The Executive Conundrum With Hiring a Consultant

Executives are faced with a conundrum when they are trying to decide on when and how to hire a consultant. There are typically 5 issues that nag an executive during this decision making process.  Those issues typically go along these lines:

• Consultants are too expensive; especially the top tier consulting firms and they don’t get real, measureable value
• Every professional who is unemployed or underemployed is a consultant until their next job and they don’t have the appropriate bandwidth; but they are cheap
• Finding a consultant or consulting firm who is a cultural fit with the organization
• Finding a consulting firm who has all the functional resources required for an entire project.
• When to admit that we really can’t solve the problem ourselves

Typically, that last nagging issue is the one that causes inaction until a lot of money has been lost or until somebody gets made enough to take action.  This happens because most executives (myself included) have a jaded view of consultants.  Let’s face it, we have all had a bad experience with consultants and have sworn ourselves off of them.   We take the position that only when we are forced by someone else to hire one will we do it.  I have been both the pitcher and the catcher in this conundrum and know there is different perspective. In today’s business environment, every company has a percentage of its workforce that is contract based.  The statistics indicate that approximately 30% of the labor pool in the US is contract based and that number is likely to get to 50% within the next 5 years.  This implies that management teams have become comfortable working with the companies who supply contract labor to lower levels in the organization.  Many of us have also grown accustomed to working with contract professionals such as engineers as well.  So what does this have to do with consultants? In my mind, as organizations have become leaner, they have lost the specialty skills required to significantly change the way a business operates.  In today’s companies, they have just enough resources to manage the day to day requirements of the company… and sometimes not so well at that.  Most companies have jettisoned highly skilled and expensive people who can work on special projects, new product introductions, launching new markets, properly assessing business process performance and reengineering them, acquiring best practices, supply chain optimization, strategic planning and most importantly strategic execution.  We mistakenly believe that the folks in our organization can handle those activities and find out too late about this wrong assumption because the project was over budget, very late, didn’t deliver expected results or was poorly implemented. Resolving the executive-consultant conundrum requires that executives and their teams view consultants as bench strength and on-call contract workers.   This perspective reshapes how a company goes about finding a consulting partner who is reasonably priced, fits the culture and has the ability to work with the business team throughout an entire project regardless of the skills required. Companies who have taken this perspective and have found the right consulting partner will tell you that they have saved a lot of time, money and frustration by having one consulting firm they work with, because they:

• Don’t have to worry about interviewing multiple consulting companies for every project
• Know what kind of results they can expect
• Have negotiated reasonable rates
• Don’t have to have their managers go through a new assessment with every new consulting firm that comes in (big savings here)
• Know they can get resources quickly for any project
• Know they have experts to ask questions to and engage in small projects
• Don’t have to take on the risks associated with adding employees

As business continues to lean down overhead costs via staffing reductions, critical shortages of resources will continue to hamper a company’s ability to differentiate itself.  I foresee a day in the near future where a company who wants to branch out into a new and untested market will staff the project with a few employees and fill out the rest of the required resources through a consulting partner.  If the project is successful, they will then make the decision to permanently hire a full time employee based staff.  If it isn’t successful, they can easily end the project without the hassle of laying off employees and taking big restructuring hits to their P&L. Think about it, maybe that day is already here, or at least it should be. Having been on both sides of this conundrum, I know what it feels like.  If you want to find out more about picking the right partner, feel free to contact me at +1 (626) 644-9746, drop me a note at info@group50.com, request more information here.

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About the Author:   Jim Gitney has worked with over a 50 companies as an employee, consultant, interim executive and contract resource. He is the CEO of Group50 Consulting which was founded on the premise of supplying expert resources for any manufacturing or distribution project including product development, marketing and sales, supply chain optimization, manufacturing rationalization, business process re-engineering and development, organizational development, strategy and its execution, restructuring, etc.  Group50 utilizes former operating executives for all its projects so that clients get the expertise of a seasoned executive who can hit the ground running and complete projects in a shorter period of time than most boutique consulting firms.