Successful Business Relationships in Management Consulting

Driven by Soft Skills?


Master's Thesis, 2010

101 Pages, Grade: 1.3


Excerpt

Table of Contents

Abstract

List of Abbreviations

1. Introduction
1.1 Background, Scope, and Context
1.2 Motivation, Research Objectives, and Hypotheses
1.3 Approach and structure

2. Literature Review
2.1 An Overview
2.2 The Specific Characteristic of Management Consulting Services
2.3 Business Relationships
2.3.1 What are Business Relationships?
2.3.2 The Role of Trust and Commitment
2.3.3 Customer Satisfaction
2.3.4 Customer Loyalty, Retention, and Defection
2.4. Soft Skills - Drivers of Successful Business Relationships?
2.4.1 Definition and Scope
2.4.2 Communication Skills
2.4.3 Emotional Intelligence
2.4.4 Ethics and Integrity
2.5 Literature Review Summary and Implications

3. Aims, Objectives, and Hypotheses
3.1 Aims and Objectives
3.2 Building of Sub-Hypotheses

4. Research Design
4.1 Philosophy, Approach, Purpose, and Method
4.2 Sampling and Data Collection
4.3 The Research Instrument
4.3.1 Appropriateness
4.3.2 Measures
4.3.3 Reliability and Validity
4.3.4 Questionnaire Design and Administration
4.4 Data Analysis and Presentation
4.4.1 Scale, Reliability and Assumptions
4.4.2 Hypothesis Testing

5. Results
5.1 Data Presentation
5.1.1 Sample Description
5.1.2 Business Relationships and Skills
5.2 Hypotheses Testing
5.2.1 Statistical Significance
5.2.2 Sub-Hypotheses SH1 - SH3 and SH5-SH7
5.2.3 Sub-Hypotheses SH4 and SH8
5.2.4 Sub-Hypothesis SH9
5.2.5 Basic Working Hypothesis

6. Discussion, Conclusion, and Recommendation
6.1 Summary of Findings
6.1.1 The Business Relationship
6.1.2 Soft Skills and Technical Skills
6.2 Research Limitations
6.3 Suggestions for Future Research
6.4 Recommendations for Executives
6.5 Conclusion

8. References

9. Appendices
9.1 Illustrative Soft Skills
9.2 Correlation of Measures and Sub-Hypotheses
9.3 Questionnaire
9.4 Collected Data on Soft Skills
9.5 Significance Testing
9.6 Gamma-Association Matrix

Abstract

The consulting industry is changing from a sellers’ market into a buyers’ market (Niewiem and Richter, 2004). Customers in the automotive and metal processing industry are facing a high level of uncertainty due to dropping revenues and a change of technologies towards electrification of vehicles.

Taking these circumstances and the fact that consulting is a pure service without any tangible aspect (Wright and Race, 2004) into consideration, the development of sustainable relationships to their customers seems to be vital for consultancies. Relationships like these show high levels of client satisfaction, trust, loyalty, and low client defection.

This study explored the effect of consultants’ soft skills and technical skills on these key relationship characteristics using an online questionnaire. This questionnaire was answered by 181 executives, all of whom are experienced in cooperating with consultants and with placing influence on the purchase decision of consulting services. The results show a clear association of relational satisfaction, trust, loyalty, and defection to the four soft skills being investigated: active listening, emotional intelligence, ethics, and integrity. These four soft skills were found to have a significantly stronger association to relationship characteristics than to technical skills. All in all, this study’s findings support a high level of importance for soft skills.

As such, it is recommended to firmly implement a clear focus on soft skill competencies into HR management of consultancies.

Wordcount: 21.911

List of Abbreviations

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1. Introduction

1.1 Background, Scope, and Context

A few years before the actual economic crisis, Niewiem and Richter (2004) argued that the international consulting industry was changing from a sellers’ market into a buyers’ market, which is surely true for Germany as well.

Now consultancies and their customers in the metal processing industry are actually facing significant change, driven by the crisis on the global markets. With the resulting limitations of tremendously restricted cash-reserves, consulting services are still required and demanded, but the market for consulting services and the will to pay high prices for them seems to be diminishing.

Nevertheless, this author’s own experience as a consultant shows that even under the present conditions, consulting contracts with high margins are fully feasible. Surely the terms ‘trust’ and ‘loyalty’ seem to be necessary preconditions between customer and consultant for any cooperation to come into being. Maister (2003) claims that ‘Clients, it seems, do not have too much difficulty in finding technically competent people to help them…’

According to Maister (2002), non-academic skills are the key to establishing sustainable customer relationships. This view is also supported by de Stricker (2005), who states that ‘It seems to be also many consultants’ own perception that their success ‘rested on additional skills and knowledge, such as communication, [and] superb listening skills….” These ‘non-academic skills’ are referred to as soft-skills in this dissertation. Consequently, it could be argued, that ‘soft-skills’ are the key to customer relationships.

