This book is primarily for consultants, but I know the readership includes buyers and users of consultancy. Therefore, in this last chapter, I have taken a client-centric viewpoint, and describe tips and techniques concerning selecting and controlling consultants. These tips should not only be useful to clients. By thinking through these points consultants who want to adopt a client-centric approach will be better prepared to deal with any client objections to proposals and, most importantly, more able to fulfil client needs.
When writing this chapter I thought of the Latin phrase caveat emptor (let the buyer beware), because the buyer does need to beware when purchasing consultancy. There are knowledgeable clients who can handle every consultant and get the most from them. But like going to the dentist or the garage, the consultant is the expert in a field (or should be), and you are in their hands. Naturally, you have your own knowledge and experience to check a consultant’s advice: you can robustly probe and challenge it, perhaps even test what they tell you, but in the end, for pragmatic reasons, you may have to accept much of it in good faith. This means the consultant is in a privileged position. Any time we buy services from someone in such a position we are sensible to be wary. To paint a slightly bleaker picture, whilst many professional management consultants are paragons of virtue and ethical behaviour, a few are not – and you can pay a price for naivety.
There is a more positive mindset to adopt. Consultancy is most effective when there is a productive relationship and working partnership between the consultant and the client. These tips can be thought of as review points that help in ensuring there is a productive partnership. All these tips relate to areas which it is reasonable to have an open and constructive dialogue between consultant and client as prospective business partners.
There are complex issues to consider when buying and getting the best from your consultants that are unique to your context, but there are some key tips common to every situation. To keep the detail to a reasonable level, I have assumed a relatively simple situation in which you wish to engage a consultant: you have a problem or issue and you want a consultant to give advice on how to solve it. My list of 20 key tips for anyone engaging a consultant or consultancy is shown in Table 14.1.
Table 14.1 Client tips for buying consultancy
| Tip | ||
|---|---|---|
| 1 | Start with an understanding of why you are buying consultancy. | |
| 2 | Take time clarifying the scope and deliverables of the engagement. | |
| 3 | Don’t forget you always have a choice – not to buy or to use someone else. | |
| 4 | Check the proposal matches your needs and expectations. | |
| 5 | Agree the billing arrangements up-front. | |
| 6 | Clarify who is the client. | |
| 7 | Decide how much freedom you will give the consultants. | |
| 8 | Expect a lot – but don’t expect miracles! | |
| 9 | Confirm precisely who is in the consulting team. | |
| 10 | Read the small print in the contract. | |
| 11 | If you don’t trust the consultant, don’t buy. | |
| 12 | Before saying yes, be clear about what happens when they finish. | |
| 13 | Plan check points in the engagement. | |
| 14 | Prepare for the consultants’ arrival. | |
| 15 | Keep an eye on who the consultants are talking to within your organisation. | |
| 16 | Pay for work, not for sales activity. | |
| 17 | Delivery is a partnership. | |
| 18 | Check back against the proposal. | |
| 19 | Check the deliverables – don’t just accept them. | |
| 20 | Only pay the bill if you are happy with the work and the invoice is reasonable. |
Let’s go through each of these in a little more detail
Start with an understanding of why you are buying consultancy.
Consultants are often engaged on the vaguest of pretences. I have had many discussions with clients who have a confused understanding of what it is they want the consultant to do. Perhaps there is a tangled knot of issues, or the problem is felt rather than verbalised. Clients can be tempted to hire consultants because they are under pressure and have a general feeling of discomfort which they would like to go away, rather than for a clear reason. The difficulty with this situation is easy to understand. If you do not know clearly what your problem is, how can the consultant clearly provide an answer? In general terms, the vaguer your thinking is, the more risk there is that the consultant will not provide a solution of value to you.
In the ideal situation you can concisely and unambiguously define the issue you want the consultant to resolve in a sentence or two. The more specific and precise you can be, the more specific and precise the consultant will be in helping you. The shorter the definition of your issue, the less chance there is for misinterpretation.
