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Better managing leadership issues

IN today’s business environment, management consultants must be able to demonstrate genuine value and return on investment for their clients in order to secure business contracts, according to Equal Consulting Group chief executive officer Leon Michailidis.

“Traditionally the industry was focused on output, producing a report or producing some sort of program that effects organisational change,” Mr Michailidis said.

“But now I think that clients are looking for more meaningful results, not just a report or organisational change, but to ensure that it actually achieves some sort of strategic advantage or strategic value.

“It is not only providing better value for money, but also demonstrating it as well.”

Recent work undertaken by the Equal Consulting Group has required the group to virtually underwrite the net value to the client versus the expenditure or investment made in the consultancy work to be completed, Mr Michalidis told WA Business News.

Mr Michailidis believes the reason businesses are demanding a return on investment largely stems from the ambiguous term ‘consultant’. As there were no formal qualifications associated with being a consultant, he said, as such, businesses had become wary about contracting out work to companies or people before ensuring that they were able to deliver what was required.

MODAL organisational development manager Peter James echoed Mr Michailidis’s comments, suggesting the economic rationalism that occurred within businesses during the 1990s has led to the situation where management consultants have to show a significant return on investment in order to prove the worth of their services.

“Smart businesses these days are asking for some sort of measurement process up front, and that does not always mean in terms of finance,” Mr James said.

“It can be in terms of anything, ranging from absenteeism, which directly affects productivity, to safety issues, to morale, to productivity improvement.

“It is not just ‘show me the dollars’, it’s a matter of having a look at the other drivers in business and if we can improve those, we know that it will eventually lead to the dollars flowing in for both businesses.”

Mr James believes the industry has been affected by many businesses viewing management consultants and their products as fads, where some products are effective and others simply do not work, and this has led to business focusing on return on investment.

The future for management consultancies, according to Mr James, lies in businesses blending both the humanistic and functional sides of the business, while focusing on training leaders rather than just managers.

“We need to train leaders, so that people are proactive rather than just managers who check and make sure everyone is doing the right thing. We need to train people to lead business into the future,” Mr James said.

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