Many concepts of ‘soft skills’ and their effects are discussed among scholars. The concepts of ‘Emotional Intelligence’ (Goleman, 1995) and ‘active listening’ seem to be central. Unfortunately, the term ‘soft skills’ has no coherent definition in literature. Doney, Cannon and Mullen (1998) point out that the culture of customers affects the way the concept of trust is interpreted. As environmental culture influences the nature of business relationships, it could also be assumed, that business culture does the same. Consequently, any study regarding concepts like trust would have to consider this fact or focus on a certain culture.

This paper focuses on the metal processing and automotive sector in the German speaking area. This is an industry currently undergoing heavy drops in revenue, imminent threats of mass layoffs and a change of technologies to e-vehicles and hybrid cars. Managers in this industry cannot presumably continue like they did in the past.

These managers personally face a high level of uncertainty and it could be expected that they will refer to consultants with whom they have established a trustful and loyal business relationship under these circumstances.

Many industries and countries are affected in this manner by the actual crisis, but for a project such as this dissertation, it is also important to consider one’s own access to information. The German automotive and metal processing industry is the area of this author’s professional experience and expertise. The access to information will thus be facilitated by the author’s business network.

As such, this dissertation focuses on the influence of soft-skills on dyadic customer relationships in management consulting for the automotive and metal processing industry in German speaking areas.

1.2 Motivation, Research Objectives, and Hypotheses

My personal motivation for this work is a result of my own experience in application interviews, six years of experience with consultants from a customer perspective, and two years of own experience as a consultant. I had noticed a high focus on technical skills and a lack of listening skills in all of these endeavours, but I think that especially soft skills like listening are vital for business relationships. Therefore, this dissertation targets the delivery of recommendations for selection, training, and the development of consultants with a focus on required skills in order to achieve better consultant/client relationships.

Thus, the underlying research question is:

Does a higher level of soft skills possessed by a management consultant lead to higher levels of trust, loyalty, satisfaction and less customer defection?

Based on this question, the basic working hypothesis is:

Soft-skills are a key to successful business relationships in management consulting.

The goal of this study is to confirm or disconfirm the latter working hypothesis by confirming or disconfirming the sub-hypotheses, derived from the working hypothesis in Section 3.

1.3 Approach and structure

This dissertation is structured in the following sections:

This study is based on the Introduction which provides the context, scope, and working hypotheses. Section 2.1 describes the structure of the literature review followed by the literature review. Section 3 goes into details about the objectives and hypotheses of this work. Section 4 develops the design of the research to assess the sub-hypotheses while Section 5 presents the results of the field research. These results, and thus their limitations and implications for executives and future research, are discussed in Section 6.

This dissertation also contains sections on personal development during this work (Section 7), references to all of the applied literature (Section 8) and appendices for further and more detailed illustrations (Section 9).

2. Literature Review

2.1 An Overview

The purpose of this review is to find and select relevant theory about business relationships, soft skills, and the effect of soft skills on business relationships. This literature review is based on an analysis of academic sources such as books and academic journals, supplemented by magazines (business-related and marketing) and internet sources. The search for relevant literature starts with very broad search-criteria to get an overview over all suitable subject-related material. This search is then narrowed down by its academic quality and the scope of this dissertation, which is described by these key elements:

- Business relationships in Management Consulting
- Soft skills and their effect on business relationships
- The metal processing and automotive industry in the German speaking areas (i.e. Germany and Austria)

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Figure 2.1.1 illustrates the content and structure of the literature review.

After the introductory Section 2.1, Section 2.2 illustrates the difference between the delivery of services, consulting and products. Section 2.3 introduces the concept of business relationships and the characteristics of successful business relationships. Section 2.4 presents consultants’ soft skills and their impact on these characteristics. Section 2.5 then summarizes the findings of the literature review.

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Figure 2.1.1: Structure of Literature Review

2.2 The Specific Characteristic of Management Consulting Services

Management consulting is ‘a form of situation-specific assistance provided by an independent, external and professional intervention-expert who enables the management of a client’s organisation to take action in an overcomplex management situation’ (Hagenmeyer, 2007). This assistance is delivered purely by interaction between client and consultant (Hagenmeyer, 2007). Wright and Race (2004) see the basic difference between delivery of products and delivery of services in the level of interaction between ‘seller’ and ‘buyer’. Figure 2.2.1 presents their examples of professions and their levels of interaction. It extends their view with the dimension ‘tangibility’, which also decreases from the left to the right side of Figure 2.2.1. Mixed products are shown following the ’x-axis’ in the graph from a 100% good to pure service. They have both a tangible and a service component.

