Business Services, the Management of Change and Regional Development in the UK: A Corporate Client Perspective Author(s): Peter Wood

Source: Transactions of the Institute of British Geographers, New Series, Vol. 21, No. 4 (1996), pp. 649-665 Published by: Blackwell Publishing on behalf of The Royal Geographical Society (with the Institute of British Geographers) Stable URL: Accessed: 29/09/2010 05:08
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The spectacular expansion of business services. a the change UK: regional corporate client Peter Wood and management of development in perspective the The expansion of business services in the UK since 1981 is reviewed in relation to general patterns of corporate management control. Hepworth et al. therefore reflect much wider influences on the development of management-related expert labour than are discernible through studies of business services alone. Such 'in-house' resources undoubtedly constitute the primary resource of business knowledge and experience. This paper examines the changing role of business services in relation to the in-house management capabilities of a sample of large companies across the UK. employing Porat's (1977) occupational classification. and the roles of different types and sizes of activity within this. Thus some consideration will also be given to the significance of the growing social division of these 'elite' groups of management labour for processes of regional economic change. based on census occupational data. decentralized service corporations in southern England and by those already experienced in change management. Estimates of the 'spatial division of information labour'. that they represent no more than one form of supply response within the wider market for specialized managerial. University College London. The results of a survey of strategic expertise exchange between consultancies and managers of major companies are presented. It is also often acknowledged. The reasons for the employment of different types of consultancy in corporate change are also examined.1 This is served not only by various types of independent business service agency but also by the expertise directly controlled by business or public-sector organizations for their own needs. The study on which it is based focuses on key strategic change projects involving senior managers and expert levels of consultancy. The relative scale. of the alternative sources of business expertise cannot easily be measured. 26 Bedford Way. (1987) and Hepworth (1989). Clients emphasize their control over consultancies but are also increasingly dependent on technical and professional expertise. offer the best indication of their quantitative significance. growing. in employment or other revised manuscript received 21 November 1995 Business service growth and the social relations of managerial expertise The modern growth and location patterns of business service activities in the UK are commonly explained in terms of the interaction of their own supply and demand characteristics. London WC1 OAP e-mail: pwood@geog.649 Business services.2 TransInst Br Geogr NS 21 644-665 1996 ISSN 0020-2754 ? Royal Geographical Society (with the Institute of British Geographers) 1996 . Consultancy growth marks a developing social division of 'elite' management labour which has significance for rates of economic restructuring and the continuing focusing of control functions in southern England key words Great Britain consultancies corporate change management expertise regional restructuring Department of Geography. Consultancies are employed most by large. For 1981. however.

auditors.8 23.0 54. The uneven spatial patterns which characterize business services also need to be placed in the context of the broader geography of businessrelated expertise (Damesick 1986. After 1991.7 61. business services not elsewhere specified. 8396.6 per cent of the UK labour force as information 'producers' and 27.7 Occupationalunit Rankedby percentageshare 24 Legal professionals 25 Business and financial professionals 26 Architects. creating over half a million net jobs between 1981 and 1989. surveying and mapping (31). Table I indicates the contribution of independent business service companies to the national stock of expertise.6 17.0 29. The sharpest retraction after 1989 was in the professional and technical (8370) services. Table 1.6 28.5 per cent and they employed 15. affected especially by the slump in construction.4 25. *8380. which also possessed by far the largest share of high-expertise information producers and . by selected occupational units. computer services. broadly defined. even as the recession deepened.7 29. down to a low of around 209 000 by 1992 (EmploymentGazette May 1995. town planners and surveyors 36 Business and financial associate professionals 31 Draughtspersons. business services includes: *8310/20. activities ancillary to banking and insurance. accountants. housing and estate agents. the business services. By 1991. During this period.1 6-1 female 80.9 18. Marshall 1988). Since 1981. these 'management-related' SIC activities have more than doubled employment.4). 8340. (1987) showed that 38-3 per cent of Britain's information occupations were in London and the southeast in 1981. These continued to expand at 7-9 per cent per year up to 1991. especially those predominantly serving business clients. 8350. rising by a further 30 per cent in three years. The other activities also serve appreciable consumer markets Source:OPCS (1994.4 12.8 17. artistic and sports professionals All SIC class 83. *8395. 1991 (10 per cent sample) Business services male 5103 8000 5076 7031 3511 3432 8297 5075 3513 90 104 female 1818 1910 439 2101 263 785 5475 9780 1800 74 333 Percentageshare of all industries male 85. over 20 per cent of national technical expertise is offered by the business services in business and financial methods (36).6 per cent as 'processors'. Great Britain. computer services (SIC 8394) and 'business services not elsewhere specified' (8395) achieved sustained annual growth rates of around 15-16 per cent. *8394.6 per cent of Britain's information occupations.1 55.9 15. *8370 professional and technical services. central offices not elsewhere allocable *'Management-related services' which predominantly serve business clients (see Table II). Hepworth et al. this share had grown to around 6-5 per cent. have grown very rapidly (Table II). computer services expanded employment more slowly than before (by an estimated 5 per cent to 1994) but SIC 8395 appeared to accelerate once more. as well as in specialist management fields such as finance. surveyors 32 Computer analysts/programmers 12 Specialist managers 41 Numerical clerks and cashiers 38 Literary. They clearly dominate the legal and architecture/ planning professions (occupation units 24 and 26) and provide well over half of business and financial professionals (25). personnel and advertising (12).0 6. Howells and Green 1987. 8360. More generally. legal services. advertising. whilst private business service organizations in Standard Industrial Classification (SIC) class 83 occupied 4 per cent of the workforce. purchasing.2 50. business services. At a time of static national employment and a 17 per cent increase in all services. The share of information occupations in the producer services workforce. marketing. and computer analysis and programming (32). compared with 8-7 per cent of all workers. including accountants and management consultants.3 40-3 32.650 PeterWood Table I Numbers employed in SIC class 83. business services Notes: Under the 1980 Standard Industrial Classification. was 84. Table 12) identified 10. SIC class 83. tax experts.

