Editor's Note:
Hiring a consultant is something that many companies are doing
today when there are short-term projects or expertise is needed
but on a temporary or less than full-time basis.
Consultants work for
many different companies over time and are considered
self-employed or the employee of the consulting agency rather than
an employee of the company for whom they are performing the
task. Before hiring a consultant, you need to know the right
questions to ask.
10 Critical Questions to Ask Before Hiring a
Consultant
by: Jan B. King
Talk to as many consultants as you can before hiring one. Even if
you have one person or firm in mind, interview at least a few others
as a sort of due diligence. You'll probably find that each interview
helps you focus on the issues you're hiring a consult to help
resolve.
1. Most consultants focus on two areas: cutting costs and raising
revenues. What do you see as the relationship between the two
functions? Which do you do better?
Cost cutting is the consultant's usual expertise. It's what most
companies need. Most of these hired outside consultants to take an
objective look at organizational charts, value-adding processes and
competitive environments.
"We spend a lot of time talking to a
company's customers, so we understand what they like and don't
like," one consultant says. "What does the customer value?
Is it time? Is it quality? We define that." What this means is
that a company can cut jobs and still not touch on one
non-value-added activity or add value to the customer.
2. What was your professional experience before you became a
consultant?
Ultimately, you should want any consultant you use to have a
strong bottom-line sensibility. You want this person-or team-to
focus on the things that will add the greatest amount of value to
your company in the shortest amount of time. This kind of thinking
doesn't come naturally to many people.
It usually demands two kinds
of experience: as a chief executive officer or as a corporate
turnaround specialist. A consultant who has this kind of experience
has dealt with strict cost controls, high-pressure scrutiny and the
need for quick results. These are the same traits you should look
for in anyone giving you expert advice.
3. How many professionals work with you or at your firm?
Business consultants fall essentially into two categories:
Solo-practitioners and team players. The differences between the two
usually involve the type of work they take.
Most of the time, the
soloists deal with less-specific, strategic or vision-related
issues; the teams get into more tightly focused number crunching.
Less-specific functions tend to take less time (sometimes as little
as one day); the more specific take more.
One of these functions
isn't better or worse than the other. The trap to beware: The
marketing soloist who claims he or she can also review all of your
accounting.
4. Will you sign a letter of confidentiality? Will you refrain
from working for our competitors?
Ask all consultants to sign a letter of confidentiality. Some
owners and managers assume that short-term strategic consultants
pose less of a threat to proprietary interests than the number-crunchers. Don't make that assumption.
You and your staff should
feel free to discuss any business subject with your consultant and
trust his or her discretion. If you feel uncomfortable, you won't
discuss things candidly. Your risk in these cases isn't usually that
the consultant will knowingly steal proprietary in formation or
material.
Most are professional enough-and work in small enough
markets-that reputations matter. More often, the risk involves a
consultant unwittingly mentioning something. If he or she has signed
a confidentiality letter, he or she will be more likely to think
twice.
5. Who are some of your other clients? Who are some people and
companies with whom you've worked before? Can I call them to ask
about your work?
Don't be wowed by big-shot former clients. At big companies,
consultants are hired in teams to tackle extremely specific
projects. Just because the person in the expensive suit claims
Microsoft as a former client doesn't mean he knows Bill Gates on a
first-name basis.
In fact, it's better if the consultant has worked
with companies closer to your size and shape. They'll more likely
understand your needs.
6. With how many clients do you work at one time? Do you have
enough time to devote to our company to accomplish our goals? Will
you return phone calls or emails the same day?
Asking other or former clients about the consultant's
responsiveness and attentiveness can be helpful. As can more pointed
questions of the consultant. These questions all focus on the same
point: How much attention can the consultant afford to spend on your
needs?
The number of clients a consultant can serve well varies with
the kind of service provided and client involved. But some general
rules apply: You want to have same-day response to questions or
problems.
If you're undertaking a major restructuring, you probably
don't want your consultant working with more than two or three other
clients. A caveat: Some owners and managers who've had bad
experiences with overly invasive (and expensive) consultants warn
that you shouldn't be the only client a consultant has.
7. Will you teach us to do this work for ourselves and become
self-sufficient? How long will this take?
One common trap in using a consultant is becoming dependent on
him or her. From the consultant's perspective, this may simply be
good business assuring future work for himself, herself or
themselves. From your perspective, it may be little better than the
status you had before you had the consultant come in.
By making training part of the consultant's job, you can limit
the chances of a prolonged engagement. Establish a schedule within
which the consultant can accomplish his or her goals. Assign a staff
person to work closely in this process-and learn everything he or
she can.
8. Have you written anything-published or not-that deals with
issues like the ones this company faces?
Consultants love to write about their experiences and their
theories. Sometimes this can be pretty rough reading, but it will
usually help you understand how the consultant sees markets and
business factors that may affect you. Also, management or technical
literature can be a good place to look for consultants. While the
latest management guru writing for the Harvard Business Review may
be beyond your needs and means, you might be able to find useful
experts in trade or regional newspapers and journals.
9. How do you charge for services? Do your fees include travel
time and other miscellaneous charges or are those billed separately?
There's no set standard for paying consultants: Some work on a
straight-fee basis, others work for a fee plus performance bonus, a
few work on a contingency basis- tied to sales increases or cost
reductions.
As with paying any outside contractor, your concerns
should be assuring a high quality of work and containing costs
within a predetermined bud get. With consultants, focusing their use
as specifically as possible will help accomplish both of these ends.
Also, make it clear from the beginning what incidental expenses
you're willing to pay and how you'll pay them. Consultants who've
worked at or for large corporations may be used to expense accounts
that you aren't. Be very clear about how much you're willing to
spend on the whole project or series of projects. Insist that the
consultant warn you-in writing-if the project won't be completed on
time and within budget.
10. What kind of documentation will you give us when the project
is completed? Who will own that documentation?
Keeping a paper trail of the work a consultant does for you
accomplishes several ends-all of them good. First, if the
consultation has worked well, this will usually give you some forms
and tools that you can use to improve some part of your performance.
Second, it allows you to keep a record of the analyses made of your
company and the responses you've taken. This kind of "scrap
book" can be a big help when dealing with future problems or
other consultants. Third, it makes clear what the consultant did-and
didn't do-while working for you.
If any disputes should emerge over
payment or ownership or confidentiality, you'll have some support.
In general, all work (including spreadsheets, computer programs,
mechanical devices or literature) a consultant does for you is your
property. Sometimes-especially in the cases of devices and
literature-this becomes an issue. Make it clear from the beginning
that you want to own everything that comes from the consultation.
About The Author
Jan B. King is the former President & CEO of Merritt
Publishing, one of the 50 largest woman-owned and run businesses in
Los Angeles and the author of Business Plans to Game Plans: A
Practical System for Turning Strategies into Action (John Wiley
& Sons, 2004). She has helped hundreds of small businesses turn
their business plans into game plans with her book and her ebooks,
The Do-It-Yourself Business Plan Workbook, and The Do-It-Yourself
Game Plan Workbook. Visit her site at www.janbking.com
for more information.
jan@janbking.com
