Cable Corporation of India (CCI), the Rs 223 crore Hiten Khatau company has initiated a business process re-engineering exercise. This, when competition from global majors, Asea Brown Boveri and Sumitomo, threatens its home base. It has hired Andersen Consulting for the job. It has also got Om Kaul, a well-known Indian consultant, to initiate process changes to transform its employees' mindset and create a more flexible, customer-oriented organisation.
As the business environment throws up new challenges, companies are looking at management consultants to guide them into new markets and build up skills to combat competition. All this doesn't come cheap. Companies, on an average, pay close to Rs 7000 to Rs 10,000 a day for moderately known Indian consultants. Those who are well known charge around Rs 20,000 a day. For foreign consultants,the fee is steeper at around $7000 a day.
Naturally then, most companies are taking a close look at the services they get. They are trying to measure the benefits against outlays. Says K K Nohria, managing director, Crompton Greaves, Consultants always bring some new directions. They learn 90 per cent from us because they tailor programmes to our requirements. But even if you get one or two ideas, it is good enough.
And being outsiders, they are in a position to give an balanced ringside view. Sometimes, we are insular and emotional. Consultants lend a touch of objectivity to your plans, says Harsh Goenka, vice chairman of the Rs 6,100 crore RPG Enterprise.
But a lot depends on the consultant the company chooses. G Kathuria, chairman and managing director, Bank of India (BOI), says, First, you have to identify the objectives for which you need expertise. Very often, this is not clearly defined, so a company is unable to judge the type of consultant it requires. This means that the onus of extracting the best from consultants rests squarely with the companies.
As Kalyan Chakravarti, president, CCI, says, A consultant's report is only as good as the feedback and inputs you give him. So CCI appointed a cross-functional steering committee, which provided feedback to the Andersen team doing its BPR programme. In another instance, NIIT pinned down its problems internally before approaching a consultant. Points out Harsh Mariwala, managing director of the Rs 348 crore consumer products company, Marico, How to get the maximum out of a consultant is also a skill.
Once the need is identified, companies use a mix of word-of-mouth enquiry and presentations to choose the right change agent. BOI's Kathuria appraised around ten consultants on the basis of their presentations on the bank's problem areas. The job eventually went to the Coopers & Lybrand's (C&L) team from Australia, which has made recommendations on five modules: strategy, structure, HRD, MIS and IT.
Often, the company and the consulting organisation strike a chord through one individual, who then spearheads the entire operation. Sometimes, the consultant also has to be convinced that the company is a worthy client. Marico's Mariwala says he has sold his company to consultants occasionally.
Consultancy needs change as an organisation evolves and matures. For instance, Marico has moved from using consultants to fill skill gaps in the early years to evolving overall strategy. Apart from using consultants to hone personnel skills, it has depended on them for process change. Mrityunjay Athreya helped the company define its value strategy and Andersen Consulting did its IT plan while C&L did a salary benchmarking study. Now, Marico is looking at overseas marketing experts like Jagdish Seth and Ram Charan. Their global expertise, feels Mariwala, will be an asset.
Nohria is not particular about his consultants' pedigree though. For him, what matters is expertise and experience. With global consultancy firms, the parents have the expertise but it doesn't necessarily mean that the children will also be intelligent, he points out.
The trend is also to use more than one consultant. While C&L did restructuring at BOI, the Hyderabad-based Administrative Staff College of India has been roped in for long-term planning. And the National Institute of Bank Management, Pune, is devising a new authority delegation structure.
Some companies even use multiple consultants for the same need. Crompton Greaves has used the Pittsburgh-headquartered Westinghouse Productivity and Quality and Andersen Consulting's Indian arm for BPR. And both Eicher and Qimpro have implemented TQM at Crompton, albeit in different divisions.
Consultants offer solutions, but companies don't necessarily expect them to implement them. Says Kathuria, While you can take their advice, the implementation itself must be done internally. In some areas like IT, however, consultants are involved in the actual implementation. At CCI, Andersen's consultants are on call all the time and attend steering committee meetings to review the implementation programme.
When KPMG Peat Marwick guided IDBI's entry into the retail banking segment, it was involved right from design and strategy to operations. It even helped it to set up the first two branches. As we progressed, professionals from the bank phased out the consultants and starting owning responsibility, says Ashvin Parekh, director, KPMG.
At times, the learning experience can misfire when clients take consultants at face value. If a consultant gives ten ideas, you should be able to pick the two good ideas from there, says Mariwala. If you can do that, the benefits are immense. Says Kathuria, In a service industry, you see the benefits over a period of time in the shape of faster decision-making and more focused attention on certain niches. But the ultimate benefit must be on the bottomline. That process has begun at BOI. For instance, the layers have been reduced from six to just two in corporate finance, thereby increasing response time.
The benefits can be easily quantified in operational areas than in processes. That's because operational changes could result in cost and time savings. Processes, hinged on people issues, throw up a lot of intangibles. For instance, at Crompton Greaves, by looking at the sequencing of functions, Andersen helped the company reduce lead time by 30 per cent in the procurement cycle. And Westinghouse's recommendations enabled it to shrink manufacturing lead time by 100 per cent. While CCI is saving Rs one crore per annum on materials after the BPR programme, the average delivery time has also been reduced by three weeks.
The going is not all rosy though. Sometimes a dream solution can turn sour. For instance, CCI found that the methodology used by a marketing consultant to study entry into a new business area was flawed. Or at Crompton Greaves, the consultant hired to implement a Manufacturers Resource Programme FAPR III did not live up to expectations. Or when consultants fly out high-powered colleagues from overseas for presentations and then put junior managers on the job.
Says leading management consultant Mrityunjay Athreya, The sourness can arise from inadequate continuity and contact with the consultant, lack of continuity of the top management, the fickle priorities of the promoter, funds crunch or even environmental discontinuities like government policy reversals, recession and the like.
Moreover, the benefits can come only if the organisation is willing to learn. Says Nohria, We are a better organisation not because of consultants but because our people want to learn from others. That desire is important.
The rest must come from the consultant. Says Mariwala, A good management consultant is one who ensures that he becomes redundant to an organisation by passing on the skills.
Additional inputs by Vinay Pandey