5 +86 +16 8. 1989 change.4 +214 +16 22.6 +87 -18 12. 1981-89 change.3 +67 -9 30. tEmployment Gazette (1994) estimates. 1989 change.1 +29 -12 26-8 +110 -7 36. 1981-89 change. although in a more concentrated form. 1989-91 Rest of southeast Percentage share of Great Britain.8 +143 -2 12-9 13. including adjacent areas .4 +64 +4 32 +42 +12 40 +224 -4 56 +134 +21 5-8 +97 +11 Source:Department of Employment (1981-91) processors. Great Britain. 1989 change. the management of change and regional development Table September SIC activity 651 services. in 'management-related' II Employment 1981-94 ('OOOs) 1981 1987 1989 1991 1994t 8310/20 Ancillaryto finance and technical 8370 Professional 8380Advertising 8394Computerservices 8395 Businessservicesnot elsewherespecified* Total 87 169 36 55 153 500 126 234 44 108 313 825 148 274 53 138 398 1011 142 230 46 148 402 968 153 212 47 157 527 1090 Notes: *including management.3 +114 -1 21.0 +92 +134 +81 -31 -6 -18 and Humberside/north 21-9 +76 -6 29-6 +65 -12 23-3 +45 -12 13-7 +248 +15 11. May 1995 Table III Employment September 1981-91 in management-related services.0 15. one-third in London itself. 1989-91 West midlands/Wales/northwest/Yorkshire Percentage share of Great Britain.9 +226 +6 13.2 +92 0 4.2 +106 +8 23-7 +139 +11 25. 1989 change.2 +57 -5 25-1 +35 -15 48.Business services. 1981-89 change. market research and public relations consultancies. 1989-91 Southwest/East Anglia/east midlands Percentage share of Great Britain.4 +136 -9 33-9 +79 -12 8370 8380 8394 8395 Total 16. employment agencies and translation and document copying services Sources:Department of Employment (1981-91). over half of 'management-related' business service employment was in London and the southeast. 1989-91 Scotland Percentage share of Great Britain. 1981-89 change. in 1989. 1981-89 change. SIC activities 8310/8320 London Percentage share of Great Britain. the professional and technical services (8370) were generally more dispersed and computer services (8394) were best represented in the rest of the southeast. 1989-91 44. Advertising (SIC 8380) and services ancillary to finance (8310/20) were particularly concentrated in the capital. 1989 change. regional groupings. The early 1980s had seen an accentuation of business service concentration into the greater southeast. Table III shows that.3 +80 +2 21. Thus business service patterns generally mirror the wider distribution of management expertise.2 +140 -4 25.

1992. marketing. The tasks of headquarters managers. personnel development. specialists-generalist. Howells 1988). Wood et al. the tasks of many managers focus primarily on the relations of particular divisions and localities. often now less concerned with routine matters. The growing use of business service firms to support these functions marks a commodification of forms of expertise once generally regarded as inherent to corporate management. particularly with growing corporate dependence on business services. technical innovation and operational procedures but. Attitudes to location are embodied within these changing relations. although within reinforced centrally monitored performance regimes.652 of East Anglia. 1993). in-house-externalized. economic restructuring now lie? Such substantive issues lie behind the aggregate employment data and will be returned to later. multilocation management and change. Most strikingly. argued that innovations in information technology would reinforce the uneven geography of information occupations. Keeble et al. Management is inherently concerned with the effective operation and adaptation of extended spaces of exchange. It remains unclear how far these dispersal trends were simply recession-related or mark a sustained shift away from southern and eastern England. 1991. changes in patterns of headquarters and other strategic functions may favour greater dispersal and local autonomy (Aksoy and Marshall 1992. changeorientated-conservative) and between these and the workforce as a whole (Hales 1986. 1993. On the other hand. The investigation follows earlier work on small business service consultancies in England during the 1980s which revealed the varied processes by which the large and rapidly growing numbers of small management consultancy and market research firms are established and survive (Bryson et al. 1992). What is the functional basis of this rapidly developing division of elite labour between corporate and consultancy inputs? In relation to wider restructuring. The concern is with the highest level and often most specialized management-related elements of the business services workforce. senior-middle. For high-level business skills. From small consultancies to large clients The empirical research reported here focuses on how business service expertise impinges on strategic management functions and the circumstances under which independent ('consultancy') sources are employed by clients in association with their in-house staff. The consistent recent growth of many business services therefore suggests a significant reorientation in national and regional sources of businessrelated expertise. The national market for such expertise remains dominated by the 'expertise-rich' greater southeast. combining rationalizing corporate control functions with the burgeoning specialist business services (Coffey and Bailly 1992. They must react to national and multinational capital PeterWood management and competitive pressures. Marshall 1994). Within any corporate realm. but their performance was stronger in other regions by the end of the decade. The reorientation has affected the recruitment. the southwest and the east midlands. at least. both between different management segments (e. Salaman 1982. technical and professional labour to incorporate both increasing 'externalization' of formerly in-house functions and the intensified search for new types of expertise. it became clear that the fortunes of these small firms are often closely linked to large . devising rationalization and development programmes. the highest levels of strategic planning itself is now commonly subject to the involvement of consultancies. it appears that even the quantitative drift away from the southeast is at best no more than marginal.3 The outcomes have important implications for the social relations of management functions. although perhaps not so much in their geography. as will be shown later. are more directed to company-wide. Their numbers are small but their activities are probably amongst the most significant in determining broader forms of organizational change. often with profound geographical impacts. They have tended to be given growing autonomy in recent years. 1992). and constraints on. to which local management must respond. training and deployment of managerial. what may be the effects of the distancing of key functions not only from the operational experience of specific localities but also even from particular corporate domains of activity and control? Where do the responsibilities for. This may include aspects of financial control. the rest of the southeast and northwest England (similar contrasts were identified between the southeast and Scotland by O'Farrell et al.g. Hepworth et al. This work also outlined some marked contrasts in conditions favouring these processes between London.

