Promotion of Management Consultancy

-- A Position Paper by the HKCSI Management Consultants Group
February 1996

HKCSI Code of Ethics

1. The Hong Kong Coalition of Service Industries believes that management onsultancy is an important service sector of Hong Kong which has great potential for future development. In October 1994, after consultation with local management consultancy practitioners and overseas professionals associations, the HKCSI developed a voluntary Code of Ethics for Management Consultants to which management consultants are encouraged to sign up to. As of January 1996 the following have agreed to subscribe to the Code:

     Arthur D Little               Asian Strategies Ltd
     Buck Consultants              Coopers & Lybrand
     Danny Chau Consultants Ltd    Deloitte Touche Tohmatsu
     Ernst & Young                 Excel Consultancy Ltd
     Fiducia                       GML Ltd
     Gemini Executive Ltd          H L Leung Consultants Ltd
     The HK Debenture Exchange     Integrated Marketing Services
     J D McGregor Ltd              K K Yeung Management Consultants
     KPMG Peat Marwick             Lawspeed HK Ltd
     McKenzie Ltd                  MVA Asia Ltd
     P A Consulting Group          Price Waterhouse
     SGS HK Ltd                    Select Temps
     Wyatt Company (HK) Ltd

2. At the time of its launch the HKCSI Code was also publicised among users and the following user companies indicated their support for the HKCSI codes:

     Standard Chartered Bank         HK & China Gas
     HK Aircraft Engineering         Shanghai Commercial Bank Ltd
     Pacific Link Communications Ltd Outboard Marine Corporation
     Silver Elm Business Information B L Wong & Co
     Delmas HK Ltd                   Recruit International Consultants
     Atkins Haswell                  Hay Nien Co Ltd
     Ferren Asia Ltd                 The Mearl Corp
     Kingfisher Asia Ltd             SGS HK Ltd
     Toyo Mall Ltd                   Caterpillars HK Ltd
     Adsale People Ltd               MacMillan Bloedel Asia Ltd

Formation of the HKCSI Management Consultants Group

3. In view of the need for a coordinated effort in promoting standards and quality of management consultancy services of Hong Kong, the HKCSI convened two informal meetings in 1995. As a result of these meetings it was decided that a Management Consultants Group should be established within the HKCSI as a focal point for continual liaison amongst practitioners as well as with users and government.
4. In January 1996 the HKCSI Management Consultants Group was formed as a subcommittee of the HKCSI Professional Services Committee, with the following 10-point Terms of Reference:

General aims

1. To provide a focal point for liaison amongst management consultants and to act as spokesman for the consultancy sector of Hong Kong.
2. To promote high standards and improve quality through self-regulation.
3. To facilitate the building up of a critical mass of high-quality local management consultants and to raise the profile of management consultancy.

Standards and efficiency

4. To promote the HKCSI voluntary code of ethics to consultants and their clients.
5. To encourage government to set forth a set of transparent criteria for selection of management consultants.
6. To foster better client education, such as by developing guidelines for clients on the nature of consultancy services, fees, and how to select a consultant.

Promotion and market expansion

7. To identify the extent and strengths of the management consultancy sector and formulate a promotional strategy.
8. To campaign to include this sector in government's overall promotional strategy for service industries, both for management consultancy on its own and in relation to other sectors such as financial services and information technology.
9. To encourage government to make more use of consultancy services, to hire more local consultants, and to publicise some of their works.
10. To provide support to the production of appropriate publicity literature, as well as the development of a central database of management consultancy practitioners to facilitate sourcing and matching of business opportunities.
5. As an immediate step the Management Consulting Group has set itself the tasks of:
   1. promoting the HKCSI voluntary code of ethics;
   2. formulating a set of indicative criteria for government in selection of management consultants; and
   3. designing guidelines for clients on the nature of consultancy services, fees, and how to select a consultant.

