Companies Seeking Advice Spawn Host of Consultants

''Transforming'' big business has become a big business itself.

Wall Street Journal/July 24, 1987
By Peter Waldman

The dozens of companies interested in changing their corporate cultures have spawned an equal number of consulting firms, each with its own diagrams, buzzwords and theories about how corporations can improve their productivity. The consultants' advice and training can cost anywhere from a few hundred dollars for simple videotape packages, to thousands of dollars for live seminars led by such ''corporate-potential'' stars as Werner Erhard, Louis Tice and Charles Krone.

''Corporations are so hard up for answers these days that I'd say there's a $3 billion or $4 billion market for transformational consulting out there,'' says Richard Beckhard, a founding father of the field of organizational development and a business professor at the Massachusetts Institute of Technology.

Werner Erhard's Transformational Technologies Inc. says its affiliates account for about $25 million of that market each year. In 1984, Mr. Erhard expanded his popular ''est'' (Erhard Seminars Training) workshops for individuals and began to market a similar motivational message for companies. The result: a franchise that now claims more than 50 affiliates world-wide and preaches to such clients as Ford Motor Co. and the National Aeronautics and Space Administration.

Transformational Technologies' affiliates, mostly small consulting firms run by some of the half-million graduates of est, pay the Sausalito, Calif.-based firm $20,000 for the privilege of learning and licensing Mr. Erhard's core ''technology,'' which they then market under their own names. The only restrictions are that franchisees must vow to keep the information secret and must remit 8% of their gross revenue to Transformational Technologies in royalties -- whether they use the Erhard training techniques or not. One affiliate, for example, charged General Foods Corp. $15,000 for a three-day course.

For Mr. Erhard's personal touch, the fees can run much higher. NASA's Goddard Space Flight Center paid $45,000 for 47 managers to attend three sessions conducted by Mr. Erhard and two associates. TRW Inc. paid the same amount for five days of training led by James Selman, Mr. Erhard's partner and Transformational Technologies' chief executive officer.

Similarly, motivator Louis Tice, whose Seattle-based Pacific Institute expects to gross $15 million to $20 million this year, sells his wisdom to corporations for $8,000 an appearance, or $15,000 for a set of videocassettes. A company spokesman estimates that most clients pay roughly $110 for each employee who attends Pacific Institute training. At that rate, Southern Bell has paid about $1.5 million to introduce 14,000 employees to the Tice method.

GM is also putting thousands of workers through attitudinal training, but the auto maker hasn't spent much for instruction at its Van Nuys, Calif., plant. There, state officials have provided GM with a $20 million job-retraining grant, and the company is using the money to put 4,700 workers through ''Team Concept'' training.

Says Robert Thierry, chairman of the California Employment Training Panel, the state council that awarded the grant in hopes of keeping the Van Nuys plant alive: ''If you don't have the right attitude, all the change in the world in skills, tools and technology isn't going to do any good.''