PA Consulting Group
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|Founded||1943 (Personnel Administration)|
|Key people||Jon Moynihan, Executive Chairman
Alan Middleton, Chief Executive Officer
Andrew Hooke, Chief Operating Officer
PA Consulting Group is a firm of over 2,000 people, specialising in management and IT consulting, technology and innovation. As of 2012 it operates globally from offices across Europe, the Nordics, the United States, the Gulf and Asia Pacific, working in both private and public sectors.
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Personnel Administration (PA) was founded in 1943 by three Englishmen: Ernest E. Butten, Tom H. Kirkham and Dr David Seymour. Britain's war effort created great demand for munitions and goods, which had to be produced by a relatively unskilled work force. Butten and co formed Personnel Administration Limited to provide advice to industry as to how to improve the productivity of their workers.
Like the other three firms that dominated consulting in the 1940s, 50s and 60s, PA was an offshoot of the pre-war Bedaux Company. Bedaux in turn was descended from the time and motion 'scientific management' theories of Frederick Winslow Taylor and Frank Gilbreth. Butten sought to take the somewhat mechanistic and task-orientated concepts of scientific management and add a human dimension to them. The chief idea, along the lines of Douglas McGregor's 'Theory Y', was that by involving the worker in the process of change, greater gains could be made both by the worker and the organisation. To date, time and motion management consultants had been seen as the enemies of the workforce leading to resistance and even violence; portrayed in a spoof of the role of a management consultant in the Ealing comedy I'm Alright Jack).
PA's first assignment was to train housewives to assemble the tail gun section for the Avro Lancaster bombers, as part of Britain's policy of bringing women into the factories in order to free-up male workers for the armed forces. By 1950 the company had 84 consultants.
PA expanded over the next 20 years, and by 1970 it was the largest management consulting firm in the world by headcount (closely followed by Booz Allen and McKinsey). PA had also expanded geographically, mostly along the lines of the British Empire: indeed its operation in Australia provided roughly a third of the firm's revenue.
In the 1960s PA diversified its revenue sources significantly by more or less inventing the 'newspaper box' advertisement for recruitment purposes. This concept spread rapidly across Europe and the Far East: in some countries, during the 60s, the 'PA Supplement' was an extra section of the newspaper filled entirely with advertisements from PA Recruitment.
Butten retired from PA in 1970, having earlier sold his 100% shareholding in PA to the Butten Trust in 1958. The Trust was intended as a long term guardian of PA's fortunes and an assurance that the company would be 'owned by the employees'.
PA's position in the industry deteriorated drastically over the following quarter century, as competitors such as McKinsey and the newer strategy consulting firms (such as Boston Consulting Group and Bain) redefined the concept of management consulting. While there were occasional years with strong revenues, the company was never very profitable. One bright element during this period of general decline was PA's work advising companies on potential applications of technology to business issues. Arising out of this success, major technology centres were built in Melbourn, UK and Princeton, USA.
Towards the end of the 80s, after an upsurge in the industry, PA's management decided it wished to take the firm public. The Butten Trust, after an application to the courts in the UK, agreed to give 15% of its shares to its employees, as part of a long-term plan to float. However these hopes were dashed in the subsequent consulting industry downturn of 1989 to 1992 and, by the end of that downturn, PA was essentially bankrupt, with some £30 million (US$ 57 million) of debt, significant annual losses and a rapid outflow of staff.
Between 1991 and 1994, PA lost almost half of its people, partly because of its downturn in fortunes, and partly because companies such as IBM and EDS had started to enter the consulting market and were aggressively hiring. During this time, in 1992, Jon Moynihan was appointed as chief executive of PA, with a remit to turn the company around. With a new strategy, aggressive cost-cutting, and an industry upturn, the turn around succeeded and in 1995 PA made record profits. Jeremy Asher became group CEO in 1998, and during his three-year tenure PA grew from about 2,500 staff to just under 4,000. The firm expanded significantly in the United States through the acquisition of Hagler Bailly Inc. in 2000 for around $96 million in cash.
Although PA suffered in the consulting recession of 2001-2004, its revenue and headcount recovered, and 2004, 2005 and 2006 were, in turn, record years for PA. In recent years the firm has significantly diversified its activities into ventures and 50% of PA's return to shareholders over the years 2002-2006 came from non-consulting activities.
PA closed its consulting operations in Australia in 2007.
PA's venture programme (PAGroup Ventures) was established in 2000 to exploit the ideas and intellectual capital generated from its consulting work. This has been highly value generating: for example PA created a third-generation mobile phone business called UbiNetics which was sold in two tranches for a total of $133 million in 2005; and Meridica - a drug delivery system company - was valued at time of sale to Pfizer at $125 million in 2004. Each sale generated a return of many multiples of PA's total investment in its ventures programmes to date.
PA demerged its successful venture arm, Ipex Capital, in June 2008. PA Consulting continues to work closely with Ipex Capital on existing ventures in the Ipex portfolio as well as looking at new opportunities together.
Procserve continues to be a wholly owned business of PA Consulting Group, providing secure electronic marketplaces with vendor-neutral connectivity and transaction capabilities.
2008 Data Loss
In 2008, PA Consulting lost a USB data stick containing the details of thousands of criminals. This loss followed a string of other high profile data losses by UK government contractors, including EDS losing personal details of 100,000 serving personnel prompting the Home Office to review its contracts
- The Wall Street Journal Europe (9 July 1997). Article by Shailagh Murray: "British Consultancy Found Needy Client In Its Own Office - PA Group's Overhaul Offers Lesson in How to Survive Increasingly Tight Sector"
- "Who We Are". London: Agile Energy. Retrieved 17 July 2012.
- "Company News; Hagler Bailly Agrees to Purchase by PA Consulting". The New York Times. 20 June 2000. Retrieved 17 July 2012.
- Australian Financial Review, 21 Sept 2007
- Ipex Capital website (June 2008)
- ProcServe website
- .Firm 'broke rules' over data loss