22 Sep 2010
This failure is not that surprising – companies rarely devote the time to consider how effective their organisations are at extracting value from the consultants they hire. It is rare for companies to maintain a scorecard showing how the various consultants they use have performed against expectations over time. On the other hand, today’s consultancies are skilled at managing the expectations of their clients that is, lowering their client’s expectations in order to close the gap between what the client really expects and what the consultant will try to deliver.
Client control and consultant roles determine value achieved
As the two-by-two matrix is a favourite tool of the consulting profession, let’s use it to discuss the levers for extracting value from consultants along the dimensions of:
Client control: The extent to which companies constructively control the relationship with consultants and participate, oversee, and direct the consultants’ activities;
Mix of consultant roles: The extent to which companies are using consultants in roles where they are acting as experts and filling high value-added roles which could not be filled by company personnel or less expensive, temporary resources or contractors.
Identifying expert roles
It is up to the client to identify the roles where consultants can provide the most value, and to source resources for the other roles. For example:
Is a €200 an hour consultant really required to manage project logistics such as booking meeting rooms? Rather make an administrative assistant available to the project.
Does it make sense to have two €300 per hour consultants both attend all stakeholder interviews? One capable consultant should be able to do the job or perhaps a client employee should participate.
Why is a full pyramid of consultants needed to research each of 24 branches or departments? Consider including client employees in the mix and progressively decrease the ratio of consultants as the employees become effective at gathering the information.
Clearly, a key ingredient to enabling a consultant to meet or exceed expectations is to avoid diluting value-added expertise with the consultancy’s unskilled or inexperienced resources. Consultancies are too quick to dismiss the capability of client personnel, when in fact internal personnel can orient the consultants, navigate political minefields, get to the data more quickly (as they understand the company and the industry), and facilitate the buy-in process. Companies must demonstrate leadership by not simply accepting a consultancy’s proposal, but by applying their own considered perspective as to the best approach to embed maximum value-adding expertise into the project while cost-effectively filling non-expert roles with resources from other sources.
Control the consultant or the consultant will control you
Irrespective of the extent of value-added expertise applied, the value realised by the company will be determined by the level of control that a company is able to exert over its consultants ñ from the first contact through to the final invoice payment. Yet many executives, managers, and employees have never received any education, training or guidance on how to manage consultants.
Managers and employees apply the majority of their time to the day-to-day operations of the business. Their participation in projects where consultants are used is infrequent and usually only part-time. Those assigned full-time to consulting projects return to their normal operational roles as soon as the project is over. Few companies routinely capture and disseminate the lessons learned by employees who have worked with consultants. In essence, companies continually allow consultants, who manage their clients every day, to be pitted against internal personnel, who are ill-equipped to effectively manage consultants. Companies need to build better internal capability and learn from internal experiences gained from working with consultants.
Too often, it is the consultants who lead (explicitly or implicitly) and control the relationship. Their clients follow. If the client is not controlling the consulting relationship, then it is highly unlikely that their consulting projects will meet or exceed their original expectations.
How are your consulting projects positioned in the Matrix?
Project outcomes can be categorised within the matrix based on how well the client controls the consultants and the mix of roles consultants are assigned:
Failure when relatively junior consultants are employed in roles that could be sourced more cost-effectively elsewhere, compounded by lack of oversight and management on the part of the client, resulting in an outright project failure or a result that significantly missed expectations.
Over payment ñ the project objectives where substantially achieved, but expensive consulting resources were used in staff augmentation type roles, so the project cost more than it should have.
Under-achievement ñ results are less than what could have been achieved with the assigned resources, often because the scope was not tightly managed and/or the client did not actively manage the consultantís activities as well as promote internal buy-in.
Meet or exceed expectations – the client and consulting staff work together effectively as an integrated team, with the consultant focused on advising, facilitating, knowledge transfer roles and tasks that require expertise that the client does not have, and with the client actively controlling the relationship, the resources, the project and the deliverables.
Next time you engage consultants, consider how you will lead your consultants to exceed expectations.
Gordon Perchthold and Jenny Sutton are authorities on selecting and managing consulting firms/consultants to realise greater business value at reduced consultant spend. They now structure complex projects and select consultants on behalf of their clients.
Their recently released book Extract Value From Consultants: How to Hire, Control, and Fire Them (www.ExtractValueFromConsultants.com) has received acclaim from book reviewers and industry executives around the world.