There is a related point. You should not only understand what your issue is, but also have a rational justification for why using a consultant is an effective and efficient way to resolve it. I am a strong advocate of consultancy, but it should not be the answer to every problem. You have some capable people already within your organisation. Whatever your issue, why not see if they can resolve it? In addition, if your problem is clear-cut and of a common nature – why not try buying a book? It will be much cheaper. I am not trivialising the situation: often the most sensible way to get a rapid solution will be to hire consultants. But you should give your in-house staff a chance first, at least on some occasions.
If you cannot clarify what your objective in hiring a consultant is, you can ask for a consultant to help facilitate developing the definition. It is often effective to engage consultants to help you structure your thinking, or to identify and scope a problem. If you do this, be clear that the reason you are using consultants is precisely that: to identify and scope a problem, not to solve it. Good consultants are adept at helping clients understand problems. The same consultants may then be used to go on and solve the problem. But it should be a separate piece of work, and remember that the skills needed to facilitate the definition of a problem are not always the same as those required to solve it.
Take time clarifying the scope and deliverables of the engagement.
In tip 1 I described how it is important to understand your objectives. The way a consultant will meet your objectives is by carrying out an engagement to a certain scope and producing a set of deliverables.
The scope should be determined as a process of discussion and exploration between yourself and the consultant. A broader scope may mean a better quality of outcome, but it is also likely to mean a longer and more expensive engagement. What factors you need to consider when setting the scope will depend on the nature of your issue, but also how constrained you are in terms of time and budget. Such factors can be described in terms of questions, such as: which areas of the business must the consultants interact with to understand your issue fully? How many people should they interview? Is there anyone you do not want them to interview? Do you have an absolute time or cost limits? What corners can be cut, and which must not be? Are there any previous reports or documented analysis available? Are there any reasonable assumptions the consultants can make to speed up the work?
The deliverables can take many formats. In traditional consulting engagements the deliverables are a report, but they may also be a presentation of findings, a workshop or some staff training. The point in checking deliverables is to ascertain to your own satisfaction that the set of deliverables the consultants is proposing will enable you to resolve your issue. You may be tempted to expand the deliverables, and it is always worth pushing consultants to maximise the value they provide to you, but if you push too hard you may simply get an increased price.
I have observed that clients often find themselves engaging consultants reluctantly, because they feel they have a unique problem and only this consultant can solve it – or they are in a hurry and this consultant is available now. The client may be under pressure from a more senior manager to get on and solve the problem. However, the client is not comfortable with the consultant or their fees.
The truth is that rarely does a consultant have an absolutely unique skill set. Even when they do, ask yourself – do you really need it for this piece of work? For all really important work, get a competitive quote. This is not just an issue of fees, but more importantly to check whether you are offered the optimal service.
Check the proposal matches your needs and expectations.
Assuming that you have given a clear scope and objectives for an engagement, the consultant should be in a position to write a proposal that meets your needs. Life is rarely this simple. It is only when writing a proposal that a consultant realises there are gaps in their understanding. It is only when reading a consultant’s proposal that you determine that what you thought was a clear and unambiguous definition of needs was not really understood by the consultant.
A proposal should do several things. First of all, it should play back to you what the issue is that you want the consultant to solve and, without being a history of your organisation, identify any relevant background information, constraints or assumptions. Secondly, the proposal should define how the consultant intends to resolve your issue. Finally, it should include the commercial terms. There may be other items in a proposal, but these three items are core. You need to be happy with all three. Even though you are not the expert, you do need to check how the consultant intends to resolve your issue and ensure you have some confidence that the consultant’s method will work within the culture and context of your organisation.
Consultants find it irritating when a client constantly quibbles over every single detail in a proposal. This is largely a commercial issue – consultants cannot afford to spend a huge amount of time writing proposals as no fees are being earned whilst doing this. Do be reasonable and only quibble if there is a real need to, as it is helpful to start an engagement with a good relationship with a consultant. But in the end you are the client – the consultant is just someone trying to sell you a service. If you are unhappy with the proposal, ask for it to be changed. If they will not or cannot, there are plenty of other consultants out there.
Agree the billing arrangements up-front.