A full study of the management consultancy industry

6. Management consultancy is an important business service in Hong Kong but its extent and scope is not clearly understood by potential users. We understand a survey is being conducted by government Management Services Agency and we await with interest the outcome of this survey. At the same time, the Management Consultants Group believes that there is an urgent need for a full study to be conducted of the management consultancy sector of Hong Kong, before an effective promotional campaign can be designed and implemented.
7. For reason of objectivity, the study should be carried out by an independent party and not a management consultancy practice. We suggest that it be commissioned by the HKCSI and conducted by local academic institutions, with funding provided by government.
8. The case for government funding stems from the fact that the economic contribution of the management consultancy sector base in Hong Kong is very substantial, both in terms of fee income and - more significantly - the value added to the enterprises served. The latter would typically be far in excess of the fees charged. An important objective of the Study would be to determine how the management consultancy sector can be developed to make Hong Kong "self-sufficient" in these resources, meeting the widest range of client needs both locally and within the region. Thus the competitiveness of Hong Kong-based consultancy practices would potentially be increased, reducing the dependence on services provided by overseas resources, but with no diminution in service quality. This would benefit the Hong Kong economy. The Hong Kong government is itself a major user of management consultancy services. Since the Study aims to benefit both providers and users of management consultancy services, the government has direct interest in its outputs.

Proposed Terms of Reference for the study

9. The objectives of the Study should comprise the following:
1. To define the extent and economic contribution of the management consultancy services available in Hong Kong, and assess the strengths and scope of services provided. The servicing of client needs would be looked at from both local and regional perspectives: many consultancy practices provide services in the PRC and within the wider Asia-Pacific region, as well as in Hong Kong.
2. To identify obstacles to growth within the sector, and develop a plan for addressing these. For example, the sector has a low profile locally, and there is generally only a weak understanding among potential users as to the extent of available service. This often results in the avoidable loss of business to overseas competitors. There is also a discernible unwillingness on the part of many local organisations to use management consultants.
3. To evaluate the criteria adopted by users of management consultancy services in the evaluation and selection of the preferred consultant, and conditions of contract that are used;
4. To assess the suitability of existing published guidelines (eg. USE/UK etc.) on the selection and use of management consultancy services in the Asian context, and of the Professional Practice Guidelines for Management Consultants prepared by the Hong Kong Coalition of Service Industries.
5. To develop a database on management consultancy practices based in Hong Kong.
6. To prepare a strategic plan for the further development of the management consultancy services sector based in Hong Kong.
10. From the outset of the Study, it will be essential to form a definition of a "management consultant". The definition used by the UK Institute of Management Consultants is proposed for initial consideration, and is quoted below.

"A management consultant is an independent qualified person who provides aprofessional service to business, public and other undertakings by:-

1. Identifying and investigating problems concerned with strategy, policy, markets, organisation, procedures and methods.
2. Formulating recommendations for appropriate action by factual investigation and analysis with due regard for broader management and business implications.
3. Discussing and agreeing with the client the most appropriate course of action.
4. Providing assistance where required by the client to implement his recommendations. The three main pillars of independence, objectivity and integrity which are implicit among qualified practitioners of management consulting have been brought together in the Institute's Code of Professional Conduct."
   [Substitute here the "Professional Practice Guidelines for Management Consultants prepared by the Hong Kong Coalition of Service Industries"]
11. The method of classifying management consultancy services, both those provided by local practice as well as those required by users, also needs to be considered. Highly refined classification systems are available from overseas professional organisation, but the Hong Kong environment may justify a simpler method of classification.

Key tasks to be carried out during the Study

12. The Study would need to secure opinions from three interest groups:-
1. management consultancy practices based in Hong Kong;
2. users of management consultancy services based in Hong Kong;
3. Non-users.
13. It would probably be necessary to advertise in a widely-read local business publication in order to achieve two goals:-
1. enable a full range of management consultancy practices to come forward, over and above the larger firms which have a strong presence in Hong Kong;
2. invite participation in the Study from users, who should not entirely be preselected by participating consultancy practices. The success of the Study depends upon securing critical as well as supportive comments.
14. A combination of interview and questionnaires would be used to meet the objectives of the Study. About 20 users and non-users should be interviewed, as well as 20 management consultancy practices, with all interviewees representing a broad cross-section of the market in terms of industry sector, size etc. Since many management consultancy practices based in Hong Kong also operate in the PRC and other Asia-Pacific countries, it would also be important to gain a flavour of the international aspect. Thus it would be necessary to interview a small sample of overseas users, but many of these users would have offices in Hong Kong.
15. The interviews and questionnaires should be focused on the resolution of four key issues:-
1. any gaps (whether actual or perceived) between the needs of users and the services offered by management consultancy practices based in Hong Kong;
2. the barriers which service users and non-users consider to prevent more extensive user of locally based consultancy practices, especially in situations where specific users have retained overseas consultants;
3. those actions which locally based management consultancy practices could take in order to raise the profile and image of the profession;
4. those actions which users could take to maximise the value obtained from engaging a management consultant.

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