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| Stimulus |
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Everywhere you turn these days, the talk is of economic stimulus. In Japan, for example, the ruling and opposition parties passed a broad economic spending plan. The UK government is shoring up its banks, and the US Congress will likely pass a massive spending and tax cut program.
Given that cash-starved clients are reining in spending and delaying projects, many consultants could also use a stimulus package. Before you jump onto your private jet and head to Washington to get in line for a handout from Congress, consider a few simpler steps.
Begin with the clients you serve. How's the economic mess impacting them? Are there any opportunities to bring new thinking to old problems that may be cost effective and high value? Even if you don't generate work from these ideas, you'll demonstrate that you're looking out for the client.
Now is also a good time to rekindle old relationships. Sure, it's hard to pick up the phone and call someone you haven't talked to in a while. But, if you have something of value to discuss, that call could mean a stimulating new opportunity for your client and for you.
Finally, get ready for the future. This slump will end, so think about what your clients will need when their fortunes turn around. Some consultants are talking to clients now about what their businesses will look like in the future once the economy gathers steam again and the regulatory environment starts its inevitable shift.
For some consultants, times are lean. But remember, "This too shall pass."
Enjoy this month's issue.
And send me an email if you have comments.
Mike
McLaughlin
Editor
Management Consulting News is a publication of MindShare
Consulting.
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| MCNews 12 Index of Professional Services |
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US Economic News |
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McNews 12 Index |
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"So goes January, so goes the year."
Let's hope that common bit of investor wisdom doesn't hold true this year. If it does, 2009 will be a long year. It was the worst January ever recorded for the Dow and S+P averages. It's pretty easy to understand why. The headlines scream bad news, from layoffs to bankruptcies and assorted corporate shenanigans.
The US gross domestic product shrank at a 3.8 percent pace at the end of 2008. Even though this is the worst showing in a quarter-century, it is much better than the 5.4 percent decline economists had expected.
Consumers kept their wallets in their pockets last month, as spending fell for a record sixth straight month. On the flip side, consumer savings jumped, which indicates slower spending in an already sagging economy.
The news wasn't much better for the MCNews Index, which dropped almost 6 percent last month. Part of that decline was due to the catastrophe at Satyam Computer Services, which lost almost 80 percent of its value in one month. Having your former chairman doing the perp walk for cooking the corporate books is very bad for business—and for the MCNews Index (see more in the article below).
That's not to say that others didn't have a bad month. Both IBM and Accenture, which often fare better than others in these market conditions, also suffered with the rest of the market in January.
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MCNews 12 Index |
YTD
Change |
S+P 500 YTD Change |
| Jan 2009 |
641 |
-5.8% |
-8.6% |
| Dec 2008 |
681 |
-24.0% |
-39.0% |
| Nov 2008 |
652 |
-27.0% |
-33.0% |
The MCNews 12 Index reflects general investor sentiment about the state of the global professional services industry.
The twelve publicly-traded companies included in the MCNews 12 Index account for roughly $80 billion in combined annual revenue, and serve clients around the world.
Learn more about the MCNews 12 Index 
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| Interview:
Sydney Finkelstein |
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 "In many instances, people make bad decisions because they think they have the right experience base for a particular situation when, in fact, they don't."
Sydney Finkelstein is a professor at Dartmouth's Tuck School of Business, and the author of Why Smart Executives Fail. His areas of research include strategy, leadership, warning signs for corporate disasters, and learnings from mergers and acquisitions.
His new book is Think Again: Why Good Leaders Make Bad Decisions and How to Keep It from Happening to You.
We asked Finkelstein why smart people don't always get it right, and how we can safeguard ourselves against flawed decisions.
Read
our interview with Sydney Finkelstein
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| Tips for Consulting in a Recession |
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The consultants at equiteq, who specialize in mergers and acquisitions for the consulting and IT industries, just published a complimentary guidebook entitled, 100 Tips for Consulting Firms to Survive and Grow in a Recession.
After surviving two previous recessions, the authors summarized their hard-won lessons into this highly readable book. The guide is organized into sections using equiteq’s "8 levers of Equity Value" model. Each section begins with a brief explanation of the importance of the lever to growth, followed by specific tips that you can implement.
