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Don't Fire Your Management Consultants, Manage Them! Print
Business consultants are often looked upon as a poor value either for lacking insight or for parroting the views of the client's own management. Consequently, companies tend to look at management consultant services with skepticism and as the first thing to be eliminated during tough times.

However, the rewards of managing consultants effectively can be substantial.
Getting specialized services or information when needed, without taking on the overhead, would be a financial model that would increase profits. It should also be considered that tough times are the times to get it right. If you can ‘rent’ the capability to provide what you need, that should pay dividends. Both the lower overhead and decreased financial risk should be preferred in tough times.
The fact that it is not, demonstrates that most consultants, as a rule, offer poor value added.

Effectively managing consulting services is a matter of proactively matching consultant capabilities with company needs. Unfortunately, most consultants are selected because they have met and impressed the study decision-maker. This can be very subjective at times and managers may not have any insight into the interior skill base of the consulting firm. Most companies are unfamiliar with a consultant’s actual analytical-level capabilities.

On the other hand, too often companies don’t effectively analyze what they need. They may know the desired result but they probably don’t know what type of steps need to be taken to confirm a decision. Consequently, it is little wonder that many consultant studies can be under-whelming or in need of correction by internal resources.
In this first part of two articles, we will discuss how to analyze what your company needs when considering contracting with management consultants.

Analyze what you need

Begin with what your company needs.
Interestingly, it is probably more difficult to determine the nature of what you need than to define the skill profile of the consultant. At least, it is an area that a buying company normally ignores. While this seems illogical, it has been demonstrated time and time again to be true. Consultants are normally called in when the internal process gets stuck on a key decision – often it is more a reflex than a decision.

In the simplest terms, a business analytical process is comprised of three steps and can become stalled during any one of these elements:

Data acquisition and analysis is the first step in the process. It is the easiest for a consultant to address but it is the most critical to the eventual outcome. A key area or point missed in the research can lead to seemingly logical but completely ineffective results.

The next step, synthesis, is the process of drawing some meaningful conclusions. Consultants can be particularly useful in this step of the project because they are generally unconstrained by internal paradigms. External resources are also valuable in connecting the dots to activities and trends outside the study area.

Divining a strategy or tactical outcome is the most complicated of the three process steps and should normally be accomplished with the insight of internal management. While consultants can be effective at making recommendations about best approaches, only an insider can bounce those recommendations off the company’s culture and tolerance levels.

In the area of general business consulting, a company usually has a process in place to decide planning and strategy issues, even if it involves a single person. Many company managers are unfamiliar with the details of this process and therefore cannot detect whether something is missing or wrong. They may not know who or what is the weak link and the individual most responsible is probably actively avoiding being identified as the problem.

So, who would you hire to fix it? Often companies hire someone who helped them before, regardless whether it is a data, synthesis or strategy problem.

Some guidelines:

  1. In the consulting contract review process, the consultant-requester should be able to define what they need to make a decision and what type of information is missing or in question. They should clearly say, “We need market intelligence or synthesis and validation of a strategy.” If they can’t define the task with clarity, they can’t know who to hire or if to hire anyone. It is also a poor idea to initially develop a scope of work “with the help of” the consultant. Do the first draft yourself or you may have the consultant steer you to a bigger study or an area that they prefer to work.
  2. Do not produce a parallel planning process between an internal organization and consultants unless you have an unavoidable reason. If your problem is a broken process, a company can save more money by fixing the process than by getting a successful study done. It cannot be efficient to fund both a broken process and outside consultants as well.
  3. The request-approver needs to ferret out studies that are based on internal staff rigidities – aka “awful ideas.” If they don’t, why are they the approver? There are millions of dollars spent annually on hiring consultants to get the answer someone wants to hear. Poor investment, obviously. No capable consultants go into a contract planning to tell the buyers only what they want to hear. Nevertheless, if a customer has brought them in for decision-bias reasons, consultants will pick up on it immediately. They look for low-level testing of ideas; they do casual early findings; talk with the buyer. They can be very intuitive about finding out if the answer they may bring will be well-received. It is then up to the fortitude of the consulting firm if they hedge or not. But open-mindedness is the obligation of the buyer. Outside consultants can’t fix internal staffing problems.
  4. Conversely, if your CEO is the one with the bad idea, hiring a consultant firm to tell him so may be a good idea. Finding one that will do so might be particularly hard.


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