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Figure 2.2.1: Difference between Goods and Services

Consulting services completely lack the tangible part and consist of 100% interaction with the client. The service quality can only be improved in this one dimension, which is in contrast to a restaurant that could improve its service quality by improving the meals served as well. Bitner et al (1994) empirically investigated ‘the kinds of events and behaviours that employees believe underlie customer satisfaction’ in the service- oriented hotel, restaurant and airline business. The questioned employees believe that their behaviour is a key for customer interaction, though all of the mentioned industries have more tangible aspects than consulting. Warren (2008) also supports that consulting services are driven by interaction with customers. To her ‘consulting is much more people-oriented, and people skills are much more important than in many in- house roles, where you can be more focused on the technology’.

Logically, ‘…service quality is highly dependent on the performance of employees’ (Zeithaml et al, 1988). In the article ‘Communication and Control Processes in the Delivery of Service Quality’, Zeithaml identified four communicational gaps ‘which can impede delivery of services that consumers perceive to be of high quality’:

1.) Difference between consumer expectations and management perceptions of consumer expectations
2.) Management perception - Service quality specification gap
3.) Service quality specification - Service delivery gap
4.) Difference between service delivery and external communications

Zeithaml claims these to be ‘factors thought to affect the magnitude and direction of [the] four gaps…. These factors … mainly involve communication and control processes…’

Summing it all up, it could be argued that management consulting is a service, generally without a tangible aspect (Wright and Race, 2004; Hagenmeyer, 2007), but with high requirements on people-oriented skills (Warren, 2008).

2.3 Business Relationships

2.3.1 What are Business Relationships?

To answer this question, the term ‘business relationship’ and what it means for the consultant/client relationship needs to be defined. The related theory is influenced by thoughts in other academic disciplines like psychology (social/group) and marketing.

Typically, the two parties of a relationship are individuals, but these two parties can also be two organisations. As such, relationships can also exist between ‘individual to firm’ and ‘firm to firm’ (Iacobucci and Ostrom, 1996).

Iacobucci and Hopkins (1992) argue that in business reality, there are always more than just two parties involved. Therefore, they suggest analysing one dyad and its relation to other dyads.

Czepiel (1990) states that, ‘A relationship exists, when an individual exchange is assessed not in isolation but, as a continuation of past exchanges likely to continue into the future‘. This definition indicates that a minimum of two parties is required and that relationships have a time dimension.

Ford at el (2003) basically agree to this degree when defining relationships as a ‘pattern of interactions and mutual conditioning of behaviours over time’, but add that relationships can change the behaviour of both parties as well. According to Ford et al (2003), managers should focus on the processes that are at work in a relationship rather than being concerned about a snapshot of it at any particular point in time.

This means that ‘relationship commitment and trust’ are needed in order for relationships to be successful (Morgan and Hunt, 1994) in the long run.

Especially the trust dimension of relationships is a widely discussed issue in literature. Maister (2002), for example, feels that non-academic skills are a key in developing successful and trustful customer relationships. Morgan and Hunt (1994) rank communication skills at the top amongst these non-academic skills. ‘You must prove that you have their interests at heart’, recommend Peppers and Rogers (2006), if you are to be successful in turning trust into loyalty.

The quality of relationships can change over time (Ford et al, 2003). Trust (Maister, 2002) and loyalty (Morgan and Hunt, 1994) are keys to successful customer relationships. Customer satisfaction plays an important role in gaining loyalty (Oliver, 1999).

This dissertation focuses on these key dimensions of dyadic relationships between a client (i.e. customer) and a management consultant: trust and commitment (Section 2.3.2), satisfaction (Section 2.3.3) and loyalty (Section 2.3.4).

2.3.2 The Role of Trust and Commitment

Trust is one of the focal points in academic work about business relationships. It is a ‘critical element in developing a business relationship’ (Foreman, 1997).

In reference to ‘trust’, words like willingness, belief, fulfilment, confidence, expectations, and promises are quite frequently used (Weitz, 1989). Ramsey and Sohi (1997) use many of these terms when they define trust (in terms of sales personnel) as ‘a confident belief that the salesperson can be relied upon to behave in such a manner that the long-term interest of the customer will be served’. MacMillan (2000) sees trust ‘as stakeholder expectations about how a business will behave in the future’. Leuthesser (1997) adds that long-term interests of buyers and sellers of services may differ, but both share the common focus in achieving shared objectives. Of course, the relational behaviour of suppliers can be instrumental in order to develop trust.

Doney and Cannon (1997) state that trust has two components: credibility and benevolence. Credibility means that both parties’ statements are reliable. Benevolence means that both parties are concerned about the other side’s welfare. Building on several academic disciplines, Doney and Cannon describe five cognitive processes to develop trust.