Clients can be surprised by the timing and scale of fees when the invoices arrive. As a client you should check up-front what you will be paying for and when. The sorts of items that can cause surprises are administration and expenses costs, which often can add 20 per cent to the overall fees. You may find fees for people you have never heard of, such as the consultant’s quality assurance team or a junior consultant who had to do some background research for the engagement back in the office. Remember a consultant will charge VAT and this will usually be on top of the quoted fees for the engagement.
Part of the billing problem is the concern amongst clients that consultants will try their luck and add additional charges to the engagement. This is a risk to avoid. But there is also a risk the other way. It is almost impossible to specify absolutely a consulting engagement with total clarity up-front. Like most service contracts there is a degree of ambiguity. Consultants often experience scope creep, where the client constantly adds extra work into the engagement. This is difficult to manage as the client’s requests are often individually reasonable, but once several have been made the consultant is in danger of an unprofitable engagement unless fees are increased. You may not be concerned whether the consultant makes a profit or not, but you should be. A consultant working on an unprofitable engagement is more likely to cut corners to get the work finished quickly.
The best way to avoid any conflict is to agree what will be paid for, when invoices will be raised and to agree a process to discuss any exceptions or changes to this. If you are on a restricted budget, you can always negotiate a cap on things like expenses, or even ask for a fixed rate for the whole engagement.
Do not expect fixed fees to be a solution to all problems. If you do negotiate a fixed rate, do not then track how much time a consultant is spending on a piece of work as this is no longer your concern. Your concern should be: ‘Have I got a quality result for the fixed fee I am paying?’ Also, if you ask for a fixed rate, do not be surprised if, when you ask for additional areas to be covered in an engagement, the consultant asks for additional fees.
Clarify who is the client.
When you involve consultants in your organisation you may consider yourself to be clearly their client. This may seem obvious to you and not in need of any clarification. This may be true, but it is worth directly confirming with the consultant that you are the client and they are taking instructions from you and you alone. For all sorts of reasons (see Chapters 2 and 5) consultants have a very fluid concept of who the client is on many engagements. Their idea of the client can vary between the person who engages them, other managers in the organisation, the organisation itself (whatever that means) and sometimes other stakeholders such as shareholders.
If you have engaged the consultant, and it is your department’s budget that is paying their fees, and if what you are asking them to do is reasonable and in the organisation’s interest, then you are correct to consider yourself as the client for this engagement. No one else is. Of course, sometimes it is not directly your budget, and sometimes what you are asking the consultant to do is in your personal interest as well as the organisation’s. It is fair to say that then the concept of client is less clear cut.
Why worry about this? One reason is that you do not want the consultant seeking changes to the scope or incurring extra fees because someone else in the organisation has asked them to do additional work. You also do not want the consultant to be drawing conclusions based on information or assumptions you regard as invalid. Further, you do not want consultants going behind your back and talking about you to more senior managers (although, in reality, this is very rare).
’Who is the client?’ can be a difficult question for a consultant to answer, as there may be many people who validly consider themselves as the client of a consultant. This is especially true if a consultant has a long-term relationship with an organisation and knows many different managers there or is running several engagements in parallel within your organisation. As a client you should understand that difficulty and make it clear that you personally are the client on this engagement.
Decide how much freedom you will give the consultants.
There are different ways of getting a consultant to resolve a problem for you. At one extreme you can tell them the problem and leave them with complete freedom as to how they resolve it. At the other extreme, you not only tell them the problem but give them detailed step-by-step instructions as to how to do it. In most cases a client works somewhere in the middle. Usually you can give some freedom or discretion as to how people working for you complete their tasks, but there are some constraints in any organisation which mean they have to do certain things in certain predefined ways.
Try to see it from the perspective of a consultant. Generally, if you define the problem the consultant will come up with a solution in any way they see fit. As the consultant is the expert this is reasonable, because they should know the best way to do something. You may have to put some limitations on how the consultant works for legal, regulatory or your own organisation’s rules. For example, you may tell a consultant that their work must be done in compliance with the relevant health and safety regulations. You may want to put additional constraints on the consultant for political or organisational reasons. For instance, you may say, ‘Please, do not involve the sales department in this piece of work.’ Additionally, you may be tempted to tell the consultant how to do the work. You could say something like, ‘I want you to do this by running a workshop for three days in March.’ There is nothing wrong with any of this, but the less freedom you give the consultant, the less of their expertise you are letting them use. On the contrary, the more discretion you give to a consultant, the more able they are to add value and use their specific skills and creativity, and come up with an innovative and powerful solution to your issues.
