Engagement Management

Session 9,10

Profit per partner

The importance of leverage (1)

AAA: large, low skill, BPR consultancy BBB: niche, high skill, strategy consultancy

The importance of leverage (2)

AAA: Charge = 400/day, wage = 40k BBB: Charge = 1200/day, wage = 90k Utilisation: 70%
AAA BBB 30,660,000 7,200,000 23,460,000 76.5% 383,250 4

Income (Fees) Costs (Wages) Profit Margin Productivity Leverage

10,200,000 3,600,000 6,620,000 64.8% 113,556 9

Profit Per Partner

662,000

1,173,000

Firm Strategy
Private Partnership General HRM Principles Recruitment Selection On-the-job Training Feedback Ownership Linked to professional values and scope given to consultants to interpret the rules. Excellent general skills sought, often with MBA. Based on personal interaction with senior consultants. Based on observation of senior consultants Focused on professional and interpersonal skills. Run by senior consultants. Mostly on personal skills. Owned by partners who buy into their share. Ownership bought back on retirement. Up or out culture frequently forces exit Excellent support through alumni network. Publicly Floated Companies Detailed and formal prescriptions for each type of consultant. Excellent commercial and technical skills sought. Formal selection (e.g. assessment centre) run by HRM function. Based on observation of peers. Focused on technical and analytical skills. Run by HR trainers. Mostly on performance technical and analytical

Widely distributed in publicly traded companies. Ownership maintained until sale of shares. Usually voluntary exit. Limited support at all levels other than partner.

Exit Support for Leavers

CCC: Target Utilisation (2)

Target Utilisation figures

Partner Senior Consultant 260 8 252 45 Annual Leave Sickness Training Management & Admin 40 121 139 53% 131 52% 260 8 252 21 25 77 183 70% 175 69% Consultant 260 8 252 0 0 38 222 85% 214 85%

Total week days Public Holidays TOTAL AVAILABLE DAYS Less:

Utilisation days available UTILISATION RATE (rounded)

CCC: Profit per Partner (3)

CCC Metrics Income (Fees) Before Tax 6,584,500

Costs (consultants wages)

2,150,000
Costs (support staff) Costs (running costs) 125,000 910,000

Net Profit
Margin Productivity Leverage

3,399,500
52% 146,322 8

Profit Per Partner

679,900

CCC: Total income per grade (4)

Chargeable Time Fee Rate Income Generated Total Income Grade Per

Partner

139

1,500

196500 982,500

Senior Consultant

183

1,000

183000

1,830,000

Consultant

222

600

133200
3,996,000

CCC: Profit related to utilisation rate (5)

Consultants

Total days

Utilisation

Actual Days

Income ()

Costs ()

Profit ()

45 45 45

252 252 252

10%

25

894,726

3,185,000

2,290,274

20%
30%

50
76

1,789,452
2,684,178

3,185,000
3,185,000

-
-

1,395,548
500,822

45
45

252
252

40%
50% 60% 70%

101
126 151 176

3,578,904
4,473,630 5,368,356 6,263,082

3,185,000
3,185,000 3,185,000 3,185,000

393,904
1,288,630 2,183,356 3,078,082

45
45

252
252

Managing Culture
Socialisation & Education Procedures and Rules Individuals Recruitment from top business schools; Up or out promotion criteria; Appraisals. Team-working rules; Knowledge management processes; Team targets. Organisational Structure; Business Processes; Partnership agreements; Legal reporting requirements. Induction programme; Professional associations; Partner mentoring. Team review meetings; After-work drinks; Away days; Alumni networks. Industry newsletters; Benchmarking reports; Market research; Corporate PR. Clothing; First in, last out; Professional conduct. Communal work space; Team branding. Symbols and Rituals

Teams

Organisations

Myths and stories,;Image of the CEO; Logos and name. Membership of professional associations.

Knowledge Management

What does KM mean in consultancies?

KM Strategies
Codification Personalisation Creative people-based problem solving Customised and personalised solutions though personal expertise. Generate high profit margins. People People. Use personal interactions to create bespoke knowledge solutions. Invest modestly in IT. Focus on connecting people. Low leverage ratio. Hire creative, expert problemsolvers who can tolerate ambiguity. McKinsey

Strategy Economic Model Knowledge Strategy IT Strategy HR Strategy Examples

Commodification and re-use using IT Invest once in knowledge asset and re-use many times. Generate large revenues. People Documents. Use IT to codify, store and share knowledge assets. Invest heavily in IT. Focus on commodification and sharing. High leverage ratio. Recruit graduates who can store and re-use commodified solutions. Accenture

Thank You
12