The initial calculative phase, where the trustor ‘calculates… in an untrustworthy manner’ is followed by the prediction of the trustor who ‘develops confidence that the target’s behaviour can be predicted’. After that, the trustor looks for ‘evidence of the target’s ability to fulfil its promises (i.e. capability) and ‘evaluates the target’s motivations’ (= intentionality). Finally, the trustor ‘draws on proof sources, from which trust is transferred to the target’ (= transference). The model also offers generic drivers and ‘factors that invoke the trust-building process’ for each step.

MacMillan (2000) adds that ‘the past trust-related behaviour’ should also be taken into consideration, which ultimately means that the level of trust can change over time.

This change in levels of trust could be due to a lack of co-operative behaviours, for example, as is claimed by Humphries and Wilding (2004).

The development of trust in a relationship is influenced by culture according to Doney et al (1998). They suggest, ‘that when trustors and targets share the same norms and values, there is a greater chance that a trusting relationship will form’. However, not only sharing the same norms (Doney et al, 1998), but also understanding the client’s culture, goes far in facilitating the establishment of a trustful relationship. Thus, Werr and Styhre (2002) found that for management consultants, trustful cooperation between client and consultant ‘requires the consultant to understand and accommodate the client’s professional, psychological and social needs’.

Trust is seen as a ‘critical element’ (Foreman, 1997) for successful business relationships and enables parties to focus on long-term benefits (Doney and Cannon, 1997). It can reduce conflicts (Ganesan, 1994 in Doney and Cannon, 1997) and is also a key-precondition of loyalty (Peppers and Rogers, 2006).

Maister (2002) enlists 16 advantages, which including personal and economic advantages of advisors who manage to establish a trustful relationship with their customers. He argues that the depth of business issues increases, the deeper (i.e. trust) the relationship is. Maister (2002) posits that ‘the more your clients trust you, the more they will’ e.g.:

- Reach for your advice
- Bring you in on more advanced, complex , and strategic issues
- Share more information that helps you to help them, and improves the quality of service you provide
- Refer you to their friends and business acquaintances

The concept of trust isn’t without criticism. Blois (1999) argues, that many studies on trust have a ‘lack of clarity in their conceptualization of trust’ and concludes that the ‘usefulness of the concept in the study of business to business relationship marketing will remain very limited.’ To prove this, he criticises a comprehensive selection of articles with definitions of trust. He claims that although the applied definitions ‘have common elements, […], each of the [above] definitions differ - some in not insignificant ways.’ Blois also adds, that trust is not necessarily reciprocal as it is assumed in many articles and asks why, that if A trusts B, one should automatically assume that B trusts A. He also criticises the transfer of results of work on the trust shared between individuals to trust being present in inter-organisational activities.

Commitment

Commitment is ‘an enduring desire to maintain a valued partnership’ (Moorman, Zaltman and Deshpande, 1992). Morgan and Hunt (1994) add that this commitment only exists if the relationship is considered to be important and that if commitment means that comparably high efforts are invested into the relationship. These high efforts are invested because long-term benefits are the objective of the parties in the relationship (Ganesan, 1994). Frow (2007) criticises this view as being ‘borrow(ed)… from other disciplines’ without considering the market-based context and adds, that the ‘meaning of commitment used in professional relationships may be more complex than its traditional conceptualisation…’ as the meaning of commitment to parties of a dyadic relationship ‘may be influenced by the culture, systems and processes of their organisation.’

Trust seems to be a key precondition to establish commitment. ‘Trust influences relationship commitment’ according to Morgan and Hunt (1994) and Leonidou et al (2008). It is therefore a key driver of strong and committed business relationships (MacMillan, 2000). MacMillan (2000) adds that not all relationships with high levels of trust show high levels of commitment as ‘commitment could be high and trust low when a business uses coercive power to ensure that its stakeholders behave in a certain way.’ This is also imaginable when ‘a business is no longer offering stakeholders benefits that are comparable to its competitors, but is still trusted because it has always kept its promises’.

2.3.3 Customer Satisfaction

Customer satisfaction is the gap between a customer’s expectations before a purchase and a customer’s perception after delivery of the product or service (Iacobucci et al, 1995). Hence, a successful business relationship has to be able to deliver goods and services that meet or exceed prior expectations. Iacobucci et al (1995) found that ‘a firm may provide ‘high quality ‘service that nevertheless does not “satisfy the customer” if the properties improved upon do not matter to their customers. Customer satisfaction can lead to customer loyalty, but it doesn't necessarily do so (Oliver, 1999). For management consulting, Harste and Richter (2009) found that satisfaction is not only positively related to loyalty, but also to positive word-of-mouth.