To give someone discretion, we normally have to trust consultants. If you do not trust your consultant you have probably hired the wrong one (see tip 11). If what you really want is someone who will not only try to help, but will help by working in the precise way you define, with little or no discretion, don’t pay for a management consultant. Save the money. There are many very competent contractors as capable as any consultant to follow your instructions at a much more economic rate.
Expect a lot – but don’t expect miracles!
Successful consultants can charge what are perceived to be high daily rates. They can justify charging such rates because they should add significant value. From a client perspective, if a consultant wants to charge you a high rate it is reasonable to have high expectations of what they can deliver.
Consultants are only human, even if they are highly skilled in a specific area. Be demanding and do not accept any second-rate advice or deliverables. Expect interesting and innovative solutions. But do not expect them to suddenly resolve the fundamental issues that have been at the root of all of your business problems for years and years. If they do, then great, and sometimes they will, but do not risk your personal reputation on it happening.
Whenever a major consultancy tells you about the wonders of buying a service from them and all about their fantastic intellectual capital, methods and tools and years of experience, remember that you are paying for people, not a company. Consulting is done by the productive interaction of consultants and clients – human being to human being. Whenever a major firm tells you that it does not matter who they provide as all their staff are brilliant, smile but ignore them. Even in the firms with the highest recruitment standards there are significant variations in skills and performance, and there are massive differences in the relevance of individual consultant’s skills to your circumstances. The situation faced by many clients is that a brilliant team arrives to make a sales pitch, but the team who turns up to actually deliver the engagement is not the same.
Before a consulting engagement starts, confirm who exactly is on the team, and make sure that you are happy that the individuals being proposed have skills and abilities that are commensurate with their individual fee rates. If you delay the start of an engagement, do not be surprised if the consultancy firm cannot offer you the staff they originally proposed. Even so, any replacement must be acceptable to you. Secondly, get some comfort that the people being proposed not only have the necessary skills, but are people who you and your team can work with. There is no point paying for a brilliant consultant who cannot effectively work in your culture.
Read the small print in the contract.
You may sometimes feel a little inexperienced about detailed legal and contractual issues and want to believe that a consulting firm would not pull the wool over your eyes. I think most consulting firms do not want to play games with contracts, but for various reasons clients often find themselves surprised when they are subject to legal clauses they signed up to unintentionally. It probably happens because when a contract is drawn up it is not drawn up as a friendly little agreement between a nice consultant and an agreeable manager – the contract is drawn up by lawyers representing two different legal entities. There is an inherent assumption that when two organisations interact they are competent to do so. Caveat emptor.
Do not enter into a contract of any scale without getting your lawyers to check it. But you need to read it too. Your lawyers should ensure you do not sign up to a contract that is detrimental to your organisation in ways that lawyers consider are important, but your lawyer may be less worried about some aspects that should concern you.
There can be all sorts of potentially troublesome clauses in a perfectly valid legal contract from a consulting company. Examples include:
If you don’t trust the consultant, don’t buy.
Everyone has instinct and gut feelings about certain people. Sometimes, for reasons you cannot quite verbalise, you do not trust someone. Of course you must avoid simplistic thinking and rejecting consultants because of your personal biases, but generally if you do not trust the consultants you are about to hire, then don’t sign the contract. There are plenty of consultants in this world, and you can find someone else.
Why do I say this? Because if you do not trust the consultant, you will waste too much time checking their work and fretting and feeling nervous because you are uncomfortable. You are a busy manager and cannot afford this. You do not owe a consultancy work, and should feel no qualms about rejecting a consultant you do not trust.
You can go too far the other way. You should not buy consulting just because you trust someone, and just because you trust someone you should not accept their advice without critical review. You should always be sceptical about any consultancy offering. As a professional manager, you should be a little wary of anything any supplier offers you. Your responsibility is to look after your organisation’s interests, and you cannot do that without being constructively critical of what any supplier offers. But there is a big difference between a workable level of ongoing critique of a consultant’s work and true distrust.