Most immediately. how does the use of business services relate to client management capabilities and how do these interact? What motivates the choice? Is it a matter of cost or are other factors influential? More broadly still. competing with the activities of large consultancy firms which also enjoyed a demand-led boom in the 1980s. the 'externalization' decision is conceptualized in terms of transaction costs and the management of uncertainty (Dahlman 1979. in which client behaviour is strongly influenced by past experience. since their primary orientation is often towards the use . and what forms of evaluation are employed? Such questions direct inquiry away from the growth and distribution of business service companies themselves towards their major clients and the interaction between the two. This distinction is.Businessservices. Client benefit is important in evaluating any service but. as others have suggested. changes in the consumers. why do well-established corporations. In many cases. with their own considerable resources of expertise.of service outputs. Even in the former cases. to some degree. a significant contribution of problem-solving ideas. O'Farrell and Moffat themselves distinguish between the quality of any business service. They characterize them as 'task-interactive'. and not by observing the activities of the producers. However. clients sometimes play a passive role. 'relational exchanges' dominate business service transactions. 1987. what is the corporate and strategic context of the exchanges? What are the power relations between client and consultancy. the client can never be truly passive. prior expectations and trust (Dwyer et al. 1994). 1993) or as manifestations of social networks of corporate interaction (Amin and Thrift 1992. the degree of client-consultancy The detailed processes of client-consultancy interaction which underpin management-orientated business services have been discussed in detail and illustrated by O'Farrell and Moffat (1991). related to implementation procedures and subsequent client evaluation. important for all services. more or less hierarchically organized corporations traditionally rely heavily on their own personnel capabilities and internal networking arrangements supported by management training and development regimes. These often offer significant competitive advantages to favoured consultancies. Goe 1991. however. in . 1993. Tordoir 1993. however. employ small consultancies to assist even with strategic change management? More generally. 318) comment applies well here: The amountsof servicesproducedmust be measured by recordingthe extent of . Whether. O'Farrell et al. For these activities. Such inputs may include information. O'Farrell and Moffat argue that each of these contributions add important dimensions to business service production and delivery. both as clients and as sources of key expert personnel.. the guiding process is a search for the critical forms of managerial and technical expertise necessary for modern organizational functioning. Granovetter 1985).rather than the production . assumed to be based largely on relative levels of expertise at different phases in the joint production process and the effects of differences in client management style and culture. client behaviour is also integral to their production. Hill's (1977. Why has outside assistance become increasingly important in gaining expertise and what are the implications for corporate organization more generally? Business consultancy of change and the management 653 which the inputs of clients are as critical to success as those of the consultancy. Their evidence suggests. and its utility. in strategic business services. Large. based in the skill of the consultant. joint membership of project teams and monitoring of the consultancy process. twelve-phase interaction model of business service transactions. especially during the delivery of the service. 261). Macneil 1980. since theirs is the ultimate production process to which business services must contribute (Wood 1991). the managementof change and regionaldevelopment companies. problemsolving services (Mills and Margulies 1980.4 The activities of small consultancies thus raises a number of further questions. For O'Farrell and Moffat. they also sometimes offer high-quality expertise which is of considerable strategic significance even for major companies. They propose a sequential.. Among the principal issues which arise from this is the balance of client-consultancy power. while this may be common for technical functions such as graphic design or market research. Wood et al. it is less likely where consultancies are involved with organizationally more significant processes such as project design or strategic management change. that. Grabher 1993.

