Hiring a consultant can be a turning point in a company’s history—a chance to reset strategy, beef up a critical function, forge a path into new markets or find a merger partner. Or it can be a costly and frustrating experience. Getting a good return on your consulting investment has a lot to do with how you and your team hire and help manage the engagement.
Hiring: Plan ahead
Some CEOs don’t think about hiring a consultant until it’s clear that they have challenges that their teams are unable to overcome—by which point, the company may be in serious trouble. Other CEOs—typically leaders of large, complex corporations—use consultants routinely, in good times and bad, to tackle thorny issues or refine a given process.
Still, other companies use consultants more tactically—to identify a merger partner or help navigate new regulations. For mid-size and smaller companies that can’t justify the expense of consultants every year, but want to avoid having to find consultants at a moment of panic, it pays to establish relationships with consultants that specialize in your industry or have expertise in challenges that surface regularly—HR or logistics, for example. In fact, interviewing a consultant when you don’t need one can help you articulate the issues you face. You also learn how different consultants work and what you might expect from an engagement.
Boutique consulting firms are often staffed by industry veterans with deep knowledge of industries such as manufacturing and retail. Others specialize in sales or HR or IT. By talking to them, you can learn things about your industry and running your company that you might not discover any other way. Also, these firms tend to be less expensive than the big management consulting firms.
When it’s time to bring in a consulting company, do your due diligence. Approach it like filling a top position on your team. Check around your industry and get references that prove the firm has done good work in the area where you need help. Focus on identifying the actual consultant known for this work, rather than the firm. Talk to peers about who’s good and who’s not. The consultant who made the dazzling presentation at a conference may not really have what it takes to help your company. Also, when you do hire a consulting firm, avoid the “bait and switch”—make sure the contract spells out who will do the work and how much of the partner’s time will be devoted to your project.
Fee structure is another consideration. More and more firms are accepting a portion of their compensation in incentive pay: if their program delivers a specified amount of savings, for example, they will get additional payments. On the plus side, clients pay for proven results. Putting fees at risk, however, can incent consultants to design and implement programs that meet defined short-term goals rather than sustainable performance. If you choose an ROI-guaranteed contract, review the terms carefully.
Managing the engagement
To make the most of a consulting engagement, a CEO should be visibly involved. While CEOs of large global corporations may not be able to directly oversee every project, middle-market company leaders should plan to be involved in every step of the process by:
Scoping the project and the timeline. Invest upfront in specifying the problem the consultant is expected to solve, what work will be done and in what phases and how long it will take.
Getting buy-in from top team members and across the organization. Demonstrating your personal support for the project and involving the top team early can help ensure that your whole organization supports the consulting effort. It’s also key to take any signs of resistance from team members seriously and look for ways to overcome those concerns before the engagement begins.