If youre going to hire a consultant, then choose a great one. The 10 questions below will help you separate the wheat from the chaff.
1. Do we need diagnosis or implementation? Before you start peppering a potential consultant with questions, make sure you know what type of consultant you need and where in the process you need them.
A diagnostician will help you make a decision (Should we close the plant? Which market should we go into?) or develop an implementation plan. An executer will implement all or part of the plan.
If you want help making a decision, building a plan and implementing the plan then your choices are: two consultants, accepting that your consultants diagnosis will be biased in favor of their area of expertise, or mediocre implementation. No one consultant is good at everything.
2.What type of expertise will generate outstanding results? Most executives start hunting for a consultant that fits their situation, which could sound like this: Were a construction company with outdated accounting systems; therefore, we need a consultant who has expertise in upgrading accounting systems in the construction industry.
You will experience better results by searching for a consultant who has mastery over the outcome you are striving to achieve. This might sound closer to, We need a consultant who will help us reduce billing errors and easily calculate profitability for each customer.
Unless your projects objective is specifically to understand an industry better, put industry expertise toward the bottom of your list. The areas of expertise that could yield an excellent outcome are: a. Subject (e.g., accounting) b. Targeted process (e.g., upgrading accounting systems) c. High-level process (e.g., upgrading systems) d. Your reason for doing the project (e.g., understanding customer profitability) e. Industry (e.g. construction)
Since its rare to hone in one consultant who aces all five areas, scan for a top consultant who excels in two or three.
3. Do we want fast, talented or inexpensive? (Pick two) The triangle of tradeoffs certainly applies to consultants: you can get superior talent, faster results or a lower cost but Michael Jordan wont teach your team to dribble tomorrow for free.
Often an executive will set a budget number then search for the best talent and/or fastest result within that budget. As a company owner who frequently hires consultants, I can tell you the budget-driven approach compromises results. Your best course is to establish your desired outcome and judge each potential consultant by how likely they are to deliver that outcome. You may find the budget is a non-issue or you may determine a small premium is well worth the investment for a superior consultant or a faster timetable.
4. What is their specialty? Once you have answered the first three questions for yourself, start determining whether specific consultants fit your bill. The first question you should ask, regardless of what the consultants website or business card proclaims is, Whats your specialty? You are looking for an answer that precisely fits one of the areas of expertise you identified in the previous question.
Dismiss consultants who cannot articulate their specialty clearly and precisely, whose specialty contains a multitude of ands (Were experts in leadership and personnel retention and increasing sales and reducing costs and), or who try to deduce what youre looking for before answering. Excellent consultants know what they do, develop expertise in a focused area and can express their value before pressing for more information.
5. How are their clients better off after they leave? Similarly, a superior consultant will be able to tell you the benefits they deliver at the end of a typical project. Look for outcomes in their answers, not for process. A great answer sounds like, Our clients are able to identify their most profitable customers and, importantly, fire customers who are eating up more resources than they are worth.
Bad answers run the gamut from Our clients end up with much better accounting systems (so what?) to We use our five-step process (so what?) to What was it you were hoping to get from this project (nice try).
6. Do they have an outstanding approach? In instances where you are dictating the approach and the consultant is a pure implementer, this question doesnt apply; however, on all projects for which prospective consultants are recommending an approach, evaluate their proposal on the following criteria:
a. Linear vs. iterative (C2B2A) The majority of consultants use an old-fashioned, linear, step-wise process. A highly iterative approach, wherein the consultant develops a solution then you jointly improve it again and again, produces far better results on most projects. Which is your consultant proposing? b. Level of detail More detail is not always better. On implementation projects employing a highly standardized process you should look for high levels of detail. On the other hand, diagnostic projects intended to deliver advice on a decision or an implementation plan should not be uber-detailed, lest they reduce flexibility. You want your consultant focused on the outcome, not on the process. c. U nderstands requirements Does their approach demonstrate powerful understanding of what is truly needed to deliver your desired outcome, or is wishful thinking involved? A consultant who suggests your systems can be switched overnight with no hiccoughs is either overconfident or nave. d. Excellent change plan Most improvements to your organization will involve a human factor that must be managed. A consultant who only deals with the technical side, even for something like an IT upgrade, wont deliver long-lasting results. e. Appropriate timelines If you are looking for a decision or a plan, does the timeline to fit your needs? If faster results are of value, has the consultant offered to compress the timing? In contrast, on implementation projects is the consultant recommending sufficient time for the changes to stick? (Most consultants promise too much implementation excellence with too little time to ensure results.) f. Long tail Does the approach include advice and input long after the deliverable? For instance, if the client is implementing a cost reduction project on the plant floor, they should be around to make adjustments as needed if their recommendation creates unforeseen problems. g. Backup plans The very best consultants include contingencies in their approach for any major exigency. Most projects dont go as originally planned and you want a consultant who has already thought through how to work out the most likely problems.
7. Do they exhibit the right characteristics? While the needs of every project differ, a few characteristics should always be in place. These include:
a. Experience delivering your desired outcome - If their other clients have achieved what you hope to achieve, you are on safe ground. If not, let them do their learning elsewhere. b. Willingness to push back A consultant who kowtows to your every command is of little value. Youre paying for expertise; therefore, demand a consultant with a point of view, strong rationale, and the willingness to support their position. A consultant who doesnt exhibit backbone during the interview process wont manifest it later when they should be alerting you to dangers youd rather not acknowledge. c. Responsiveness Great consultants are available for you when you need them. We promise two-hour turnaround on phone calls and you are well within your rights to expect something of that ilk perhaps same-day turnaround from most consultants. d. Rapport Contrary to popular belief, you dont need to like your consultant. If you are going to jointly develop a solution then its important that you respect each other and your communication is excellent. While the consultant doesnt need to be a buddy, pass them by if their style will inhibit your organization from hearing, accepting and adopting their recommendations.
8. How likely are they to succeed? Success means you achieve your desired outcome. There is no 100% certainty your consultant will accomplish your goals (although they may check off all the tasks on a project list). For any consultant you may hire, estimate how likely success is. How successful have they been with other clients? How many outright failures have they delivered? Get some data and use your judgment rather than assuming the project will deliver as planned.
9. Is the risk-adjusted ROI acceptable? After you answer the previous question you can calculate the risk-adjusted ROI on the consultant. You should already have a good estimate of the value of your project (see Could Your Project be a Dud?) and by factoring in the likelihood of success you will know the risk-adjusted value.
Lets say your leadership development project is estimated to deliver $1.0 million in value. You are considering hiring a coach for $85,000 and you estimate theres a 75% chance the project will live up to your expectations. The risk adjusted ROI is 8.8 ($750,000/$85,000). Any risk-adjusted ROI above a 7.0 is typically a better investment than youll get from other uses of your money.
10. Are they the real deal? Finally, ask for references at least 10 of them. This next point is very important: the references must be for the specific consultant who will be working on your project, not the firm in general. The references may not change your mind on whether to hire the consultant, but they could help you re-evaluate your estimate of success or prepare for quirks that were not apparent during your interviews.
David A. Fields helps companies find, hire and get great results from outside experts. His book, The Executives Guide to Consultants , will be released by McGraw Hill in fall 2012. Contact him by e-mail at [email protected] or call 203-438-7236.