One reason why customer satisfaction surveys (Hill et al, 1999) and customer satisfaction oriented strategies are essentially criticised by scholars such as Iacobucci et al (1994) is that there may be customers that ‘may not be profitably worth satisfying’. Dawkins and Reichheld (1990) claim that ‘customer satisfaction surveys are highly misleading’. They suggest to ‘ask about a specific behaviour’, like the ‘decision to stop buying’, in order to be able to draw useful conclusions and develop countermeasures. Reichheld et al (2000) even use the expression ‘satisfaction trap’ to explain how surveys are manipulated in some cases and how high satisfaction rates don’t allow one to predict loyalty. Thus, they argue that customer surveys are a waste of time and money. A few years later, Reichheld (2006) added that the wrong people answer the questionnaires. Reichheld observed that often feedback is given by those who don’t influence purchasing decisions in a business context, which reduces their feedbacks’ value.

Summarizing, customer satisfaction seems to be important for business relationships in the long run (Oliver, 1999; Harste and Richter, 2009), but the prevailing view is that the measurement of customer satisfaction could be misleading (Dawkins and Reichheld, 1990).

2.3.4 Customer Loyalty, Retention, and Defection

Repeated purchasing by a customer, which is the definition of retention by Ahmad and Buttle (2001), is the base of most definitions of loyalty.

Hirschman (found in Zeithaml et al, 1996) posits that ‘loyalty [is] the decision to remain with the company despite dissatisfaction’. It is more than this though, as Hall (2007) relates this repeated purchase to freedom of choice, claiming that loyal customers are those who buy repeatedly although they have other options. To Wipperfürth (2005), ‘retention’ means that consumers are somehow constrained in their choice by barriers to change, installed by a brand or supplier. ‘Real loyalty’ is the voluntary and intrinsic motivation of a consumer to return to a brand or supplier, which to him excludes ‘loyalty programs’ such as Miles and More of Lufthansa and Star Alliance. With regard to such ‘loyalty’ programmes, Douglas (2000) points out that ‘canine-type’ one-way loyalty on behalf of customers can hardly be established in the long run.

One can assume that customer loyalty is hardly achieved. This was discovered by Dowling and Uncles (2009), who saw that ‘a mere 10% of 100% of customers is loyal to a particular brand’. Oliver (1999) discovered some of the reasons for this in ‘variety seeking’ or ‘multi-brand loyal’ customers. Jones and Sasser (1995) and Buttle et al (2002) come to the conclusion that loyalty can generally be achieved as a result of repeated customer satisfaction, but not necessarily. Harste and Richter (2009) also found that for consulting services, ‘satisfaction components contribute strongly towards client loyalty’.

Another key driver in achieving customer loyalty is ‘listening to the customer’.

Tellervision (2005) suggests to ‘Keep[ing] attention on the person at the front of the teller line’ and to show certain behaviour such as discontinuing conversations with colleagues if customers are waiting. Others, like Peppers and Rogers (1999), suggest that one ‘ensure customer loyalty by starting up a one-to-one marketing program’ and focus on ways to receive and process customer feedback efficiently. They also point out that it is not enough ‘to just install an internet-feedback platform…’

Indeed, the strongest drivers in achieving or loosing client loyalty and retention in the consulting business seem to be ‘non-economic factors like satisfaction and trust’ (Harste and Richter, 2009). Harste and Richter (2009) posit that certainly ‘negative relationship experiences caused by opportunistic behaviour [would] incur significant economic damages’, because this behaviour damages trust and thus, reduces loyalty.

The measurement of loyalty is not without pitfalls as it is not enough to simply measure ‘those staying as a percentage of the original number over a specific period’ as customers may, for example, stick with one consultancy, but may shift a lot of their consultancy spending to another consultancy (Ahmad and Buttle, 2001). This means that the revenue with this customer could decrease although he is loyal. Jones and Sasser (1995) found that customer loyalty can change over time due to external market threats such as the advent of new technologies, entrance of new competitors, deregulation, and reduction of brand dominance.

It is difficult to achieve customer loyalty, but it seems to pay off for companies in terms of economic benefits. Dawkins and Reichheld (1990) say that an increase of 5% in retention has a disproportionately high impact on customers NPV (= Net Present Value). Oliver (1999) adds that customer retention is much cheaper than customer acquisition. Customer loyalty based on a trustful customer relationship is seen as hardly imitable and therefore a sustainable competitive advantage (Kahn, 2009). With these benefits, customer loyalty is also ‘particularly important for consulting firms and other professional service firms’ (Harste and Richter, 2009). A customer loyalty-focused strategy is not without risks. Douglas (2000) argues that it may be the case that a company manages to keep its existing customer base loyal, but this customer base may be a certain generation that is aging and finally decreasing. Customer defection can be seen as the opposite to customer retention and ultimately means that customers either change to another supplier or stop using a certain product or service. Some scholars suggest focusing on reasons as to why customers defect (Jones and Sasser, 1995; Reichheld et al, 2000) in order to understand how to improve the delivered service quality. Keaveney (1995) examined that defection in the service industry is due to ‘failed service’ in most cases.