The purposes to which it is directed are defined and ultimately evaluated in relation to in-house expertise. which tended to be smaller and in the consumer services and utilities. Over half the respondents had headquarters in London and the southeast but the rest were evenly distributed . construction and transport Other Location of headquarters London Southeast Rest of England Wales/Scotland/Ireland Company structure Centralized Decentralized / decentralizing Functional Multidivisional Holding company Employment size <1500 1501 to 3000 3001 to 6000 6001 to 18 000 >18 000 (Missing) Methodology Two types of evidence were sought. With such sectoral diversity. Most of the firms were multidivisional or holding companies. recent strategic change projects which had generally been implemented at the corporate rather than the divisional or product level. This has important implications for the of client-consultancy significance geographical relations. the growth of business services may reinforce the corporate dependence of regional economies. but a minority. The variety of internal and external management resources employed in achieving particular corporate goals are examined at different stages of the change process. Table IV Characteristics Peter Wood of corporate sample 15 26 41 15 21 6 37 25 43 10 25 98 30 55 36 20 23 18 31 23 (9) Sector Utilities Financial and business services Manufacturing Consumer services Primary. and between those in the 'south' and 'north' of England. be only secondary sources of regional competitiveness. an 'expert labour' interpretation is placed on the consultancy role (Wood 1997). Thus local networks of expertise exchange may. The 124 firms contained a balance between manufacturing and service-based companies. The respondents were managing directors (chief executive officers) or their nominated deputies with knowledge of. The sample design and response rate are summarized more fully in Wood (1997). as Amin and Thrift (1992) have argued. for which more detail was requested. 1993).654 interaction effectively merges many aspects of the traditional distinction between production and consumption. the sample employment ranged widely from below 3000 to over 100000. External consultancies had been employed to assist with these changes in 87 cases. at best. the effectiveness and survival of such regional networks are dominated by global corporate requirements. discussing the processes of strategic change and the involvement of various types of consultancy. a postal survey carried out in late 1993 attracted responses from 124 large UK-based private firms across a range of manufacturing and services. Compared with studies of business service firms themselves. First. but not presented here in any detail. especially in manufacturing and construction. rather than inquiring into the general uses of different types of business service at particular establishments (Marshall 1982. Manufacturing. The second type of evidence informing the analysis. were functionally organized and generally more centrally controlled. water and telecommunications) and a wide range of service corporations were well-represented. But if. the newly privatized utilities companies (electrical. as here. this approach also reveals the nature of the control exerted by corporate clients over the range of available consultancies. this study adopts a project-based approach. including utility sectors. O'Farrell et al. examining the joint contribution of expert consultancy and client staffs. and usually responsibility for.5 This is especially evident if. Thus. Respondents were also asked to nominate specific significant strategic changes affecting the organization in the previous three years. This established the varied nature of the organizations and how they employed both resources and outside their own management experts to manage change. These may seek out distinctive 'spaces of on intraregional based primarily production' exchanges of innovative expertise derived from clusters of specialist business service firms. came from interviews with a sample of about 60 of the respondents. The sample characteristics are summarized in Table IV.

Respondents claiming not routinely to employ consultancies (4). and marketing. . especially strategic planning. the management of change and regional development Table V Characteristics among other English regions with a few based in Scotland and abroad. and for organizational change and development. many based in the south. The dominant context of ing consultancies over the 1990-3 period was recession and change corporate restructuring. handling and northerly firms (cf. 655 of sample firms employ- Commonpractice to use consultancies? Yes No Patterns of consultancy use A full account of the general relationship between in-house management experience and the use of consultancy expertise has been presented elsewhere (Wood 1997). experienced companies used consultancies more in broader disciplines such as Turnover (? millions) >?1000 ?500 to ?999 ?100 to ?499 <?99 Management style Centralized Decentralized Past three years change in turnover >40 per cent growth 21 to 40 per cent growth Up to 20 per cent growth Total 'growing' firms 0-20 per cent decline >20 per cent decline Total. Although over 60 per cent of the firms increased turnover. like the 'inexperienced' consultancy users. Table VI ranks the regularity of consultancy use in different management disciplines (1) and numbers claiming to be experienced in these disciplines (2). 'declining' firms Sector Manufacturing Primary. personnel and human resource management. There were striking variations in both characteristics and the relationships between them. Ireland and Scotland 31 8 18 7 14 5 19 5 14 63 11 35 9 16 20 45 11 3 14 3 5 11 19 11 3 14 25 9 34 17 10 12 4 43 16 12 28 9 5 3 2 19 28 22 17 8 14 11 20 2 strategic planning. transport Total 'materials'-based Financial and business services Consumer services Utilities Other (service conglomerates) Total 'services' Location of headquarters London Southeast. There was thus a clear impression of greater openness to employing consultancies (and perhaps also a greater need) by larger. less rapidly growing. Also shown is the percentage of client companies using the different types of consultancy in relation to their own level of experience (3). in descending order of frequency. Such genermaterialsally smaller. Conversely. Table V) draw on their own technical experience and skills. compared with only 27 per cent of the inexperienced. The latter measure reveals significant variation in corporate capacity to deal with different types of change. East Anglia and southwest regions Rest of England Wales. habitual consultancy use appeared to vary with client size (consultancies used more by larger. Consultancies also appeared to be employed to compensate for in-house inexperience in this way. were least familiar with broad planning skills. growing. compared to smaller. service-orientated companies. 41 per cent of firms experienced in market research used market research consultancies. Some of this evidence is summarized in Table V. firms). construction. for example. sector (more in services and utilities compared to material handling) and location (more in southern compared to the rest of England). legal advice.Business services. marketing. rates of growth (more in expanding companies). two-thirds reduced their numbers of employees. Respondents were also asked to indicate the management disciplines in which their companies were relatively experienced or inexperienced and the disciplines for which they employed consultancies. in which 57 per cent with experience used consultancies. Although the sample size and nominal form of data made it difficult to establish statistical relationships. compared with 60 per cent of the inexperienced firms. financial management and the implementation of financial and administrative systems. Thus. in information technology and systems management. as well as with organizational change and development. mode of control (more in relatively decentralized regimes).

