Individuals employed in the role of internal management consultants in (typically) large organisations within both the private and public sectors, have long been recognised as valid potential CMCs and members of the institute. Logically, therefore, the same principle has been applied to internal management units of such consultants in the context of qualification as potential Accredited Practices.
There has however always been a certain concern: how to be sure that such management units (and correspondingly the individuals within them) are actually undertaking a management consultancy role?
This paper suggests six main tests for internal management consultancy units, to be used in assessing whether a unit qualifies for consideration as an Accredited Practice. (Correspondingly, the same basic tests can be used to assess whether an individual from an internal consultancy qualifies for consideration as a CMC). The tests are designed to address basic characteristics of the management consultancy role, in the central respect of the relationship between client and consultant. The argument is that, in the absence of the characteristics which the tests address, the role being undertaken (though no doubt a perfectly valid one) is not a management consultancy role.
2. The Six Tests
The six tests, which should be taken together, are as follows:
Is the internal consultancy an identifiable organisation or unit, managed separately from its actual and potential internal clients?
The first part of the test, is there an identifiable organisation, is a sine qua non of any consideration as an Accredited Practice. The second part of the test, separate management of the unit from its internal clients, is of course relative: at some level in the overall management structure the reporting lines will come together. But this should ideally be at a relatively senior level, higher than the management level of the main business or operating units, however defined. The importance of this part of the test is that it gives assurance of the relative independence and hence objectivity of the management consultancy advice provided.
Is there the equivalent of a fee-paying relationship between the internal consultancy and its internal clients, preferably at broadly market rates or charges?
The argument is that payment for professional advice and help is of the essence of the management consultancy /client relationship. Such payment places an obligation on the consultancy and its consultant(s) to provide a thoroughly professional service delivering value for money; and gives the client the right (and the motivation) to require and ensure this, as well as helping to assure that the use of management consultancy is undertaken seriously It is recognised of course that “charging” in the case of internal consultancies is some form of internal cross-charging, using various mechanisms.
The closer such internal charging is to market rates and costs, the more the assurance that the relationship is as above: if charges are very significantly below market rates, it could cast serious doubt on this. The same point applies in the case where internal consultancies offer their services externally: subsidised rates would throw some doubt on the full validity of the management consultancy/client relationship.
Are the clients of the internal consultancy free to use external management consultants as an alternative?
It is argued that the client having a choice between different management consultancies (together with the ability at any time to go elsewhere if not satisfied), and correspondingly a management consultancy organisation being exposed to actual or potential competition (external competition in the case of internal consultancies), is – if not actually of the essence of the client/management relationship – a crucial discipline on management consultancy, in assuring a strong focus on the highest level of professionalism, delivery of results, and client satisfaction. If an internal consultancy is not subject to this discipline, then it is argued that the degree of development of these characteristics must be in real doubt and subject to serious (and sceptical) scrutiny. the client should have the opportunity to reject the internal consultant (that is go outside).
Does the consultancy have the right to refuse the assignment?
An internal consultancy that may be forced to take any assignment allocated by the parent company lacks the necessary independence to exercise detached professional judgement and to give objective advice based on that independence.
Does the consultant have the right to withdraw for professional reasons during the course of the assignment?
Similarly to the right to refuse an assignment, a consultant or internal consultancy who is unable to withdraw for professional reasons during the course of the engagement may lack the necessary detachment and independence
Would the management of the firm be able/ prepared to sign an independence statement if required ?
This can be an overriding as well as a supportive test that might compensate for any doubts on the five earlier points.
3. Application of the Tests.
As the commentary on the tests above implies, the consideration of these five tests should be undertaken with judgement and discretion; they are helpful indicators not absolute requirements and should be taken together and weighed in the balance. Considered overall in this way the tests essentially form a framework for guidance in qualifying potential internal consultancy candidates for Accredited Practice consideration, alongside other facts concerning the candidate organisation.
However if an internal practice did not substantially meet the spirit of these six tests, it should not normally qualify as an Accredited Practice candidate.
Although this is in no way an argument for the above tests which must stand or fall on their own merits, explicit adoption of these tests would, (together with the adoption of the generic term “Accredited Practice” already agreed within ICMCI), facilitate relationships with FEACO who are concerned with what they perceive as “unfair” (i.e. subsidised or closed shop) competition from internal consultancies.
Approved by ICMCI Executive Committee on 6 October 2002.