective national and international development of the country and consulting industry development. The academic note tries to characterize the need and importance of management consulting as an industry in any country and role and impact of governments in consulting firms’ transactions and elucidate the challenge its face during this development process.

 

JEL Classification: L1, M38, O43, O57

 

Table of contents

Introduction

Conclusions

 

Introduction

Government as the role of a manager and trustee can be responsible to create and increase the management consulting institutions in the country with the aim of effective national development of the country and consulting industry improvement.

Government can play the important role by providing three basic elements: Infrastructure, create a market and systemizing for better preparation the environment and conditions of increasing the management consulting institutions in country and between companies and also to help well done developing the consulting industry.

The following article is an introduction to invite to reflection and a starting point for reaching an agreement on a frame and model for the important role of government in the development of the management consulting industry in the country.

Government and management consulting has a multilateral mutual relationship. (Corcoran, Jan & McLean. 1998) As consultants can be an effective help for development the government, in this regard the governments also can playing two essential roles:

•    At the role of a manager;

•    At the role of a trustee the country’s development.

At the countries, especially with the democratic government system, the consulting industry is the largest labor market in a country. According to Statistical Center of Iran, in (Iran) more than 70 percent of organizations are governmental.

Furthermore, the distribution of resources in both the public and private sectors is not adequate and equal.

For example, 30 percent of the workforce in the governmental organizations constitutes of the educated people, while seeing this ratio in private companies is 3 three percent.

So, we can say in the country (such as Iran) with regard to the shape and form of government, the governmental organizations, nearly constitute all the sections of the management consulting market.

The government in the role of trustee it has a fundamental and significant responsibility for the development of the management consulting system in the country, although this role of government has been less in attention.

The basic question is what should the government do to play such a role more effective?! In other words, what are the expectations of management consultants of the government for develops the management consulting in the country?

Objectives and methodologies:

Here in this descriptive article tried to answer to this fundamental question and regarding the main objectives of this research for understanding better the perception and expectation of consulting industry about the government effectiveness in the country and to study the relationship between the consulting performance and its development with the government interactions, the concentration is based of Iranian’s consultants organization because due to the lack of literature on consulting industry in middle east countries and limited understanding of the role of government in the countries with different and special kind of culture and organizational climate at developing the consultants’ industry, the models and samples chosen from Iran.

The methodology for gathering the following data and information provided with the help and using the questioners, interviews and also survey between potential consultant organization and some secondary data and library source also to assess the reliability and validation of the questionnaire the content method used.

In this method the questions were designed to correspond to the research assumptions. And then these questions reviewed and reformed by the supervisor.

At end for analyzing the conceptual hypothesis of this research the data was analyzed by descriptive analysis.

The role of governments in developing the capacity of management consulting in the country.

Government for the sake of responsibility and mission of the national development will inevitably play a significant role and important impact for the management consulting development.

Statistics results indicate the significant fact, which there is a direct relation between country development and management consulting development.

The amount of growth in the global management consultant’s market, depending on the inclusion scope of the market, it can estimate between 120 to 170 billion dollars.

As it can be seen in Figure (1) the distribution of management consulting market accounted for about two-thirds of this amount, in the United States and Western Europe and the rest of countries have only included one-third of the market.t

The growth rate of management consulting market is high rate in developing countries, these countries mainly in Central and Eastern Europe, Asia-Pacific, Latin America and Africa but the market growth rate in developed countries is low and saturated.

The importance of building and increasing the capacity of management consulting in national development is to the extent that, the governments which they see the development in consulting as the important issues beyond establishes the dams, factories and road for them, for this development aim which they consider it as the human-centered process, they try to impalement the strategies of increasing the capacity at the software, programs and intellectual level and consider it as a strategy decision for national development and management consultant development.

The proceedings of Eastern European countries in this context at the late 80’s since the regime changed are a clear example in this regard. These countries to overcome and compensate for the bygone lagged in the development process and rapid national development in the country – which is a major issue of concern for the Western Europe and the United Nations – alongside the privatization, they placed on the issues of developing management consulting capacity as a major strategy for efficiency development on their agenda and plans.

The basis of this action, a belief in the principle that a privatization alone cannot increase organizational efficiency and management consultants should come as evolution agents to support managers.

Japan Productivity Center for support of investments carried out in Eastern Europe so far Japan has established subsidiaries in these countries.

