The Management of Companies and Enterprises sector comprises establishments that hold the securities of (or other equity interests in) companies and enterprises for the purpose of owning a controlling interest or influencing management decisions or establishments (except government establishments) that administer, oversee, and manage establishments of the company or enterprise and that normally undertake the strategic or organizational planning and decision making role of the company or enterprise. Establishments that administer, oversee, and manage may hold the securities of the company or enterprise.
Establishments in this sector perform essential activities that are often undertaken, in-house, by establishments in many sectors of the economy. By consolidating the performance of these activities of the enterprise at one establishment, economies of scale are achieved.
The Internet is changing the way companies do business and the kind of consulting they need. Many traditional consulting practices are in danger of becoming less relevant in the Internet Age. The consultants of tomorrow will require different skills than the consultants of today. Many consultancies have some sort of e-business push underway, whether it’s a specific e-biz practice, a special initiative, or just funneling a ton of cash into figuring out all the ways they can use the Internet to help their clients.
A slew of e-business boutique firms have arisen in recent years, including Razorfish, Scient, USWeb/CKS, Viant and Agency.com. Look for these firms to increasingly butt heads with the more traditional consulting firms for Internet-related and eventually, perhaps, general-consulting projects.
To help you understand the consulting landscape, we’ve divided the industry into six different categories: the industry elite, the Big Five, boutiques, information technology (IT) consultancies, human resources specialists and the independents. Most players in the industry can be put into one or more of these different categories.
The rich and famous of the consulting world. These companies focus on providing cutting-edge strategy and operations advice to the top management of large corporations. They generally hire the best candidates from the best undergraduate, MBA and other graduate programs. Slackers need not apply. Players in this group include: Arthur D. Little, A.T. Kearney, Bain & Co., Booz-Allen & Hamilton, the Boston Consulting Group, McKinsey & Co., Mercer Management Consulting and Monitor Co., to name a few.
The consulting operations of the Big Five accounting firms. Although these firms provide some of the same strategy and operations advice as the elite, they tend to put a stronger emphasis on implementation work, particularly in the IT world. The players are Accenture, Deloitte Consulting (part of Deloitte & Touche), Ernst & Young, KPMG and PricewaterhouseCoopers. The Big Five may get out of the consulting business, partly because the SEC is concerned about possible conflicts of interest that could result in overly rosy audits of firms that are consulting clients of the accounting firm performing the audit. The Big Five deny that a conflict of interest problem exists. At any rate, Arthur Andersen is spinning off Accenture, Ernst & Young may sell its consulting business to French consultancy Cap Gemini, and industry observers expect more of the same.
Boutique Firms that specialize along industry or functional lines. Although often smaller, these firms may have top reputations and do the same operations and strategy work the elite firms do, but with more of an industry focus. Representative players include: Advisory Board Company and APM (health care); Corporate Executive Board (cross-company research); CSC Planmetrics (energy and utility industry); Cluster Consulting (telecommunications and the internet); Marakon Associates (strategy), marchFIRST, formerly Mitchell Madison Group (financial and strategy); Oliver Wyman (financial services); MarketBridge, formely Oxford Associates (sales); PRTM (high-tech operations); Strategic Decisions Group (decision analysis), Roland Berger and Partners (strategy and operations); Braun Consulting, formerly Vertex Partners (strategy).
Information technology specialists constitute one of the fastest-growing sectors of the consulting world, although this sector’s growth isn’t quite as meteoric as that of strategy consulting, according to Kennedy Information Group. IT firms provide advice, implementation and programming work on issues related to computer systems, telecommunications and the Internet. Representative players include American Management Systems, Computer Sciences Corp., Diamond Technology Partners, EDS, IBM, Mondial and the Big Five firms.
Human Resource consulting focuses on personnel issues such as employee management and evaluation systems, payroll and compensation programs, pensions and other benefits programs. Representative firms include The Hay Group, Hewitt Associates, William M. Mercer, Sibson & Co., Towers Perrin and Watson Wyatt Worldwide. In addition, several of the Big Five firms have practices devoted to this area.
