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outsiders like the press to find out what really goes on inside major corporations and government departments.
Nevertheless, when I see major consumers of consultancy mentioned in newspaper headlines like Corporate
chameleon on the make (5) and Arrogant B& & d counts the rewards of failure (6) and Pru and Corus in
fat cat row (7) and BT paying ex-chief £700,000 to do nothing (8) and Laxity and complacency exposed
by AIB inquiry (9) and AIB chief s job safe despite £494m loss (10) and Line to disaster (24) and Hi-tech
shambles of Britain s airspace .(11) I get at least a little satisfaction from knowing that occasionally the truth
does partially come out. These headlines also give an indication of the poor condition of the management teams at
some of our largest and most profitable (for us consultants) clients.
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It may be interesting to compare two lists that were published in Britain. One is of the twenty companies that
seem to buy the most management consultancy from their auditors.(2) The other is a study that splits major
companies into four groups according to the pay and performance of the chief executives the four groups are
The Great , The Good , The Bad and The Ugly .(12) The Ugly were those companies that had both
significantly decreased shareholder value and yet chose to pay their chief executives often much more money than
the successful companies.
None of the top users of consultancy fall into The Great ; three of the twenty top users of consultancy are
classed in The Good whereas four of the top twenty users of consultancy fall into The Bad and five into The
Ugly . While clearly not scientific nor statistically representative, this quick comparison does suggest that paying
tens of millions to management consultancies over many years is more likely to be a sign of poorly performing,
overpaid executives with a tendency to destroy shareholder value rather than of strong, value -creating
management. Moreover, the poor performance of those companies using most consultancy, also could be seen as
questioning the real value of all the consulting, which those bad and ugly companies bought. If the work the
consultants had done was of any real value, why were their clients appearing in such a negative light in the press?
As I look back over all the more questionable management teams that I have come across, most of whom were
regular consumers of millions of dollars and pounds and euros of management consulting, there seem to me to be
four main types of situation where the top management and their consultants, rather than working for
shareholders or stakeholders interests, could be considered to have almost hijacked their organisations and to
treat them as their own personal property to be desecrated and plundered at will. I ve called these four situations:
1. There s one law for the rich and another for the poor
2. We ll take the rewards but not the responsibility
3. Management as a fashion accessory
4. It s only taxpayers money
In this chapter, where I m going to name a lot of well-known names of very powerful organisations and individuals,
the risk of death by a thousand court cases is fairly high. So when talking about clients, who bought masses of
consultancy from us and our competitors and yet so conspicuously appeared to achieve little to nothing, I will
restrict myself to only quoting from information that is already available in the public domain . In many cases,
my colleagues and I may be privy to much more information about certain organisations and individuals that,
though totally and shockingly true, is probably quite unpublishable. I apologise in advance, that for obvious legal
reasons, I will not make any comments about companies and individuals, that have not already passed the scrutiny
of our learned friends in the legal profession and are thus already published elsewhere in the public domain .
Nobody seems able to plunder a company and its shareholders quite like an American executive. Two key
Enron executives, Andrew Fastow and Jeffrey Skilling, for example made over $60 million each from off-balance-
sheet partnerships and shares sales before the company s collapse.(13) Dennis Kozlowski, the former boss of the
U.S. conglomerate Tyco, and two colleagues stand accused of bilking $170 million from the company
through a racketeering scheme involving stock fraud, false expenses and unauthorized bonuses .(14) Tyco
also paid its chief financial officer a comfortable $47 million in just one year. Moreover, Mr. Kozlowski s
generosity to himself with his shareholders money is the stuff of which legends are made $125 million of Tyco s
money allegedly spent on his homes (including the famous $6,000 shower curtain, the $15,000 dog umbrella stand
and the $2,900 coat hangers), $43 million allegedly given to charities as if coming from him personally and $1m
allegedly spent on a 40th birthday party for his wife at which A life-size replica of Michelangelo s David
carved in ice dispensed a seemingly endless stream of vodka from its private parts .(15)
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However, the best publicly documented stories of when executives at our clients and their consultants
(including us) took huge amounts of money from organisations, while apparently causing massive disruption and
loss, seem to concern American consultancies getting into bed with top executives and apparently raping and
pillaging British companies and government departments. Ever since the 1920s, American companies have
dominated management consultancy and, whereas French and German executives have perhaps been more
immune to their blandishments, in Britain it has always been fashionable for top executives to be seen to be
implementing the latest American management ideas. This has made it very easy for U.S. consultancies to sell
stuff, which may have been unnecessary or even destructive, to executives who lacked the ability to lead their
organisations. Although I have seen some true horror stories in the U.S., with incompetent management and their
consultants plundering organisations, these cases seldom seem to get the same degree of exposure as in Britain.
Perhaps this is because the litigious nature of American society prevents journalists openly calling top executives
things like incompetent, over-paid, complacent and arrogant . In Britain, the press are probably more critical
of failing management and less afraid to reveal some of the great consulting catastrophes and the failures of the
management teams who allowed them to happen.
1. THERE S ONE LAW FOR THE RICH AND ANOTHER FOR THE
POOR
I saw many management teams, which were ruthless in controlling their costs and their expenditures when it
concerned their employees reducing budgets and firing people were often painful annual rituals. Yet, when it
concerned the survival, well-being and comfort of top management and their favourite consultants, there appeared
to be no limit to the organisation s generosity. My colleagues and I lived very well from this situation, though often
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