Level expectations of government.

To create a management consulting and development institutions in the country should create conditions conducive to thought and not adopt one of two particular decisions. Singer (American philosopher) says: acorn is not a result of an oak tree, but it is a result of conditions which a tree is one of the necessary factors to create those conditions. (McLachlan, R. D. 2000) Collections of the factors that create favourable conditions for the development of the counselling system in the country are at three levels:

-     Create market;

-     Infrastructures;

-     Systemising.

Each of these levels is a prerequisite for creating the next level. In other words, we must first understand and attention to the development of the market consultancy, consultation is the kind of service that demand for it, would not exist under any circumstances.

The demand function needs the circumstances, which is the government responsible to create it. (McLachlan, R. D. 2000) In the case of market development, the consultant development in the next level needs to do infrastructure to by this action create a field for growth and development the management consultant.

In the third level, the government has responsibility and tasks for creating favourable and healthy conditions for proceed with the function and process of management consulting. So, expectation levels of the government can be in shown the form of a pyramid- shaped in three levels as below:

 

1) Create market

Management Consulting, like any other business management needs demand, for their development, government as the largest manager in the management consulting and national development in the country, consequently, can play a key role in deepening developing and expanding the market for management consultants.

At this level, the government provided the conditions, which under these conditions, will provide the opportunities for consultancy work in the country.

The result of this preparation is creating a vision and effective efforts of all agents’ government in alignment with it.

The following are two essential factors in creating and developing the management consulting market and creation and supply of them are the government duty.

A) Stability: One of the basic conditions for survival and life counselling is the stability of the political and economic situation in the country. Although instability and uncertainty in government policies and decisions are considered a problem for all industries, but management consulting and training is the most of the affected industries, in unstable conditions. Managers in terms of uncertainty will not stop current operations, but they will postpone the start of their development programs.

B) Culture: A comparative study (Peter & Peterson, JULY 1994) indicates that the Iranian managers in their decision-making process rely upon over the public opinion than consulting.

This study examined the decision-making process managers in different countries and the influence of some affecting factors on it, and the result showed the Iranian managers have less trust and believe in using the consulting in their decision-making process, while investigated the use of consultants in decision-making is at the helm of American managers work.

For the demand development and creating job opportunities of management consulting, the government should work and concentrates on culture.

In this connection, two main factors more than any other cultural factors involved in the development of the consulting market:

- Rationalism: The primary and main source of consulting is wisdom. Consulting sells think of others.

Therefore, the consulting demand development has a direct relationship with the valuable thinking and advice for the employer and managers. The role and impact of wisdom are shown at work and assessments and have placed value on thinking in action and not just in words and expression, and rationalism requires the prevention of having any prejudice, luck, and superstition in decisions.

It is the responsibility of the government and its cultural programs and absolutely it is not an easy work and takes time and it is very difficult to be dealt with carefully. Bertrand Russell said “most people would rather die than think and many of them do. (Collins, 2001).

- Variability: One of the major problems of third world countries unprepared and lack of preparation to an adaptation of the present conditions which one of the most important characteristics of this age is the intensity and highly variability. The issue of variability in the organization of such importance that it can be a major index of an organization’s health.

We can see as Motorola Company” 24 times in four years has changed the structure in its organizational system. Compare this with our organizations- Iranian organization- and ministries indicate that there is very low capacity variability, in our organization system.

One of the government tasks for developing the market segment management consulting is to preparations government agencies and more importantly believes their senior managers to accept change and variability. The consultant is an evaluation and transition factor, but if in an environment which the managers run their organizations with controlling and managing the status quo and they think no need to change and assume their organization separate as competition world, therefore will not have a consultant in their system.

 

2) Infrastructure

The government’s role as a supporter can help to create and establish the best conditions under which development of management consulting to respond to the market facilitate. The result of the government’s efforts in this area, to create a platform for developing smoothly consulting institutions in the country.

Government recognition, management consulting as a professional and necessary organization in the country and it can effectively provide its requirements growth in the country’s development. (Christensen, Wang, & Bever, D. 2013)

The constituent elements of this level include:

• Rules and Regulations: The government as an employer and as a trustee of development should reconsider in the existing laws and regulations to develop government agencies as well as it can and create favourable conditions for the management consulting work.