Before saying yes, be clear about what happens when they finish.
A consultant will work with you for a limited period of time to produce a set of deliverables. One common point of contention between consultants and clients is the situation in which a consultant believes they have finished their work and wants their invoice paid, and the client is not satisfied because they cannot use the deliverables from the consultant.
It is easy for a client to develop a dependency on a consultant or consultancy company. Consultants are often highly skilled and productive, and can produce deliverables, recommendations or implementation plans which are meaningful to them and usable by them given their skill level, but may not be appropriate or easily usable by the client.
Ask yourself: will you be able to use the consultant’s advice or are you opening the door to an endless stream of future sales? There is nothing intrinsically wrong with the latter, but you should get into this situation with your eyes open and sufficient budget to deal with it. Will your staff need training to be able to apply the recommendations of the consultant? Again, this is a normal situation, but if it is the case you should ensure there is some degree of skills transfer built into the proposal. Overall, the best approach is to define as one of your requirements for the consultant that any deliverables they produce are appropriate to your organisation and usable by you and your staff given your current level of skills.
I discuss this issue in more detail in Chapter 8.
Many consulting projects are difficult to define in a way that you are absolutely sure that your and the consultant’s understanding of the problem are the same. More importantly, in productive consulting engagements understanding evolves as the engagement does. Part of the reason for many engagements is as much to improve understanding as it is to fix the problem. This means the structure and scope of the engagement often changes as progress is made. Having regular check points in a consulting engagement enables you to make changes to the structure or scope in a controlled way. If you are employing consultants, I recommend having some form of review at least once a week.
Additionally, if your finances are tight and the consultants are working on a time and materials basis, regular updates enable you to track expenditure and ensure you are both getting value for money and that the work remains within your budget. You can easily make sure the spend-to-date is reasonable and you are not going to get an unexpected surprise.
Good consultants will ask for this – even insist on regular meetings with their client. Both for cost and scope control, regular updates with any consultants you are employing are essential. Most managers have busy schedules, so plan these check points and fix them in your diary at the start of the engagement.
Prepare for the consultants’ arrival.
Consultants are typically expensive beasts to have walking around your organisation. They can add tremendous value, but they can also rack up significant fees doing mundane administrative tasks. Some parts of the engagement can be just as well done by your staff. Of course, you may be working for a cash-rich company that really does not mind a few thousand pounds of extra fees, but this is not true for most clients.
If you can do up-front work it can save you a lot of money and make the consultants more efficient. There are obvious administrative tasks – for example, arranging building passes, car parking spaces, office space and so on. Additionally, usually at the start of an engagement consultants need to collect information about your organisation. Much of this data collection needs the consultants’ specialist skill, but some data will be quite straightforward. For example, consultants often need basic company information such as turnover, last year’s annual reports, organisation charts and so on.
Of course consultants can perfectly well manage the process of getting building passes and a desk – but do you really want to be paying someone at top rate to do this? Ask what administrative and facility needs are required, and, if they are reasonable, fulfil them. Feel no qualms about saying no if the consultant has unreasonable requests, or refusing ones that do not fit the style of culture of your business. Also, ask them what information they will need to do their work, and, if any of it is straightforward then source it for them. Finally, ask if there are any tasks on their project that can be done easily by a member of your staff.
Sometimes you cannot help the consultants simply because your staff are already too busy. However, you may be able to reduce consulting bills by hiring cheaper contractors or temporary members of staff and getting them to do some of the less value-adding parts of the consultants’ work. Consultancy companies do not like this as it decreases their fees, but you are the client.
Keep an eye on who the consultants are talking to within your organisation.
If you are the client for a consultancy team working in your organisation, it is worth keeping some track of who the consultant is talking to in your organisation. You do not want to constrain unnecessarily the consultants, as this may limit the quality of their resulting recommendations, but you need to be aware of a few risks.
Common things to be wary of are:
Pay for work, not for sales activity.