2.4. Soft Skills - Drivers of Successful Business Relationships?

2.4.1 Definition and Scope

This section opts to define the term ‘soft skills’ as well as illustrate their importance in professional life. Chakraborty (2009) found in a study conducted among professionals (which included consulting) that ‘soft skills play a very important role in various modern day organisations’. This is also supported by Hagberg Consulting Group, a consultancy agency, who point out that ‘Nearly one-quarter of executives in high-tech positions are "in trouble" due to poor people skills…’ (Kaipa and Milus, 2009). This should be true for consulting services as well (Sharma, 2009).

With regards to a definition of soft skills, Ramsoomair (2004) claims that ‘Not only the skills are soft but so are the criteria that define them.’ Generally, soft skills can be seen as the opposite of ‘technical skills’ (Maister, 2002). Perreaul (2006) supports this definition. To him, ‘Soft skills are those traits and capabilities that an individual possesses in addition to the individual’s technical and/or knowledge skill set’. Both definitions typically define soft skills by the method of elimination as ‘non-technical’ skills. Other sources list soft skills required for a certain aspect or purpose (Schulz, 2008).

One of such lists for American (High) schools is presented by the ‘Partnership for 21st Century Skills’ (in Perreaul 2006). It lists four categories of soft skills that are important for students, ‘joining the modern workforce…’, ‘that should be integrated within core content areas to strengthen schools.’ These are:

(1) Learning and thinking skills (collaboration, problem solving, critical thinking, creativity)
(2) Life skills (people skills, accountability, ethics, leadership)
(3) Information and communications technology skills
(4) 21st century content (global awareness, financial literacy, and civic literacy).

Another example of such a list of soft skills is Purdue University’s (found in Ramsoomair, 2004) ‘illustrative soft skills’ listing (Appendix 9.1.):

- work ethic
- courtesy
- teamwork
- self-discipline and self-confidence
- conformity to prevailing norms

Both these lists (‘Partnership for 21st Century Skills’ and Purdue University) overlap in some aspects. While, for example, the ‘partnership’ enlists collaboration, ‘Purdue’ enlists teamwork. Both expressions overlap somehow, but they are not completely the same. Another example is ‘work ethic’, as Purdue calls it, which is called ‘ethics’ as part of ‘life skills’ by the partnership. Both are similar but not fully the same. While both lists are rather close to each other in some points, they differ significantly in other aspects. As such, the partnership enlists special ‘21st century content’ skills that are not a part of Purdue’s list.

Some listings in literature may overlap or complement each other as was illustrated above. With respect to the constraints of this dissertation, it is useful to find a comprehensive structure for a more detailed literature review. Ramsoomair (2004) categorizes the soft skills of Purdue University and Partnership for 21st Century Skills together with findings of his own literature review. He has come to four categories of soft skills:

- Communication Skills as being ‘at the top’
- Emotional Intelligence as definitely covering ‘… much of the same zone as soft skills’
- Integrity and ethics as to him ‘no discussion of soft skills would be complete without the latter two’.

Ramsoomair (2004) posits that these four categories are those that ‘research on the subject usually shows … in common.’ Since this dissertation is focused on management consulting, it is important to decide about the more suitable of both lists to go forward with. In this regard, it was found that Wootton (1995) and Birtles (2008) suggest communication skills, especially listening skills, as being very important. Othman et al (2008) found EI ‘proposed to be the most salient concept in professional service’. Allen and Davis (1993) see ethics as important for consulting services while Hagenmeyer (2007) feels integrity is of great importance. With the sources just mentioned, Ramsoomair’s (2004) structure is pretty close to the PSF and consulting requirements. Therefore, his four categories and their effect on the characteristics of successful business relationships are discussed in further detail in Sections 2.4.2 - 2.4.4..

2.4.2 Communication Skills

Spurlock Miller (2000) suggests that communication skills ‘tend to be more important than technical skills’ and Sharma (2009) found communication skills to be most important for success in the workplace of IT companies in India and maybe in the worldwide PSF context. Spurlock Miller (2000) lists two dimensions of communication and communication skills as well as written and oral communication. Included among her 36 written communication skills are:

‘Sell ideas well in writing’, ‘write under pressure’

She also lists among her oral communication skills:

‘Have effective oral communication skill’ and ‘ask appropriate questions’

Spurlock Miller (2000) doesn’t mention non-verbal communication. O’Connell (2005) found that ‘70 percent of communication between people in the same language is nonverbal’. He lists seven dimensions of non-verbal communication - all of them represent a communication skill: e.g.