Independent one-man or one-woman shops. By sheer numbers, independent consultants far outnumber the larger firms. Fully 45 percent of all consultants are reported to be independents. They typically have some sort of industry or functional specialty and get hired on a project basis. If you have an MBA and several years of useful and topical business experience, there’s no reason not to hang out a shingle yourself.
CLICK HERE FOR LINK TO ECONOMIC INDICATORS
Profile Is Courtesy of www.bls.gov , www2.deloitte.com , www.doingbusiness.org and WetFeet.com
RESEARCH & DEVELOPMENT:
ASSOCIATIONS & INSTITUTIONS:
Every economy in the world has a system of laws and regulations that mediates the relationship between employees, employers, trade unions and the government. On the one hand, labor market regulation protects workers from unfair treatment and brings a degree of predictability to contracting; on the other, labor markets may not operate efficiently if overregulated, resulting in productivity and employment losses.
The question of how economies can design efficient labor policies—that increase employment and productivity without compromising employment protection—has been the subject of intense debate.2 The challenge for governments is to set labor policies on an efficiency range, or “plateau,” while avoiding distortionary interventions, or “cliffs,” which could undermine job creation through rigid policies or leave workers wholly unprotected as a result of excessively flexible ones.3 Denmark’s “flexicurity” model has been widely studied because it provides employee protections while maintaining labor market flexibility.4 Many economies that enact more flexible regulation, however, fail to make adequate investments to get the unemployed back into work.
Without adequate social protection and active labor market policies—job assistance programs provided by the state, for example—workers are at the mercy of the employment contract. For firms, this can be equally challenging: instead of focusing on their business, they are faced with the burden of protecting their employees.
For employees, such protection is not always reliable and, furthermore, it only covers those in formal employment— everyone else is left unprotected. To extend protection to all, while easing the burden on firms, policy makers should consider enacting national labor policies that provide universal protection, instead of firm-based arrangements.
By measuring elements of labor market regulation—hiring, working hours, redundancy rules and cost—as well as aspects of job quality (the availability of unemployment protection and sick leave, for example), Doing Business offers a rich dataset of 43 indicators for policy makers to learn from the labor market regulatory experience of 190 economies worldwide. The dataset can be used by governments, employers and researchers to measure excessive or insufficient labor market intervention and investigate the state of social protection in their economies. A researcher could use Doing Business data, for example, to determine whether there is a relationship between the flexibility of an economy’s employment regulations and the number of newly registered companies (figure 7.1). Such findings are in line with earlier research showing that stringent labor market regulation coupled with burdensome regulations on entrepreneurial activity is negatively correlated with the entry of new small firms.
Faced with cumbersome labor laws that result in complex hiring procedures, stringent working hours or high redundancy costs, new businesses may choose to employ workers informally, effectively joining the informal economy.7 The existence of a large informal sector in developing economies is one of the central factors undermining productivity and economic development.8 In Sub-Saharan Africa, informality remained at an average of 75% of total employment from 2000 to 2016.9 In Nepal, 98% of employment is informal.
Unequivocally, the reach and impact of improvements in labor market regulation in economies with higher levels of informality will not be the same as in economies with lower levels of informality. Nonetheless, research shows that informality is more prevalent in economies with more cumbersome entry regulations and rigid labor laws.11 Therefore, care should be exercised when designing labor market policies to avoid a further increase in the level of informality as a result of rigid labor laws that constrain firm growth. Doing Business data show that there is an association between economies with more flexible labor regulation and a higher number of newly registered businesses. Even formally established companies may choose to under-hire permanent employees or increase temporary workers when faced with strict regulation governing hiring and redundancy.
Firm-level data also show that where labor market regulation is less flexible, more firms rely on temporary workers as a share of total workers. Conversely, lower labor costs could give more hiring space to start-ups, particularly in times of economic downturn or production shifts.12 These findings suggest that stringent labor regulation is related to an increase in temporary employment relative to permanent employment. Sub-Saharan Africa is the region with the highest proportion of firms that rely on temporary workers as a share of total workers, followed by South Asia and East Asia and the Pacific.13 Understanding these linkages and their consequences is important, given that entrepreneurial activity and job creation play a crucial role in poverty reduction and sustainable development.
