Consultants And Getting The Most Value Added - When and How to Use Consultants Cost Effectively

As a CEO I struggled long and hard over any decision to use a consultant. There are many issues that need to be managed by the client to keep a consultant from going overboard on time and costs.

Too many need too long to get up to speed on your business (on your dime), cost too much and can not provide tangible results on a limited project basis. Too many are unproductive and do things in ten hours that I know I could have done in 2-3 hours as paying by the hour is often a de-motivator while paying by the task aligns the client's and consultant's interests more.

All that said, I currently make my living as a consultant and do believe there is a better way.

The old saying that a consultant is someone who you pay to learn your business who then goes down the street to sell that expertise to someone else next week can be true if you let it happen that way. But it does not have to be that way if you use consultants appropriately and as a collaborator.

It is also important to understand that a consultant's value added is often what the client does not understand. For whatever reason you may be too close, too entrenched in the industry or not see it due to very different experience.

The difference between what the client thinks they need and what they actually do need is the consultant's value added.

There is not a truer saying and understanding this is critical. What this means is that if you could understand the problem fully and/or describe the solution you would not really need the consultant at all and would probably even have all the experience and skills to solve the problem also. Therefore, it is critical that you have flexibility in the definition of the problem and the solution, as the consultant will be most effective then. Part of the consultants job should always be helping to define the problem and solution (Phase I), not just solving one you as the client defines.

One reason we need consultants is that their outside perspective can calibrate us to many outside changes that may not have been adjusted to as they happened due to corporate inertia and "tradition". A good consultant can quickly find problems you did not know existed and suggest solutions, however, they can sometimes not implement the entire solution due to lack of authority and resistance from staff who will be affected. The best consultants will understand this an define what you and others might need to do to solve the problem.

For any single person project ALWAYS interview and hire only the INDIVIDUAL who you know will actually perform the work. Never hire a FIRM on their reputation, as in personal services only the individual matters.

Types of Consultants:

1. Content or specific knowledge in a particular field (i.e. marketing in a particular industry), scientists, programmers with certain language skills.

2. Expertise - Knowledge that transcends any one industry and is applicable in many areas. (i.e. management and strategy consultants)

3. Knowledge - This is experience, as in "been there, done that" exactly as an operational participant (not as a consultant). This is the type of consulting the C-Level provides and means doing what you have done before many times.

4. Behavioral - People who specialize in facilitation and third party intervention or training. (i.e. focus groups, image consultants)

5. Rolodex - People who facilitate meeting other people. Generally a slimy way to make a living in my view, as the value added is debatable, and selling access to other people is a dubious way to make a living. However, sometimes a necessary evil for a short period of time.

TOP TEN TIPS ON USING CONSULTANTS WISELY:

Consultants must participate in the definition of the project and problem. If not they are a contractor, not a consultant as they are really not adding much value in knowledge and experience, just manpower.

You must trust a consultant's integrity and align your goals with theirs. This often means flat rate projects, after they are well defined so there is no incentive to take longer than necessary. Trust your gut on this, don't hire someone who you do not "feel" good about.

The firm does NOT matter, only the actual person who will do the work. Therefore sole practitioners are almost always more cost effective and better on smaller and single person projects. Don't fall for the "partner selling bait and switch routine" where a freshly minted MBA is brought in after the contract is signed. This will cost you twice as much for inferior work. Get a guarantee on who will DO THE WORK before making any commitment and always interview them too.

Always look at specific past experience compared to WHAT YOU THINK is the problem, then compare again after the project is defined well (Phase I is over and you are truly looking at solutions).

Know the type consultant you need (see above) and focus on that value added in interviewing and deciding on the PERSON.

Test a consultant with a smaller project first when practical, then do larger projects after you have initial results and chemistry.

Consultants must be supported by your staff, all the answers are usually there already but not surfacing. So provide access to everyone.

Always have regular updates, even if just a quick phone call on status, at least weekly.

Always have targets with real dates and costs outstanding at all times, unless the consultant is really a mentor or sounding board for ideas.

CEOs should always have a few consultants they have relationships with in different expertise areas to call on for quick "double checks" of major decisions. A day of consulting time can save a fortune on bad decisions made with good intentions when the entire management team is looking at all the same internal data, but lacking a broader outside perspective.

Every company needs consultants sometimes, most need consultants fairly regularly, but use them sparingly for well define projects and expertise you do not have in-house.

A Project Process:

Analysis and Definition of Problem with research and interviews (often 30% to 50% of cost). Most answers will already be there, but the staff is not making it happen.

Analysis on solution options with brainstorming and review (an iterative process with communications to all involved)

Implementation

Results Analysis and feedback to adjust and optimize (possibly return to 1 to repeat process when additional improvements can be justified financially)

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