On the other hand. they often contributed to projects which clients regarded as strategically highly significant. indicating more than one if appropriate. A minority of firms. 3 percentage of respondents 'experienced'/'neither experienced nor inexperienced' /'inexperienced' in each discipline employing consultancies in that discipline. 2 No. Also. 4 number of respondents not employing consultancies by management disciplines in which they claim experience for example in information technology. Similar 'addition' to in-house expertise occurs for some technical functions. companies experienced in these processes used consultancies most. The usable nominated . new personnel development programmes or strategic programmes of change. often in combination: * expertise: their specific specialist knowledge or skills (68 cases). Consultancy use is based primarily on their distinctive contribution to the client skill base but this takes various forms. production management and environmental and legal issues. image (43 per cent each) and technology (20 per cent). capabilities Information on particular projects offers further insight into the interaction of client expertise with business service firms. as the earlier study of small consultancies had suggested. for example. when manufacturing firms buy in expertise in production and services management. of course. remain selfreliant in these respects. Changes in particular tasks and activities were less commonly described. experienced Experienced Neither 62 52 49 66 57 63 47 53 60 90 85 73 56 41 47 57 29 38 25 24 13 13 62 54 52 50 29 55 19 27 15 33 21 Notes: 1 Numbers of respondents using consultancies in each management discipline (ranked). organizational culture (81 per cent) and personnel capabilities (72 per cent). These may nevertheless also be implicated in wider processes of organizational change.656 Peter Wood Table VI Patterns of consultancy use in relation to in-house experience Levels of in-house experience 3 Percentage using consultancies Inexperienced 64 67 60 40 27 43 50 22 18 33 28 4 No. however. not using consultancies Experienced 32 48 41 32 15 40 33 42 45 41 39 Management disciplines Organizational change and development Information technology/systems Market research Personnel and HRM Strategic planning Legal Marketing Environmental Production/services management Financial management Financial/administration systems using consultancies 52 42 37 36 31 29 24 18 14 13 12 using 2 No. when broader managerial skills were required for organizational development. consultancies were thus employed to 'substitute' for in-house inexperience when seeking information technology and market research advice. consultancies tend to reinforce the strategic strengths of experienced companies rather than compensate for the weaknesses of the inexperienced. 2 numbers of respondents claiming to be 'highly experienced/experienced' in each discipline. At this strategic level. including those related to products and markets. How consultancies are employed Respondents were asked to indicate the reasons for employing consultancies on projects according to the categories in Table VII. The interaction of client and consultancy projects from 115 respondents reflected the strategic emphasis of the inquiry and most frequently involved changes in management structure and processes (83 per cent). often in combination. or environmental consultancies are used by primary sector or utility companies (Wood 1997). Generally. This. often reflected their need to undertake such changes in response to acute commercial pressures. There was a close relationship between the general policies of firms towards employing consultancies and their behaviour in these cases.

with universal pressures for change. On the other hand. most obviously in providing extra capacity where critical experience and management methodologies are required to supplement the increasingly 'lean' capacities of company headquarters. issues of corporate control and the 'ownership' of change. rather than detachment. Client management often requires augmentation to gain either extra capacity or an alternative perspective on change. therefore. outside viewpoint Required intensive temporary help Timescale did not allow development of internal skills Good past experience with consultancies To confirm an internal management decision Unable to recruit appropriate staff Numbers of firms 68 48 44 18 14 11 2 Percentageof all projects 58 41 38 15 12 9 2 657 ? detachment: their impartial viewpoint (48). especially through implementation. In other cases. usually without consultancies becoming involved in implementation. this was usually seen to be the task of the in-house staff. Consultancies were also most often expected to work closely with client staff and on specific elements of projects (Table VIII). Sometimes they offered specialist technical advice. Conversely. the questionnaire evidence suggests a selective acceptance of the need to employ consultancies in change management rather than any wholesale flight to do so. provided a common theme in these responses and in the subsequent interviews. Cost was indicated as a deterrent in only six cases. this was usually because the potential client considered the necessary expertise to be already available in-house (30 cases) or because. * capacity: their ability to provide temporary intensive help (44) and to respond when time is short (18). Although consultancies often reinforce experience. Overall. Similarly. sometimes under conditions of confidentiality (8). Table VIII Use made of consultancies in change projects Use made of consultancies Worked in partnership with in-house staff Carried out specific elements of project Provided specialist technical advice Provided overall 'blueprint' for change Trainer/educator role Involved directly with implementation of change Provided specialist human resource management advice Provided specialist market research advice Number of firms 50 37 36 30 24 17 11 9 Percentageof all projects 43 32 31 26 21 15 10 8 . including staff training and development. particularly close familiarity with the company was required (18). they also indicated a growing dependence on consultancies. the more 'political' context of consultancy growth is also often strategically important. where consultancies were not employed. a broader overall blueprint for change was devised.Business services. direct involvement in implementation was expected in only a few cases. In spite of a variety of behaviour in different circumstances. specific expertise is still valued. arbitrating between alternative courses of action and more generally supporting in-house managers promoting change. Significantly.the managementof change and regionaldevelopment Table VII Reasons for using consultancies on corporate change projects Reasonsfor using consultancies Required special knowledge and skill For an impartial.