Stringent employment protection can also cause employers to create fewer permanent jobs as they attempt to circumvent the cost of providing employment protection to permanent employees.15 While doing so may be a short-term solution for employers, this labor market duality presents significant risks to the economy. These risks—including no overall increase in employment,16 negative implications for employees’ professional development, the costs associated with unfair dismissal17 and weak productivity growth—are discussed extensively in the literature.18
It is a challenge for any economy to develop labor policies that avoid labor market segmentation and provide a balance between worker protection and flexibility. Measuring labor market regulation assists policy makers in making informed policy decisions. The differences in selected labor market regulation—such as that governing working hours, severance payment, unemployment protection and the availability of national training funds—is discussed below.
Working hours Technological advancements and market dynamics are changing the nature of work. As a result, economies may consider revisiting legal restrictions on non-standard working hours such as night work, weekly holiday or overtime work. Understanding the impacts of regulatory restrictions, including those on working hours, is important for promoting entrepreneurship.19 According to Doing Business data, 40% of economies have legal restrictions on night work, weekly holiday work or overtime work in the food retail industry. Of these three areas, weekly holiday work is the most restricted. The largest share of high-income economies have restrictions on work performed on a weekly rest day, followed by lower middle-income economies (figure 7.2). In Belgium, for example, there is a general prohibition on employing personnel on Sunday; to operate on Sunday, businesses must obtain authorization from the Mayor and Aldermen.
Night work is the second most restricted area according to Doing Business data. Upper-middle-income economies have the most limits on night work, followed by the lower-middle-income group. Nine economies reformed in the area of working hours in 2017/18. In India (Mumbai) the Maharashtra Shops and Establishment Act, 2017, increased overtime hours and eliminated work restrictions on the weekly rest day, while introducing a compensatory day off and a 100% wage premium for work on that day. Norway also eased restrictions on night work by allowing employees to work past 9:00 p.m. and until 11:00 p.m. Non-standard work schedules allow businesses to adjust their workforce as they evolve and face new global dynamics. Weekly holiday or night work prohibitions constrain firms and give them less flexibility to meet their employment needs.
Severance payment and length of employment New data show that low- and lower middle-income economies, which maintain the highest average severance pay as measured by Doing Business,21 tend to mandate longer minimum lengths of employment before a worker is entitled to severance pay (figure 7.3). Facing higher dismissal costs, employers may be induced to choose to keep senior workers over junior ones. If only available to experienced employees and in economies without unemployment insurance, more vulnerable employees—such as youth, for example—may be left without any income protection. Research shows that youth employment can decrease by roughly 1.5 percentage points when severance pay is increased by 100%.23 The labor market can become segregated between highly protected older workers with job stability, and younger, less experienced workers who are unable to benefit from labor protection mechanisms. Therefore, more flexible regulation should be enacted only once enhanced social assistance and insurance are in place.24 Within the past year, South Sudan adopted legislation introducing severance payments for redundancy termination; France increased severance payments, while Azerbaijan and Lithuania decreased these amounts.
Unemployment protection and skills development Globally, 40% of economies measured by Doing Business provide unemployment protection, with an 8-month average minimum contribution period before an
employee becomes eligible. However, only 5% of low- and lower-middle-income economies require unemployment protection by law. A lack of protection and benefits leaves people vulnerable to poverty, particularly during life events such as poor health or old age.25 Unemployment protection policies are critical in promoting inclusive labor markets, human capital development, productivity and economic growth.26 The need is particularly high in developing economies where informality is predominant. In 2017/18, Malaysia and Nepal introduced unemployment protection schemes, while Bulgaria increased the minimum contribution period for unemployment protection from nine to 10 months. To ensure basic protections for all citizens, effective national level policies should be designed in collaboration with social partners.
Similarly, a lack of training can leave people, especially youth, unprepared for the job market. Economies should continuously improve the skills of the labor force to adapt to rapidly changing business and social environments. Although firms are generally expected to provide training for their employees, professional development as a national policy generates more opportunities for the wider population. India, for example, has set a target of training 500 million people by 2022 to spur employment and national development.
