Management Consultancies are a relative easy to initiate business to set up since they are knowledge based and do not require expensive tools and specialist equipment. Forming such a company requires only a base, normal office equipment such as laptops, printers, telephones, and internet routers, and competent employees to apply their knowledge to the particular business niche. However, just because it is relatively easy to form any kind of management consultancy – while appreciating that there is a cost involved with setting up any company – it does not simply follow that because a person can, they should.
Creating a company takes time, drive, and of course, finance, and should only be considered by those who are ready to do so. There are three signs that someone is ready to set up any kind of management consultancy:
- They have the essential background, experience, and qualifications in their field, and can consider themselves an expert.
- They have developed a rich network of peers, like-minded individuals, and potential clients who they can call upon to help the business grow.
- They have a stable financial background and have at least some knowledge of business management.
With those elements in place, if a person has the will, they are likely to be able to launch and run a successful company, but there are still plenty to think about, and that is where a mentor is invaluable.
In setting up a new business, one of the most fundamental decisions is what kind of business it will be. There are a number of different options available, ranging from sole proprietorship, through a partnership, and onto a small corporation or even a limited company (Gov. UK, 2015).
This is the easiest type of company to set up and run, and allows easy accounting and tax interpretation, but can be seen as less professional than some other business types. The sole trader business gives the owner full control over business decisions and are easy to set up and run. They also give the owner full control of the profits but they are not a separate business entity, divided from the owner, and the owner is liable for any debts or liability actions mounted against the company.
A partnership is also a popular business structure among smaller companies and form when two or more individuals decide to share a business and become co-owners. A partnership is owned in the same way as a sole trader company, but the liability is spread over the two or more people who form the partnership.
This form of business greatly increases a company’s credibility and makes it the kind of professional entity that other business’s look to work with. The main issue with a limited company is the very formal procedures that are used to form and control them, and the need for a professional accountant to help keep on top of what can be complex spend and investment.
Because a limited company is detached from those who own and run it, there is only a limited liability should it go wrong.
Because of its professional connotations and ability to attract investment, it is suggested that the new project management company starts as a limited company, with Charles as the sole shareholder.
Management is fundamentally a people-orientated venture that is used to organise a team, and accomplish aims for that team and a wider company in general (Robbins and Judge 2014). However, over recent years, there has been focus on what Deming (1993) identified as the seven deadly diseases. These are:
- Lack of constancy of purpose
- Emphasis on short-term profits
- Evaluation by performance, merit rating, or annual review of performance
- Mobility of management
- Running a company on visible figures alone
- Neglecting long-range planning
- Relying on quality inspection rather than improving product quality
Deming countered all of these by identifying a system that countered all of these failures by devising what has become known as Total Quality Management, with the intention of helping the management of better products or services, creating product uniformity, improving product testing and, ultimately, greater sales (Stoner et al, 2003).
Following the reimaging of management in light of Deming’s intervention, focus has shifted from the simple organisation of people to a process of producing and maintaining an environment that allows the efficient accomplishment of predetermined and selected aims. These are achieved by managers using what have been identified as the four functions of management:
Planning: Identifying the steps needed to achieve a predetermined goal.
Organising: Bringing together all the resources needed to achieve the planned goals.
Leading: Motivating those on the team to achieve the set goals.
Controlling: Ensuring that team members stay on track through open and honest reporting from and to the team.
Achieving these goals means that managers must be adept at organisation skills and have the trust of both their own team and senior management. The goal of all managers is to deliver their assigned tasks on time and to an agreed budget, while ensuring that their team members are fulfilled and with due consideration to quality of product or service. Furthermore, a good manager will enact their assigned tasks using the minimum of resources, thereby maximising profitability for the company while satisfying the customer.
The effectiveness of a manager depends greatly on their style and how they interact with their team (Adeniyi, 2007). The three fundamental leadership styles are identified as:
- Autocratic leader. This manager type tends to instruct the team on what needs to be achieved without consultation, and expects the team to deliver as required.
- Democratic Leader. This manager seeks the input of the team, and discusses the way forward with them, making joint decisions as they arise.
- Laissez-faire Leader. The opposite of the autocratic leader, the Laissez-faire manager supplies resources but otherwise allows the team to function almost autonomously.
Due to the flexible yet well-defined nature of project management, it is suggested that Charles adopt a democratic leadership style with his sub-managers, since they will have customer-set goals and only really require resources and to feedback.