clients tended more to favour consultancies on the basis of reputation. especially where operational skills such as information technology and systems development. with <50 professionals.e. 37 of the respondents planning recent strategic change claimed not to have employed consultancies at all. The 87 projects included 167 uses of various types of consultancy. the more important is confidence in consultancy abilities. This confirms a degree of client discrimination in relation to what consultancies are perceived to do best . not only from client expertise but also from the parallel contributions of other consultancies. Table VI). on average about two consultancies were employed per project.a finding which also emerged from the study of small consultancies (Wood et al. When consultancies were employed. Their own management capability was regarded as sufficient. 1993). 1991). For shorter projects. the choice of particular consultancies was more often based on past experience with them. have tended to examine their activities in isolation. First. There was some relationship between the use of consultancies and the period over which change was planned. including small to medium-sized firms (i. These reflect the duration of projects and types of change involved. Corporate rather than regional networks were clearly dominant. The longer projects most commonly involved changes in management structures and processes. production and services management or environmental expertise were required (cf. A variety of smaller consultancies was also employed. it emerges that they employ different types of consultancy selectively and in combination. has been made of the growing influence of major consultancy firms but this is often viewed largely from their own perspective (Morris 1988. their ability to work with client staff or on recommendation. however. The more significant the programme of change. compared with 23 of the 65 shorter projects. including those associated with major accountancy firms. for example. operational changes (such as the introduction of new technology or new tasks and activities including new products and markets) or a significantly improved performance (Table IX). Past studies of particular types of large or small consultancy. there was no evidence that consultancy choice was influenced by regional location. Moulaert et al. including a high proportion concerned with company image. In all of these inquiries. 43 per cent of projects) and specialist technical service consultancies. Much.658 PeterWood Table IX Planning period in relation to main components of change Planning period (months) Changes in (rankedby significance) Management structures and processes Organizational culture People Organizational performance Tasks and activities Image of the organization Setup of the organization Technology used Less than six months Number Percentage More than twelve months Number Percentage 22 21 21 16 13 13 11 9 23 23 25 24 27 27 19 27 41 27 23 23 18 12 18 13 43 29 29 34 38 25 31 38 O'Farrell and Moffat (1991) emphasize the social interaction processes at work in the choice of consultancies. as well as the influence of past experience. therefore. The significance of corporate control is further emphasized by evidence for client selectivity in choosing consultancies. Only six of the 38 projects planned over more than one year did not use consultancies. large multifunctional consultancies. When the various skills which clients seek for particular projects are examined together. Assuming the employment of more than one of each type in some cases. based on trust and mutual understanding. or of particular The choiceand use of consultancies sectors. commonly in information technology or computer consultancy . Even though these offered more time for the assessment of alternatives than shorter projects. were engaged for only 61 per cent of the projects.

often involved smaller specialists. 1993). more static. trust and sensitivity to corporate culture at this level are most significant in the client-consultant relationship. small companies. including training. large consultancies had been employed to provide an overview and diagnosis of particular problems. as indicated by the close complementarity of in-house and consultancy inputs. often from intercorporate and even global sources. Consultancies are thus becoming more integral to strategic restructuring. combined to varying degrees in the work of corporate managers themselves. ten small to medium-sized firms and five technical specialists. less experienced colleagues are employed to do the work and that they are also often too interested in widening their remit to justify more work. diverse experience and operational independence. including those embedded in spatial arrangements. however. that the effective use of consultancies itself requires client experience. Thus. Only seventeen of the programmes employed large consultancies alone. Consultancy status. thirteen programmes simply used small to medium-sized consultancies and eight used other types of consultancy alone. is associated particularly with specialist knowledge. but various stages in planning change. The division of labour between consultancy and in-house expertise rests primarily on the distinction between (a) the acquisition and transmission of generalized management expertise. and (b) management responsibilities for the effective control and direction of specific patterns of investment and labour. the quality of individual consultants is often paramount. For a further fifteen programmes. The special status of client managers resides in their powers of decision and action over other workers within particular corporate and spatial contexts. They clearly cannot act alone in this respect but they legitimate and offer ways forward for managers favouring particular forms of change. of course. also allows them to act as agents and supporters of change. the managementof change and regionaldevelopment (29 per cent of projects). In the extending division of elite labour. client selectivity in choosing consultancies and clientbased implementation. the use of their expertise is tightly controlled by the client. including that from in-house sources (Blackler et al. This was sometimes done to control costs but there is also a general perception of large consultancies that. Experience. or often even sole proprietors.and advice from banks was added in a few cases. including thirteen individual-based consultancies (sole proprietors/ 'consulting professors'). independent arbiters are also required for many decisions.Businessservices. The independence of consultancies from conservative influences within established corporate cultures. if individuals are wellregarded and trusted. large consultancies were associated with two or more other types of firms. Such control. especially among corporations facing rapid change. their expertise seems to be directed towards corporations which are already adept at change rather than to smaller. clients with a clear in-house vision of what is needed and experience in employing consultancies prefer to engage small firms to provide specific requirements. This separation is manifest in their very spatial mobility and locational independence of client activities and. In many respects. Consultancies as agents of change 659 Consultancies often contribute to strategically significant change projects. One reason for this is. Where large consultancies were not employed at all. In almost as many cases (15) they were supplemented by one other consultancy. in the apparently accentuating spatial division of elite management to which their growth is contributing . however. In conditions of increasing uncertainty. The common practice is thus for clients to combine varied consultancy skills. Their temporary role also divorces them from the wider corporate consequences of such change. Some projects combined small to medium-sized consultancies with individual specialists (7) or technical specialists and suppliers (3). including small to medium-sized firms (6 cases) and technical specialists (5). In many cases. traditionally organized companies. of course. Forty per cent of the projects employed individual consultants including sole practitioners and academically based 'consulting professors' . Generally. Consultancy expertise is increasingly influential because of the variety of challenges faced by client managers and the reduction in many in-house support functions. once their senior staff have gained a project. however. Even where large consultancies are employed. would prevail whenever specialist expertise influences management decision-making. can also be influential at the highest strategic level in advising key managers. sometimes to support in-house teamwork. These roles are. more broadly.

