Management consultancy and the public sector

Over the last two decades the public sector has been one of the more important driving engines for consuming management consulting services internationally. Consultants have been used widely to help modernise the design and delivery of public services and introduce best practices from the private sector.

The need to improve efficiency has presented an important strategic and operational challenge as it involves a range of socio-economic and political interests. In the UK the successive political parties have been dependent on their capacity to modernise society through the deployment of large software systems that can allow easier access to local authority services, healthcare and tax. The need to improve quality of public life led to the deployment of large change initiatives by deploying consulting services. Recent developments include the deployment of electronic services that aim to reduce red tape and increase efficiency by replacing traditional methods for processing information and also for responding to the public. Connecting for Health is one of the largest UK initiatives for modernising the National Health Service (NHS) with costs expected to reach £20 billion.

The relationship between management consulting and the public sector is currently changing, mainly because of the new economic constraints imposed as a result of country's exposure to deficit. The uncertain economic environment is inevitably challenging existing methods and practices by which the UK government chooses to sustain their modernisation strategy for reforming the public sector.

This research involves the collection of interview data, participant observation analysis and the production of internal reports to explore structural shifts and international trends in the changing relationship between management consultancy and the public sector.

Project objectives

The objectives of this research are to:

  • examine the implication that follow from structural change reforms in the public sector's resource allocation and impact on existing large consulting engagements that contain considerable investment and risk.
  • identify international trends regarding the responsive mechanisms by which the consulting industry reacts to the public sector’s austerity measures and how such trends come to shape the evolution of the industry.
  • explore how the changing socio-economic conditions trigger new reactions to the development of self-autonomous approaches to the regulation of organisational challenges that ultimately seek to moderate dependency on consultants.

Project findings and impact

We have found that efforts by the UK's public sector to moderate its dependency on consultants generate two key challenges. The first challenge is the absence of an organisational learning approach to introducing large-scale reforms where the emergent organisational challenges are addressed internally. The second challenge is how disruptions triggered by the intention to reduce expenditure and rely on consultants is cascaded onto the more nuanced workings of the consultant-client relationship. The management of disruption at the interpersonal level helps us understand how trust and power are regulated in the midst of disruptive change. 

Austerity measures require a new approach to accountability, which challenges the design and delivery of procurement practices by the public sector. The pressure for accountability requires the public sector to implement effective methods and tools for procuring consulting services and for generating added value.

As for the consulting industry, we find that austerity measures trigger a considerable move towards international expansion. However, this transition demonstrates deeper complexities between the migration of culture and knowledge-transfer. Consulting firms that seek to expand into new markets are required to communicate western business models to non-western clients. Such distribution raises new questions about the nature of mechanisms by which the diffusion and legitimation of consulting value happens across international territories.

This research is in its early stages; we expect outputs to be added as the work progresses.


Research team

Dr Stephanos Avakian

Output

Related materials

Managing and replacing the Aspire contract: Thirtieth report of session 2014-2015 (2015) House of Commons Committee of Public Accounts. London, The Stationery Office.

Central Government's use of consultants: Market analysis (2006) A paper presented to the National Audit Office by Fiona Czerniawska. London, National Audit Office.

Central Government's use of consultants. Report by the Comptroller and Auditor General (2006)HC 128 Session 2006–2007. London, National Audit Office.

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