- tone of voice
- proxemics (spatial aspects of communication)
- body position
- gestures
- facial expression
- …

The latter listings illustrate, that the field of communication is wide. This field is narrowed down by making use of the following articles. With specific regard to consulting service, Wootton (1995) postulates that ‘the good consultant is a good listener’ and thus, addresses the importance of listening skills for consultants. Birtles (2008) supports this view from his own working experience as a consultant and Warren (2008) claims that communications skills, especially listening skills, are vital. Addressing successful interpersonal communication, Carl Rogers (found in Robertson, 2005) stated, ‘that the natural tendency to evaluate from the listener’s own frame of reference, and approve or disapprove of what another person is saying, is the major barrier…’

To Rogers, this issue could be overcome with active listening. Based on the results of Wootton (1995), Birtles (2008), Warren (2008) and Rogers (found in Robertson, 2005), it can be assumed that listening and active listening play an important role among communication skills in relationships. Initially, active listening sounds like a contradiction as listening literally is passive. ‘Active listening skills are an extension to communication skills and involve both verbal and nonverbal communication’ (Robertson, 2005). Robertson adds that ‘Active listening is a specific communication skill… which involves giving free and undivided attention to the speaker’. Hoppe (2006) sees this undivided attention as ‘a person’s willingness and ability to hear and understand.’ Finally, most literature on active listening uses the following characteristics:

Paying attention, reflecting, holding back judgement, clarifying, summarizing and sharing

Active listening skills seem to play a very important role for management consulting as Cousins (1996) claims that ‘Active listening techniques are especially useful in the counselling process’. Berry and Parasuraman (1997) argue that ‘the quality of listening has an impact on the quality of the service'.

Jones and Sasser (1995) went into more detail as they discovered that completely satisfied customers believe ‘that the company excels in understanding ... [their] ... personal preferences, values, needs, ... To figure out... a company has to excel in listening to the customers...' Morgan and Hunt (1994) found a positive association between communication [skills] and trust. Good listening behaviour as a subset of communication has the same effect (Ramsey and Sohi, 1997). The level of loyalty in a business relationship is also affected by active listening.

Peppers and Rogers (2006) think that ‘you must prove that you have their [i.e. customers] interests at heart', which requires good and open communication. Finally, active listening could help to sell consulting projects because ‘when you actively listen to the prospect, you are better able to understand that prospect's needs, and in turn, you are then even better able to express the ways in which your product or service can benefit the prospect’ (Brooks, 2006).

2.4.3 Emotional Intelligence

The term emotional intelligence (EI) has a long history as it was already mentioned in 1920 by Thorndike in his ‘Theories of social intelligence’.

Recently, it was Salovey and Mayer (1990) who coined the term with their work, while certainly Goleman (1995) made the concept known among managers broadly. Salovey and Mayer (1990) provided the most commonly used definition of EI as

‘[EI is]… the ability to monitor one’s own and others’ emotions, to discriminate among them, and to use the information to guide one’s thinking and actions.’

EQ is the quotient related to EI as IQ is the quotient related to intelligence. They illustrate this definition with the following four branch model:

a.) Appraisal and expression (perception) of emotions
b.) Assimilation of emotions and related feelings
c.) Understanding emotional information
d.) Regulation and management of emotions

Goleman (1998) described EI with a simple and thus, more rememorable determinants:

a.) self-awareness
b.) self-regulation
c.) motivation
d.) empathy
e.) social skills

‘EI is key in times, we’re facing disruptive change’ say Bunker and Wakefield (2004) and they are joined by many other scholars who assign positive effects to private and business life to individuals with a high EQ. The following paragraphs focus on the positive effects on business life and business relationships. Clients look for empathy (Leyes, 2008) and that’s why employees with higher EI make better salespeople according to Deeter-Schmelz and Sojka (2003).

Regarding the performance of service staff, one could say that EI enables them to use their technical skills more efficiently (Chester, 2004), show higher resistance to situational stress (Slaski and Cartwright, 2002), improve interpersonal interaction (Banks, 2003) and the ability to receive feedback (Koczwara and Bullock, 2009). Feyerham and Rice (2002) found that high levels of EI result in an increased level of service quality and EI improves the coaching-quality (Brenner, 2007). Othman et al (2008) claim ‘that EI plays a salient role in influencing [a] service providers’ job role, …’ and ‘… is proposed to be the most salient concept in professional service’. They thus emphasize the importance of EI skills for professional services delivery. Not surprisingly, Ashkanasy and Daus (2002) were able to prove that successful and full use of emotional intelligence plays a critical role in customer retention.

The concept of emotional intelligence has been heavily criticised. This criticism addresses the incoherent definition and measurability of EI (Matthews et al, 2004). They criticise that ‘Conceptualizations of El range from an ability for processing information that is applied to emotions, subject to principles governing the intellect (e.g., Mayer, Salovey et al., 2000), to a complex interaction of qualities of emotions, mood, personality, and social orientation applied in both interpersonal and intrapersonal situations.’ Consequently, Matthews et al (2004) doubt that the work on EI is really comparable as the underlying definitions of EI in different sources may differ. Zeidner et al (2004) share this critical view on EI. They think, ‘Goleman defines EI by exclusion’ and claim that Goleman is unable to cite empirical data supporting any link between EI and the proclaimed benefits.