• Infrastructure facilities: The need to provide and access the necessary resources for the development of management consultants such as books, journals, software, fast internet, satellite and participation in international conferences.

• Accuracy and considering the development of consulting in development programs and plans: This issue as one of their objectives should be placed on the agenda of planners to consistently and systematically planning for having an effective counselling, development, holding training courses in universities and forecast state budget use of consultants are examples in this regard.

 

3) Systemizing

After creating market and infrastructures for growth consulting, government plays another role in organizing and systemizing the consultation.

The result of the government and society of consulting effort in this area is to create an intelligent market in which the consultant with employers and the government has a productive and win-win relations and the consultant in the form of a coherent system has a high capacity for problem-solving. (Hagedorn, H.J.1982)

Management consulting industry to be able to operate in the form of a business and career as a community needs to regulate the industry and its environment and on the other hand, requires setting standards, professional ethics and a way to determine the necessary competence in the form of the management consulting system.

A noteworthy point is the sensitivity of the government’s role and its impact on the formation and creation of consultancy in the country.

Government as the major employer and manager is required to regulate the conditions and referral policies, deliver and evaluate the work, coordinated with counselling system to prevent any disorder or chaotic in the system and in the market. The government will be responsible for decision making and create the consistent policies for more effective development of consulting system and help to improve and strengthening the management consulting.

The government should refrain from direct intervention in creation of career system and it's important to leave and pass it for the profession. (Hagedorn, H.J. 1982)

The main 2 factors in the effective role of government at systemizing are policy-making and organizing.

• Policy-making: Role of policy making in strengthening the foundations of management consulting is very important, inconsistent policies and neglects by the state government in their development tasks, is now one of the major causes of backwardness of the consultant’s society in the country.

The following refers to the example of policies that are required by the government for adoption and perform at the systemizing level:

- Don’t competition, government with the private sector;

- The government shouldn’t have any direct intervention in the formation of consultation system;

- Help to make a more competitive market;

- Refrain from the unilateral policies related to the industry.

• Organizing: The government for organizing role required to set the specific reference and organization and also consider the appropriate structure for this organize to coordinate the consultant work and ensure consistent policies are implemented in the same direction and effective sets with government objectives.

Importance comments on the proposed model:

It is necessary to consider the following points for clarifying the proposed model:

1) Referral levels of the pyramid role of government and identified factors in each level aren’t absolutely inseparable and in some cases, a little or too much they overlap each other. (Kuber, M., ur.2002);

2) In article wherever is talking about the consultant, it means institutions and organization consultant, not an individual consultant, (wherever I mean those individuals that have been mentioned);

3) The model has been developed to express the expectations of consulting organizations from the government.

This model is not talking about the consultants who make significant contributions to the development the counselling system. 

In figure (3),identifies the different degree of contribution government and consultant in the different levels;

4)  In figure (4), however, moves from the down of the pyramid to the top of it, a need for interaction and coordination between government and consultant will be more increase.

 

Conclusions

The obtained model of interaction between consultant’s organization and government showed the governments in the development of management consulting not only as a manager in the country, but also in order, with the mission of national development, can play a major and important role.

The tasks and responsibilities of government in this context mentioned and proposed in the form a set factors and conditions that influence on the aim and objectives of management consulting, while all these factors can create favorable conditions for the development and improvement of management consulting in the country.

As it was shown in the pyramid model in figure (5).

All these factors are categorized into three levels, systemizing, infrastructure, create market which obtain and achieve the needs of each level, is a prerequisite and the necessary condition for finding needs of the next level.

Another thing to notice in the pyramid of government’s role in the development of management consultant is that, how much moves from the down of the pyramid to the top of it, the need of interaction between government and consultant will be more increase as it was shown in the figure (4) and its mainly the best response and reason for the need and expectation of consultant industry for better supporting and potential interactions with government.

 

Contributo selezionato da Filodiritto tra quelli pubblicati nei Proceedings “International Conference on Economics and Social Sciences – Challanges and Trends in Economic and Social Sciences Research - 2018”

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Contribution selected by Filodiritto among those published in the Proceedings “International Conference on Economics and Social Sciences – Challanges and Trends in Economic and Social Sciences Research - 2018”

To buy the Proceedings click here:

http://www.filodirittoeditore.com/index.php?route=product/product&path=67&product_id=149