Probably no other area of the service industry is used as often or as inefficiently as consultants. There is scarcely a firm, no matter how small, that hasn’t used a consultant at one time or another, and many firms rely on them on a regular basis. In fact, the demand for outside consultative services is so great that it has given rise to a huge and sometimes bewildering array of consulting firms offering a wide diversity of services. Consulting has become one of the fastest-growing service industries in North America. At the same time, it is unregulated, unorganized, and most client firms just don’t know how to work with and manage the consultants they hire.
Who are the consultants? Why do firms use them? These days, a consultant can be anyone, from the member of a large established firm to the man or woman who has just decided to become a “consultant” and has opened a one-person shop. Consultants are found in every field. We are accustomed to thinking about consulting engineers, but now there are consultants in accounting, management, recruitment, marketing, media, compensation, advertising, finance, personnel, sales and of course, computers and computing systems. In addition, there are specialized facets of the field which cater to client needs in such areas as obtaining government funding, labor relations, the prevention of unionization, mergers, and even dealing with government regulations and taxation. Consulting has become one of the most broadly based businesses in North America, and the trend is to continued growth and proliferation of services.
Historically, consultants have been used for a number of reasons. The client firm may not have the expertise it needs for a specific project, and the current need does not justify hiring a full-time person even for a temporary position. Hiring a consultant in this case can be a money saver. In other cases, the firm may need specific management assistance that is not available within the firm because of a shortage of staff, budgetary restrictions, and so on. This is where a consultant can provide a needed service without tying the firm to a long-term commitment.
Sometimes the company needs to learn how to introduce a new procedure, use a new piece of machinery, tackle a new market, develop a sales strategy, or simply improve the qualifications and effectiveness of its work force through advanced training and development. Here again, consultants can provide these services.
Finally, there are often cases where the client firm has a certain feeling of malaise. There are signs that something is wrong or simply a feeling that things could be better; but the firm doesn’t know what, if anything, is wrong or what to do about it when it does figure out the nature of the problem. This is a case where consultants can be particularly helpful since they can provide an outside, unbiased point of view.
Once a firm decides that it needs a consultant, how does it go about finding one? What should it look for? There are literally hundreds of consulting firms out there, and picking the right one is no easy job. A good way to approach the problem is to use the business network and find out who has used these firms before and with what degree of satisfaction. Be sure to find out the names of the individual consultants who were involved. This is especially important in dealing with large national or international consulting houses that have many employees. They can’t all have the same degree of experience or expertise, and this is what you are buying.
Often word of mouth is an excellent clue to the consulting firm’s reputation and reliability. Everyone’s brochures look great, but it’s the track record that really counts. You must ask for names of former clients and check the firm out. Get a list of its former clients and check their references. Anyone can supply a list of glowing testimonials, but it is the personal contact that you make that will give you the best information.
Look for information on how long the firm has been in business, whether it has ever been asked back to a firm to do more work, what skills it has, and what kinds of expertise it can provide.
Be sure to meet with the people who will actually be doing the work for you. The client-consultant fit is extremely important. Both parties must feel comfortable with each other and feel they can work together. There is no sense, for example, in hiring experts who are knowledgeable but so abrasive that they will infuriate your employees while solving a problem. This will only lead to other and perhaps more severe problems.
In addition, you should determine how available the consultants are and how well they understand your business, your people, and your working environment. Many firms have had the unfortunate experiences in hiring consultants who are too far away, too busy to come when a problem crops up, or who fail to understand their community, their people, or the firms themselves.
There are certain key issues that must be fully discussed and agreed upon when you hire a consultant. Try to define the issue or project as carefully as possible. Set guidelines for what is to be done and determine limits and goals.
Agree on the consulting fees and the method and frequency of payment. Some work is charged for as a flat fee; some is broken down into discrete sections that are paid for as they are completed. Sometimes consultants are paid on an hourly basis. Whatever the case, be sure that both parties are in agreement and that the arrangements are put in writing.
Determine what is to be included in the work and what is being included in the fees. Is the cost of travel to and from the firm included? What about the cost of research, computer time, test instruments, training materials, participants’ workbooks, final reports, and so on? Nail all these items down before the work begins.
Decide on the duration of the work to be performed and the timetable for it. If you do this, be sure to plan for any changes that might occur as the work progresses. New problems can surface, timetables do have to be altered, and changes may have to be made. If this happens, how will you handle it? Is there a need for an escape clause to be exercised by either party? Sometimes neither of you will want to be locked into a relationship that has soured. If this happens, you will want to be clear about how to handle it.
What services, information, access to records and people will the consultants need from the client firm? If the consultants need to meet with middle management for five days in the Bahamas, be sure that this is spelled out in the arrangements. If they must have access to your financial records, sales reports, or quality control records, be sure to stipulate and agree on this.
How will the work be evaluated, when, and by whom? These are important issues, issues often left out. The size of the fee paid is no indicator of success. Any consultants worth their salt will be able to advise you on how their work can be assessed. Both parties should want some evidence that the work has been worthwhile and beneficial.
Is there funding available for this work and if so, who will obtain it? Strange as it may seem, this question is often overlooked, to the disadvantage of the client. There are several federal and provincial grants available to support consultant services. Be sure you know about them and take advantage of them.
Finally, put all these items in a contract or letter of agreement and have it signed by both parties. Because of the diversity of consulting services, there are few, if any, standard contracts. Nevertheless, each of the key items discussed above should be clarified, explained, written down, and then signed by both parties. This will put the relationship on a firm business footing and eliminate any confusion and misunderstandings. It will also give both parties a clear understanding of what is to be done, by whom, when, and under what circumstances.
Once you have done your homework and found the best consultants for the job, put your faith in them and follow through on their advice. After all, this is what you have paid for, and it would be ludicrous to hire them and then ignore what they say. Remember, too, that if you require them to ask certain questions and recommend solutions, you may have to live with the results.
As Peter Drucker, the guru of management consultants, says, “a good consultant is an insultant.” That is, he or she may tell you things you don’t want to hear. You probably knew that hiring your brother’s son was a mistake, but when the consultants tell you this was a stupid move that shouldn’t have happened, you have to face up to reality and deal with it. You will probably be happier as a result, even if your brother is not.