The guide is available to you at no charge by following this link.
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| Top Consulting Firms to Work For |
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Fortune magazine released its annual report of the "100 Best Companies to Work For," and consulting firms are featured prominently among the best of the best companies.
Boston Consulting Group (BCG) claimed the number three spot on the list, edging out contenders like Google and Cisco. The most common job within BCG is consultant, and the average salary for that role tops $140,000.
Accountants and consultants at Plante & Moran appeared on the list for the 11th consecutive year at the 42nd spot, followed by Ernst & Young (51), Booz Allen Hamilton (52), and KPMG (56).
In a year of turmoil for many firms, executives at KPMG doled out bonuses totaling more than $100 million. And Dennis Nally, audit firm chairman at PricewaterhouseCoopers (58), told employees, "We have no plans to downsize, rightsize, or reduce our staffing levels." What these firms understand is that in a time of economic stress, retention of people remains a strategic priority. Instead of simply slashing payroll, they look for other ways to tighten their belts. And that behavior will serve these firms well once the economy turns around.
Congratulations to all the companies that have bragging rights as one of the 100 best places to work.
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CEOs Sweating Bullets Too |
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You're not the only one who's concerned about the state of the economy. In a global survey of CEOs by PricewaterhouseCoopers, only 21 percent of CEOs are very confident about the growth prospects for their companies in the next year. What's most telling is the sharp decline in CEO confidence. The survey was done in the final quarter of 2008, and researchers noticed a remarkable decline in the confidence of the survey respondents who replied later in the quarter.
In response to the weakening economy, look for CEOs to hunker down by attempting to maximize returns from existing markets, rather than expanding into new ones. In the short-term, CEOs are working to maintain sources of credit, preserve revenue, use working capital more effectively, and manage costs. Translation: Expect more layoffs to roll through the economy.
On a separate note, a survey of public opinion by PR firm, Edelman, shows that statements by corporate chiefs concerning their businesses are considered to be extremely or very credible by only 17 percent of respondents, a six-year low. It was hard to believe that anyone would spend more than $87,000 on an office area rug, as the former CEO of Merrill Lynch reportedly did.
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| Consultant's Perp Walk |
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 Last month, police in India arrested B. Ramalinga Raju, the founder and former chairman of outsourcing giant, Satyam Computer Services. Raju admitted to falsifying earnings, employee counts, and the company's cash balances. Investigators are looking into how anyone could perpetrate such fraud for so many years, without the company's CFO or Audit Committee getting wind of it.
The scope of the scam could total more than a billion dollars. In the meantime, Satyam is being positioned for a potential auction to the highest bidder. Satyam's share price fell from $9.35 to $1.90 in the month of January.
Some view Satyam's woes as an opportunity. If you type the keyword "Satyam." into Google search, for example, you'll find a paid ad from CapGemini's Outsourcing practice entitled "Satyam Uncertainty?," which shows the trend.
Not to be outdone, Forrester Research, the marketing and technology researcher, displays a Google ad called "Satyam Scandal." Follow that link and you're offered a three-page special report on the impact of Satyam's predicament. You'll need $279 to read the report.
In more bad news for Indian outsourcing firms, the World Bank announced that Wipro Ltd, one of India's leading outsourcers, has been banned from doing business with the Bank for four years. According to World Bank officials, Wipro staff provided "improper benefits" to bank managers. Satyam and Megasoft Consultants Ltd were also put on the Bank's ban list for similar infractions.
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| Coming
Attractions |
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 "We don't trust people until we've seen them get emotional..."
Next month, we'll talk with Nick Morgan, Founder of Public Words, Inc., and the author of Give Your Speech, Change the World. One of the top communication coaches, Morgan is a former Fellow at Harvard's Kennedy School of Government.
His latest book is Trust Me: Four Steps to Authenticity and Charisma. Morgan says that every communication is two conversations--the verbal one and the nonverbal one. And if those two conversations are aligned, you have the ingredients for persuasive communication.
We'll ask Morgan how we should rethink our communication strategies to align those two conversations and what we can expect from those changes.
Look for the next issue of Management Consulting News on March 3, 2009.
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