All in all, EI is a well-known concept that is argued to have positive effects on relationships and business life (Goleman, 1995), though it is not without criticisms (Matthews et al, 2004).

2.4.4 Ethics and Integrity

Ramsoomair (2004) mentioned, that ‘no discussion of soft skills would be complete’ without mentioning ethics and integrity.

To show what the term ‘ethic’ means, Messick (2008) makes use of his two dimensions of ethics, ‘discrimination’ and ‘conflict of interest (COI)’.

With regard to discrimination, Messick (2008) found for example, that ‘it is widely accepted that making personnel decisions on the basis of race, gender, ethnicity, or other ‘‘irrelevant’’ factors is unethical’. This conscious statement, however, is challenged by his finding, that decisions people make are not completely and consciously made, because ‘our brains … make ‘‘judgments’’ outside of consciousness’. So, we are likely to discriminate others unconsciously.

Concentrating on discrimination between groups of people, Messick (2008) also found that a ‘major element of inter-group discrimination is in-group favoritism.’ This means that people treat others better if they feel that they belong to a joint group or have things in common.

Messick’s (2008) second dimension of ethics, COI means that people can get into a situation where their own interests conflict with that of others. COI are also relevant for management consulting as consultants are ‘permanently in the danger of providing advice that runs counter to their clients’ best interest - of seeking to optimize their own sales and profits rather than (primarily) to solve the customer’s problem’ (Hagenmeyer, 2007).

According to Messick (2008), one must ask the question, ‘When someone has an interest in the outcome of (a) process, can that person be a fair and objective participant who can influence the result of the process?’ He found out that ‘people are blind to the extent to which they are influenced by their interests’. Allen and Davis (1993) support this position:

‘While a consultant can maintain high personal and professional values which are positively related to professional ethics, they somehow disintegrate when actual ethical dilemmas are faced…’

With these results, Messick (2008) postulates that most of the issue with ethics ‘is that they are totally invisible to decision makers.’

Hagenmeyer (2007) suggests seven ethical business principles are helpful for consultants to resist the temptations of COIs:

- Generally avoid conflicts of interest that could influence the consulting service provided
- Do not link inappropriate economic interests on the part of the consultant to the consulting services provided
- Do not foster unrealistic expectations.
- Only take on consulting jobs where consultants have the right expertise and experience and sufficient capacity
- Clearly define the objectives, scope, procedure and fees for each project
- Treat clients ’ information with absolute professional confidentiality (especially in respect of a client ’ s competitors)
- Do not poach clients ’ staff

In addition to the points from Hagenmeyer (2007), training on ethics could be suggested. Ronald (2008) conducted a survey among 561 undergraduate students and found ‘that the completion of a business ethics course had no significant effect on the respondent’s ethical attitudes.‘

Also, a ‘mere codification of the ethical values… may not counteract ethical ambivalence’ and ‘would be of limited value in actually regulating unethical conduct’ of consulting services ‘unless ethical codes and policies are consistently reinforced with significant reward and punishment structure and truly integrated into the business culture’ (Allen and Davis, 1993).

Summing up, ethics are heavily influenced by unconscious procedures in the human brain (Messick, 2008), can hardly be learned or taught (Ronald, 2008) and can hardly be advised (Allen and Davis, 1993).

A central topic to the discussion of integrity in business life seems to be ‘fraud’. This is the result of a global survey among more than 150 chief compliance officers whose top concern was fraud (Aguilar, 2009).

As such, it is not surprising when Thurston (2007) stated that ‘you can't be a growing enterprise if there is a question of integrity and trust in the business…’ This statement clearly relates integrity to relational trust in a way Maister (2002) does as well. Hagenmeyer (2007) argues that management consultants who ‘understand themselves as people of integrity’ and ‘see their clients as equals and regard consulting as a way to reinforce their clients autonomy’ should ‘arrive at independent judgements among the potential conflicts of interest they encounter in practice.’

Considering fraud as a conflict of interest, it could be assumed that some of Messick’s (2008) findings on COI’s are applicable.

With that, fraud and integrity may be affected by unconscious procedures in the human brain such as ethics with the same consequences.

[...]

Excerpt out of 101 pages

Details

Title
Successful Business Relationships in Management Consulting
Subtitle
Driven by Soft Skills?
College
Henley Business School University of Reading
Grade
1.3
Author
Year
2010
Pages
101
Catalog Number
V186727
ISBN (eBook)
9783656994787
ISBN (Book)
9783869433899
File size
4444 KB
Language
English
Tags
successful, business, relationships, management, consulting, driven, soft, skills
Quote paper
Franz Kriechbaum (Author), 2010, Successful Business Relationships in Management Consulting, Munich, GRIN Verlag, https://www.grin.com/document/186727

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