each contributing information. offering 'state of the art'. Clients exert ultimate control over any process of change and effective consultancy must take account of the specific practicalities of implementation. legal or financial expertise. tends to complement client in-house experience and consultancies may not be employed at all where this is deemed to be a 'market'orientated mode of working. The growing use of consultancies follows these imperatives further. since this is largely the responsibility of client staffs. These include the devolution of many aspects of control within large organizations and reductions in their headquarters and middle management functions. from a 'production'. * growing recourse to outside business services is a symptom of wider changes which also affect the development and deployment of management expertise more generally. building on established client skills through experience and training. At this strategic level. The balance . in information technology. 48. consultancies are commonly employed both to support operational improvements and to enable senior managers to plan ahead strategically as competition intensifies. They draw on sources of intelligence and authority which are increasingly remote from traditional corporate cultural and social. It offers flexible access to a widening range of management expertise from organizations whose methods of working are often presented as exemplars of the style required of future corporate management.660 in the UK. Many 'business services' must be the joint products of consultancies and clients. specific expertise.sometimes after having undergone such a transformation many corporations employ a series of often small consultancies as extensions of their increasingly 'lean' management capability. additive way. the commonly drawn contrast between factors encouraging internalization and externalization of functions is thus difficult to draw. the use of more technically orientated strategic consultancies. * the most common requirement of all types of strategic consultancies is that they work closely with client staffs. utility to the client remains the determinant of its economic significance. intensive temporary assistance or an impartial perspective on the deliberations of client managers. For example. internationally promoted management techniques to speed the pace of restructuring through willing corporate managers. In offering. various relationships between client and consultancy staffs thus underlie these exchanges. although it may be applied to more routine outsourcing. organizational restructuring or human resource development is more often employed where there is already a significant degree of client experience arising from past pressures to change. drawing on them regularly as a controlled resource of expertise. Summary Drawing on both questionnaires and interviews.6 explanation of the outcomes of such exchanges in terms of relative 'power relations' between the greater expertise of consultancy compared with client skills is misleading (Walker 1989. often in combination. O'Farrell and Moffat 1991). with dependence running in either direction and with varying degrees of staff acceptance. consultancies are primarily agents of globalizing change. More routinely . The commercial need for these changes dominates 'postmodern' management commentary PeterWood and research (Clegg 1990). moving. including employment and community. in the financial services and retailing markets. The successful implementation of change depends on such transfer. strategic consultancies have devised and supported the emergence of a new set of cultural norms. In geographical terms. for example. marketing. For some. such as manufacturing firms undergoing critical restructuring to survive. However original or strategically orientated a consultancy input may be. Companies nevertheless display wide variations in how consultancy expertise is integrated into their operations. and each monitoring the outcomes. Consultancies have thus facilitated the survival of these corporations but at the cost of radical functional and spatial reorganization. consequences. they augment in-house expertise but not in any simple. or privatizing utilities. perhaps the most significant outcome of joint in-house and consultancy service production is the transfer of expertise between staffs. ideas and team personnel. the evidence suggests * consultancy expertise in support of broad processes of strategic change. On the other hand.