National training funds are one of the main financing vehicles for putting national skills development policies into practice. Such funds, dedicated to improving the skills of citizens, typically come from a stock or flow of financing outside normal government budget channels. Doing Business data indicate that national training funds exist in 60% of economies worldwide at varying levels of development and geography. The OECD high-income group has the largest share of economies with national training funds, followed by Sub-Saharan Africa and Latin America and the Caribbean (figure 7.4). Training funds in high-income economies are most commonly financed by levies (taxes) on enterprises, while in low-income and lower-middle-income economies the funds primarily come from international donors.
The benefits of national training programs are yet to be fully evaluated. However, Doing Business data show a negative and significant association between the availability of national training funds and youth unemployment (figure 7.5), suggesting the youth unemployment rate is lower in economies where national training funds are available. Since its creation in 2017 Bolivia’s National Employment Plan has helped generate about 58,000 jobs for young people by providing incentives to companies including co-financing their training.30 In Brazil the Serviço Nacional de Aprendizagem Industrial (SENAI, the National Service for Industrial Training) and its associated institutions,31 which operate under the umbrella of the National Confederation of Industry, have graduated 55 million professionals since 1942. The SENAI offers approximately 3,000 courses that train workers in 28 industrial areas.
Courses range from professional learning to college and graduate degrees. In Sub-Saharan Africa, Côte d’Ivoire’s Professional Training and Development Fund was created with the core mission of financing employee training initiatives to address the challenge of low education and skills among workers.32 In East Asia and the Pacific, the Lao People’s Democratic Republic established a national training fund in 2010.33 The main role of the fund, which is financed through 1% mandatory employee salary contributions, is to foster the development of relevant job skills in the country’s workforce.
To manage growth while maintaining staff and service quality, many consulting firms have placed renewed emphasis on retaining seasoned staff. It's generally much better to keep people who know the business than to hire fresh-off-the-boat students and raise them to maturity (although students are comparatively cheap). Consulting will never be a nine-to-five job, but many firms seem to be adopting measures to minimize stress and strain where possible.
The Big Five, in particular, have come a long way toward making their work environments more livable. And many are offering perks such as business-casual environments, free flights to visit significant others for the weekend, pay for doing volunteer work on company time, and dog walking and concierge services. Firms are also creating new positions below the partner level that enable veterans to avoid the “up-or-out” track, offering part-time work options and sabbaticals, restricting travel to weekdays, and refusing to schedule presentations on Mondays.
Consultants are hired advisors to corporations. They tackle a wide variety of business problems and provide solutions for their clients. Depending on the size and chosen strategy of the firm, these problems can be as straightforward as researching a new market, as technically challenging as designing and coding a large manufacturing control system, as sensitive as providing outplacement services for the HR department, or as sophisticated as totally rethinking the client's organization and strategy.
Management consultants must be skilled at conducting research and analyzing it. Research means collecting raw data from a variety of sources including the client's computers, trade associations in the client's industry, government agencies, and, perhaps most importantly, surveys and market studies that you devise and implement yourself. It also means interviewing people to gather anecdotal information and expert opinion. The interviewees may be anyone, from industry experts to the client's top executives to the client's lowest-level employees. All this data must then be analyzed, using tools from spreadsheets to your own brain. The idea here is to spot behavior patterns, production bottlenecks, market movements and other trends and conditions that affect a client's business.
Your ultimate job is to improve the client's business by effecting changes in response to your analysis. That's the hard part, because it involves convincing the client to accept your recommendations, often in the face of opposition from client executives who resent outsiders upstaging them with the boss or resistance from company employees who have something to lose from change. To succeed you'll need excellent people skills and the ability to put together a persuasive PowerPoint presentation. Finally, you'll need the ability to handle disappointment if your solution fails or the client decides not to even try implementing it
One good thing about the advice business: Companies always seem to want more. As evidence, the consulting industry has been on a sustained growth binge for well more than a decade. One other thing about the consulting business: The product really is the people, and firms compete on the basis of who's the smartest and the hardest working. As a result, each firm wants to hire the best and the brightest. If you're one of them-you probably know if you are-you'll have a good shot at landing one of these competitive jobs.