Selling consulting engagements is one of the costs of running a consultancy business. Experienced consultants know how to manage the balance between chargeable client work and business development activities such as selling. When a consultant is working in your organisation, they usually have the freedom to move around and talk to all sorts of people. This freedom is often essential to the consultant being able to make quality recommendations. This freedom is also a huge temptation for the consultant, as it is a wonderful opportunity to make new relationships and sell other work.
Don’t be paranoid about consultants selling other work: it is perfectly legitimate for a consultant to try and gain other business within your organisation. A consultancy is a commercial enterprise and needs to sell profitably to continue to exist. But you should not be paying for their sales time. Make it clear that you will not tolerate paying for any time that you perceive to be business development activities.
Unless you want completely generic information, consultants cannot deliver meaningful advice on their own. (If you do need generic information, it’s much cheaper to buy a book or a report.) The value from consulting comes from bespoke recommendations which are tailored to your specific context: your organisation’s sector, its nationality, the way you are structured, your way of working – all those things that make your business unique. For a consultant to understand your uniqueness they need to work with you. Therefore be prepared to give a proportion of your own time to helping the consultants. Consultants will help you, but you cannot simply delegate or outsource the resolution of a problem to them. Additionally, you should be prepared to provide staff time to work with consultants.
Factors to consider in allocating staff to work with consultants are:
If you are hiring consultants both to advise and implement, then be clear to yourself that all a consultant can do when it comes to implementation is help. The help may be valuable or even essential to implementation, but it is your organisation that must own the implementation project, and your organisation that will live with the results once the implementation is over.
At the end of a consulting engagement, and at periodic intervals throughout the engagement, check that the work being done is aligned with the proposal. Even if you have set up regular reviews, it is worth explicitly checking back against the proposal. In the intensity of a good consulting engagement it is easy to slowly veer off track compared to what was originally agreed.
There are often valid reasons why the engagement is not following the original proposal. The understanding of the work needed will evolve, and new ideas, different from those originally proposed, are generated. Often a consulting engagement starts trying to resolve one issue and then a different root cause is identified. Hence the shape and scope of the work will change. You should ask for an updated proposal or statement of work. This does not need to be a complex document, and can be something very brief. Without it, you risk ending the engagement in conflict.
Check the deliverables – don’t just accept them.
All consulting engagements should result in some form of deliverable. The deliverable may be something tangible like a report; it may be something intangible but measurable, such as an improvement in performance in a department; finally it may be intangible and unmeasurable, such as some skills transfer to staff. Before letting a consultant complete their engagement you should have confidence that the deliverables produced are complete and of a sufficient level of quality. Of course, this is easier for some deliverables than others, but even for those that are completely unmeasurable you should judge completeness and quality. You cannot reject deliverables simply because you do not like them. Ask questions such as: are they comprehensive? Do they cover all the areas expected? Are they of sufficient quality? Are the findings valid? Are any assumptions the consultant has made reasonable?
Once the engagement is over and the deliverables have been handed over, you will receive an invoice for the consultant’s work. For large engagements you may also receive interim invoices. Your main responsibility is towards your organisation, and you therefore must only pay the invoice if you are happy with the work and the invoice is reasonable. By reasonable I mean that it is in line with expectations and the parameters of the proposal or statement of work. Even if you are happy with the work, you may not be happy with the invoice when you see thousands of pounds for unexpected expenses. If you are unhappy with the bill, tell the consultant, and arrange to discuss it and ask them to explain and justify it. If they cannot, ask for a reduction.
Many consultants will not thank me for pointing this out, but if you are arguing over invoices, ask to see copies of all expenses receipts. It is a fair request, but often extremely painful for the consultants, especially if there was a big team on the engagement.
If you do decide to dispute an invoice with a consultant, make sure that the reason for any discrepancy is not down to you or your organisation. Clients often, unwittingly, ask consultants for all sorts of extras and add-ons as an engagement progresses, and may increase the scope significantly. Also, often consultants’ productivity is constrained by being unable to get sufficient time with you or your staff, or slow decision making on your behalf. These sort of factors extend the engagement, and it is usually perfectly reasonable for consultants to expect additional fees in these situations, although this does depend on the proposal and what was agreed at the start of the engagement.
Invoice surprises can be reduced by following the advice in tips 13 and 17.