marketing and other consultancies in international as well as interregional trade. the main factor influencing access to such expertise is the experience of corporate managers in each region in engaging with it. their decision-making and action. finally. the alignment of . is most active in southeast and reflects its range and quality of supply (O'Farrell et al. including that from consultancies. Much of this evidence encompasses what Tordoir (1993. The use of local strategic specialists. 1992. regular or routinely subcontracted functions. Wood et al. often favouring repeat work. The success of its regionalized mode of production depends in turn on its relation to global networks of corporate control (Allen 1992). 1992 demonstrate this with regard to 'blue chip' clients in Scotland). Individual contract negotiations often define required outcomes and these may be closely monitored. As has been seen. however. 1992. 9. essentially as an extension of corporate management practice and priorities. itself negotiated through client-consultancy interaction. within the greater southeast. not just in manufacturing but also in private and public services (Champion and Townsend 1990). again especially for more technical. Business services are. As noted earlier. corporate access to this expertise. Various aspects of client operations may be affected and more than one consultancy may also be engaged on any project. 1993). political and cultural context of change. 1994) terms a 'sparring' relationship. under the pressures of international competition. the greater southeast offers a nexus of corporate management and technical expertise which dominates many aspects of production in other regions. however. including those available through the branches of major consultancies. In general. These are reflected in consultancy choice. It is readily available from national (predominantly southeastern) or even international markets and institutions (O'Farrell et al. and absorbing it into. the implications of business service growth are rather different. is at a premium. locally available in all regions and may be successful in developing wider export markets (O'Farrell et al. the extent and impacts of corporate restructuring have been and continue to be profound. and the basis for. often in association with UK-based clients (O'Farrell and Wood 1996). the managementof change and regionaldevelopment depends on relative levels of experience or technical skill and the urgency and degree of change. Even where profound cultural change is required. especially for important or longerterm projects. whether from in-house or consultancy sources. The processes of project management commonly draw on a continuous and evolving requirement for expertise. He emphasizes that close interpersonal and reciprocal relations require sensitivity to the strategic. One consequence in this region is the growing involvement of successful independent management.Business services. and most pervasive in their corporate impact. of course. Business services and regional development: the corporate perspective 661 Regional patterns of corporate activity in the UK are well-known and have been much commented upon. From the point of view of the expertise available to other UK regions. who initiates and controls change in relation to who is affected by it? Familiarity of client personnel with their own organization presents both barriers to. The client authority structure is also important. As in the southeast. Stabler and Howe 1988). in which consultancies augment client expertise in areas of broad management capability. although these often mainly support the more standardized services. dominate much management endeavour. however. the ability of in-house staffs to implement it and still to deploy their own specific expertise effectively determines the outcome of any consultancy-supported change programme. But more subjective responses tend to dominate general assessments coloured by interpersonal relations. computer. the significance of client inputs makes it difficult formally to assess the effectiveness of business service support. Clients also engage in some regional sourcing. sector-specific. Ch. Senior managers frequently draw on the authority of consultancies to overcome resistance. The adaptation of spatial patterns of production and exchange. On the other hand. Local needs may also be served through interregional supplier networks or by investment from outside firms in branch offices or communications infrastructure. Strategic expertise. Marshall and Wood 1995. deregulation or privatization. They are most active. change. is hardly affected by regional location. The evidence presented here indicates that the growth of the independent business serv- ices sector is reinforcing these established patterns of exchange and domination.

At present consultancy expertise is directed predominantly towards restructuring the corporate (and increasingly the public) sector. and Dawn Rotheram. This appears to be true even of the 'One Stop Shop' Business Link initiative (see Bennett et al. and controlling. University of Cambridge. R-000-234358). emphasize public agency advice. David Keeble. University of Birmingham. Management and technical expertise remains dependent on a narrow range of corporate opportunities which rely more for strategic expertise on non-local sources. School of Geography. for PeterWood example. provided . no consistent approach to such policies has yet emerged. Companies with effective in-house management or which operate in areas of relative commercial stability may not need to employ consultancies. therefore. Heriot-Watt University. Research Fellow. the expertise offered by various types of consultancy. exploiting agglomeration advantages and developing a growing global role. Unfortunately. Locally based small to medium enterprises (SMEs) probably face most difficulty in actively engaging with. however. the use of consultancies is a symptom of a much broader sea-change in modern management approaches which underlies growing instability in regional and local economies. Elsewhere. Even this. presenting a significant imperfection in the market for management skills. In fact. neglecting the resources of commercial experience available through the business service sector. Most local and regional business advisory schemes. positive attitudes to consultancies and good practice in their use appear particularly to be associated with rapidly changing corporations. consultancies are instrumental in implementing the principles they promote. Segal Quince Wicksteed 1991). attracting agglomeration advantages and supporting a growing global role (Amin and Thrift 1992). particularly where there is strategic potential for growth. although there is some networking of complementary skills. and the Business Growth Training programme have been modestly successful in providing consultancy assistance to SMEs (Marshall et al. Even large companies with considerable resources of in-house expertise have taken time to develop the effective use of consultancies over the past fifteen years. The resulting diverse and competitive corporate markets of the southeast provide scope for specialization. The nature of this study made it impossible to distinguish systematically between their effective and ineffective use. Nor could judgement be passed on non-use by some respondents. While fashionable management gurus catch the headlines. Department of Geography. In the UK generally. Much the most significant source of regional advantage is collaborative production at high management levels with corporate client staffs. they act primarily as agents of regional economic restructuring rather than offering significant prospects for export-based net growth. policies such as the Department of Trade and Industry Enterprise Initiative. wherever they are based. conducted much of the survey work. seems not to be based primarily on collaborative production with other service companies. 1994. with limited in-house management resources. This has been a gradual process. Concluding comments 'Consultancy culture' is not an autonomous force for change but a symptom of wider influences affecting modern corporate management styles. was also a co-director. Only in the greater southeast are they involved in a distinctively space-based production system. 1993. which in turn offers potential for service export to national and international markets. Corporate networking therefore dominates the southeast regional production system. one of the main advantages often offered by consultancies is ease of access to specialists. University College London. compared with seconding or training client staff already committed to other work. It appears that. In most regions. Nevertheless. John Bryson. Consultancy influence should not. Bennett and McCoshan 1993). be overstated. co-director. of course. within the context of growing competition. the growth of business services seems to be polarizing the geography of elite expertise in support of corporate goals. Some have still not yet done so. In Britain. Patrick O'Farrell. Acknowledgements The work on which this paper is based was undertaken with support from the UK Economic and Social Research Council (Award No.662 consultancy work to the strategic needs of clients seldom depends on a high degree of regional co-location. However. lower levels of indigenous business service skill reflect weaker market and competitive conditions (O'Farrelland Wood 1996). they may be most in need of it.

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