Organisational culture has been likened to the personality of the business, and the overriding feature that defines how a company works and its interactions with suppliers, employees, and customers (Alversson, 2013). There are several types of organisational culture (Drafke & Murtaugh, 2009), of which the main ones are:
- Clan culture. These are family like and tend to focus on mentoring, nurturing, and creating a workforce that feels comfortable and works well together.
- Power Culture. Key to this is firm control by a few high ranking members, and tends to be found in either smaller companies or discrete sections of larger companies, since it would be difficult to run a large company with such a culture. Key elements mean that decisions can be made quickly making the culture highly reactive.
- Adhocracy culture. Sometimes referred to as forward looking cultures, these tend to be entrepreneurial and dynamic, and promote an air of risk taking and innovation. Companies with this culture tend to pride themselves on being market leaders and attempt to do something new ahead of possible competitors and the market in general.
- Role Culture. This type focusses on assigning individuals specific roles with a certain job description and does not allow much scope to step out of that role. They tend to be rigid and are renowned for being very task-focused. Cultures such as this are found in companies that specialise in high technology or businesses where roles are determined by knowledge, making it difficult or someone without specific skills to be able to step into certain roles.
- Market culture. The market culture companies are highly results-driven organisations that concentrate on achievement and completing the task in hand.
- Hierarchical Culture. These are high structured and controlled businesses that concentrate on creating an efficient company that does the right thing. They tend to be run with a well-defined management structure which feeds information down through it and accepts reporting back through the same lines.
The project management company planned by Charles will start with a smaller number of employees but they will have highly specialised tasks to carry out – such as detailed project management – therefore the Role culture is likely to be the best fit for his business. Since there is only a few employees to start with, the feeding out of information can be handled via team meetings, making communications easy and fluid.
Business perception relates to the way in which people – either employees, competitors, or customers – relate to a company, which can affect how they interact with that company (Schnaky, 2008). How a company is perceived may impact on how others work with the company which in turn can affect their long-term profitability and their ability to operate in the market.
This report has outlined some of the areas that Charles, the business owner, should examine in order to establish a successful company and gives indication of the type of culture he should aim for. However, rather than simply indication certain aspects of the business, it becomes important to define particular strategic objectives for Charles to establish.
It has been suggested in section 2.4 that Charles strongly consider establishing his business as a limited company, as that will give him extra credibility in the business world, and he is likely to be able to attract the right calibre of technical staff to
Charles’ company is expected to follow a specific pathway to success, built on his company’s specialist knowledge of project management and innovative work systems. This means that the corporate strategy needs to be based on a culture of innovation and the highly-desirable skillset that his employees have. The structure of a corporate strategy built on innovation is shown in figure 1, below.
Figure 1: Charles’ Corporate Strategy.
With the company firmly seated in the high-skills, technology, and innovative work streams, Charles can build up a suitable processes that reflect the kind of business that thrives in highly specialist markets such as detailed project management. The second layer of the strategy is based on the fundamental processes that the company will employ every day to deliver customer excellence. These processes will encompass innovation in deliverables in which the project management element will keep abreast with the current practices in the field, and project management practitioners kept fully trained as appropriate. Operations process will dictate how the technical staff will interact with customers, while business growth will be the focus of sales and marketing processes.
The goal of the sales and market department will be to grow the visibility of the company and create a customer experience that entices return custom through a positive experience in all dealings with the company. Customer feedback will further allow the company to innovate and to modify their services based on what customers actually want rather than their own perception of what customers need. By delivering the correct product and service, Charles’ company can experience substantial growth through returning customers as well as picking up new business through the correct marketing strategy and customer recommendations.
With the correct strategy in place, the management becomes easy since all members of the company understand what is required of them and departments that they deal with to streamline all operations. As already stated, it is suggested that Charles adopt a Role culture into the company so that people are aware of what they need to achieve within their work sphere, but are able to take direction on other tasks as necessary. This means that self-management is carried out to the greater extent, with Charles and his senior management team – which is expected to comprise himself as chairman, a Finance Director, and a Sales//Operations Director – offering overall direction for the company, leaving day to day management to area managers and individuals, empowering them to stretch goals (Vandeveer and Menefee, 2010). This will add a flexibility to the company that is attractive to potential customers, which, together with the obvious innovative ethos of the company, will help boost sales enquiries.
The management system and strategy set out for this company does not have to be binding, and with future growth, it may be necessary to consider different strategies and management styles that will be more befitting the organisation as it grows. This means that Charles will need to assess the company on a regular basis to assess whether a new direction in strategy and style may be of greater benefit.
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