Consulting firms are working hard to build their brands-and the confidence business leaders have in them. A survey conducted by Landor Associates and Louis Harris Associates showed Accenture, which was the first consulting firm to promote itself heavily, to be the most highly regarded consulting firm among business leaders. In 1999 Ernst & Young, KPMG, Accenture, Deloitte Consulting and PricewaterhouseCoopers have all promoted their brand names heavily through TV, billboards, magazines and event sponsorships.
Even though there are thousands of consulting organizations across the country, these firms can be tough to get a handle on. Why? Most are privately held, work directly with other businesses rather than with your average consumer and tend to be intensely private about the names of the clients they work with and the actual work they do. Nevertheless, if you want to get a job in the industry, you're going to have to know which firms do what and be able to say in clear and convincing terms why French vanilla is oh-so-much-better than vanilla with little specks of vanilla bean sprinkled throughout.
Labor costs in business services have gradually increased since 2015, partly due to the introduction of the National Minimum Wage, National Living Wage and the apprenticeship levy which have impacted many of the jobs in business services. Proposed increases to the National Minimum Wage and National Living Wage in April 2018 will add to the pressures in the future. Labor supply has also continued to be strained, as unemployment remains low. The UK is now less likely to attract foreign workers, with a third (33 per cent) of non British workers reporting the UK less attractive place to work.16 While costs are rising, there is also increasing pressure on pricing coming from both clients as well as competition. The Deloitte Global Chief Procurement Officer Survey 2017 found that 77 per cent of procurement leaders in EMEA are now focusing on cost reduction.17 This means that increasing prices in line with increasing costs is challenging as clients are actually looking to save money themselves. Additionally, many of the sub sectors, such as catering, outsourcing and facilities management, continue to be highly competitive. Some sectors are highly concentrated with a small number of companies competing for the contracts available, while others are more fragmented with new competitors entering the market with aggressive pricing. The recently enacted tax reform legislation in the US could also have an impact on the competitiveness of the business services industry in the coming years.
What can business services do in the short term? It is unlikely that cost pressures are going to decrease in the short term as there is uncertainty stemming both from Brexit and the general economic outlook. Businesses should therefore focus on improving the efficiency of their operations.
• Increase scale where there are opportunities. Increasing the scale of operations to reduce marginal costs will help drive profitability. While the economic outlook might appear gloomy, businesses should focus on identifying areas where growth continues. For instance, the Deloitte State of the State report suggests that local government has the appetite to extend its working relationship with the private sector to deliver more public services in the future. Business service companies should look at the portfolio of services they offer and identify which ones are the most profitable to focus on. Many businesses are also developing new offerings to ensure they continue to meet client demands and enter service areas where competition is still limited.
• Make operations more efficient through simplified processes and leaner supply chains. Organizations that experience rapid growth often end up having their business processes and legacy systems combined, rather than having a thorough review of what is the most efficient way of achieving the same outcome. Only when there is more pressure on margins does the focus shift to understanding what is not working. A detailed analysis of business processes and costs can highlight inefficiencies or duplication of resources which could be avoided. Business service companies should map out where the most employee hours are spent, what the biggest pain points are and analyze how processes could be simplified to make operations more efficient.
• Increase productivity through technology. The Deloitte Connected Worker report discussed how digital transformation can improve margins significantly by making processes more efficient and workers’ lives easier. While workers are increasingly connected and use digital technology continuously in their personal lives, the technology is yet to penetrate their working world. This is particularly true for manual workers in the services industries. While office based workers are more likely to be heavier users of technology at work, more than half (51 per cent) of blue collar workers class themselves as ‘very light users’ of technology in their work.19 Several types of technology that can achieve significant cost savings in labor intensive tasks. These range from more complex application of automation and artificial intelligence to the simple use of instant messaging on work mobile phones to communicate with colleagues. This means that businesses of all sizes and with varying budgets can look at implementing the most appropriate solutions.