Archive for month: March, 2012

People Often Say They Have… But Really Haven’t! How to Pick the Right Consultants for Your Company

Selecting the most appropriate consultant for your company and optimizing their expertise is the greatest challenge facing a decision maker.

It’s lonely at the top. Certain kinds of objective information cannot come from within your own camp.

True expertise is a rare commodity, and the successful company utilizes it on the front end, rather than on the costly back end.

Matching consultants with actual and emerging company needs is the corporate leader’s quest. With a wealth of expertise available via outsourcing, one can quickly become a ‘kid in a candy shop,’ wanting whatever is readily available or craftily packaged.

Too many consultants mis-state and over-represent what they do, stemming from:

• Eagerness to get business.
• Short tenure in consulting, believing that recent corporate experience readily translates to the entrepreneurial marketplace.
• Unfamiliarity with the actual practice of consulting at the executive level.
• Lack of understanding about business needs, categories, subtleties and hierarchies.
• Failure to create service area niches and target clients.
• Professional rivalry with other consultants, resulting in the ‘I can do that’ syndrome.

Everyone knows that dentists, nurses, social workers and respiratory therapists are all health care professionals. Yet, distinctions in their expertise lead consumers to discern and seek out specialists… or at least ask a general practitioner physician to make referrals for necessary services.

Niche consultants place emphasis in the areas where they have training, expertise and staff support for implementation… and will market their services accordingly. An accounting firm may suggest that an economic forecast is a full-scope business plan (which it is not). A trainer may recommend courses for human behavior, believing that these constitute a Visioning process (of which they are a small part). Marketers might contend that the latest advertising campaign is equivalent to re-engineering the client company (though the two concepts are light years apart).

Niche consultants believe these things to be true, within their frames of reference. They sell what they need to sell, rather than what the client really needs. Let the buyer beware.

Consultants Are Not All Alike

Distinctions must be drawn into three consulting categories (and percentages of their occurrence in the marketplace):

1. Vendors sell products which were produced by others. Those who sell their own multiply produced works are designated as subcontractors. (82.99 percent)
2. Consultants conduct programs designed by their companies, in repetitive motion. Their work is off-the-shelf, conforms to an established mode of operation, contains original thought and draws precedents from experience. (17 percent)
3. High level strategists create all knowledge in their consulting. It is original, customized to the client and contains creativity and insight not available elsewhere. (0.01 percent)

As one distinguishes past vendors and subcontractors, there are six types within the 18 percent which constitute consultants (with their percentages in the marketplace):

1. Those who still lead in an industry and have specific niche expertise. (13.5 percent)
2. Those who were downsized, out-placed or decided not to stay in the corporate fold and evolved into consulting. (28 percent)
3. Out of work people who hang out consulting shingles in between jobs. (32 percent)
4. Freelancers and moonlighters, whose consultancy may or may not relate to their day jobs. (16 percent)
5. Veteran consultants who were trained for and have a track record in actual consulting. That’s what they have done for most of their careers. (2 percent)
6. Sadly, there is another category… opportunists who masquerade as consultants, entrepreneurs who disguise their selling as consulting, people who routinely change niches as the dollars go. (8.5 percent)

99.99999 percent of actual management consultants come from five basic career orientations and fit onto one of the five branches of The Business Tree:

1. Technical or niche industry orientation.
2. Financial.
3. Entrepreneurial, small business management.
4. Academic, research.
5. Human resources management.

The remaining 1/100,000 of a percent of consultants is a rare breed… a Big Picture strategist, fitting onto Categories 6 and 7 (trunk and roots of The Business Tree). The Corporate Strategist is an idea person who has run businesses, knows about all other categories, deals in concepts and policies, and possesses sophisticated understanding and insight.

What They Claim They Do

When They Say They Provide	They’re Usually
Growth strategies	Sales trainers
Company turnaround	Marketers
Information for business solutions	Accountants

 
Choosing Consultants

These pointers are suggested in the selection of business advisors and consultants. Ask a true business strategist to help you to determine which consultants are needed, draft the requests for proposals, evaluate credentials and recommend contracting options.

Understand what your company really needs and why. Don’t pit one consultant against another, just to get free ideas. Don’t base the business on ‘apples to oranges’ comparisons.

Ask for case studies which were directly supervised by the person who will handle your business… not stock narratives from affiliate offices or a supervisor. Find out their expertise in creating and customizing for clients… rather than off-the-shelf programs which they simply implement. Determine their abilities to collaborate and interrelate with other consultants.

In budgeting for and pricing consulting services, budget for consulting at the start of the fiscal year, averaging 10 percent of gross sales. This does not include marketing, which should be another 10 percent.

See consulting as an investment (short-term and long-term), not to be short-changed. Every size of business needs consultants, just as your clients need your services. The company which makes the small investment on the front end (consulting) saves higher costs. Research shows that consulting fees foregone are multiplied six-fold in opportunity costs each year that action is put off.

Consulting fees are best compensated by the hour. The client who contracts a quantity of time may request a volume discounted fee. It is customary to pay for all consultations after the initial ‘get acquainted’ session.

Out-of-pocket expenses are customarily passed through to clients, without markup. For project purchases, such as printing, graphic production, video production and materials creation, consultants customarily mark up slightly, to cover bank financing and handling costs.

Questions to consider in evaluating consultants include:

• Would you feel comfortable if they ran your company?
• What is their longevity? Were they consultants 10-20 years ago? Real consultants must have at least a 10-year track record to be at all viable as a judgment resource.
• What is their maturity level? Could they appear before a board of directors?
• How do they meet deadlines, initiate projects and offer ideas beyond the obvious?
• If one level of consultant sells the business, will this same professional service your account? Big firms usually bring in junior associates after the sale is made. Demand that consultants of seniority staff the project.
• How consistent are they with specific industries, types of projects and clients?
• How good a generalist are they? Consultants with too narrow a niche will not ultimately serve your best interests.

Professional status is important. Prospective clients should inquire about the consultant’s respect among current and recent clients and reputation among affected constituencies within the business community. Look at their activity in professional development and business education. If they do not pursue a program of ongoing knowledge progression, they are obsolete and not valuable to clients.

Also examine potential consultants regarding their own track record at mentoring other business professionals. Check to see that they give beyond the scope of billable hours. Pro-bono community involvement is a factor because it indicates character, ethics and integrity. If they have done little or none, they are not worth hiring. Top professionals know the value of giving back to the community that supports them, becoming better consultants as a result.

The ideal consultant:

• Clearly differentiates what he/she does… and will not presume to ‘do it all.’
• Is a tenured full-time consultant, not a recently down-sized corporate employee or somebody seeking your work to ‘tide themselves over.’
• Has actually run a business.
• Has consulted companies of comparable size and complexity as yours.
• Has current references and case histories.
• Gives ‘value-added’ insight… in contrast to simply performing tasks.
• Sees the scope of work as a professional achievement…rather than just billable hours.
• Pursues client relationship building…as opposed to just rendering a contract service.

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About the Author

Hank Moore has advised 5,000+ client organizations worldwide (including 100 of the Fortune 500, public sector agencies, small businesses and non-profit organizations). He has advised two U.S. Presidents and spoke at five Economic Summits. He guides companies through growth strategies, visioning, strategic planning, executive leadership development, Futurism and Big Picture issues which profoundly affect the business climate. He conducts company evaluations, creates the big ideas and anchors the enterprise to its next tier. The Business Tree™ is his trademarked approach to growing, strengthening and evolving business, while mastering change. To read Hank’s complete biography, click here.