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How to Avoid Dissatisfaction with Consultants
In looking at the number and complexity of mergers, acquisitions, divestitures, and exercises in re-engineering, product positioning, and strategic planning in our industry, you begin to understand who is really responsible for the increase in health care costs. It's not physicians or hospitals, but a generic class of lawyers, accountants, investment bankers, quality improvers, and advertisers--all calling themselves consultants!
It is a safe bet that while health care expenditures may have doubled in the last five years, consulting expenses for these services have gone right out of the galaxy. Organizations may get true value, insights, and improvement from these specialists, but often they don't. This article will help you figure out why this happens and suggest what you can do to ensure that you get value every time and that you get what you want from us.
The Rules of Consulting
Consultants typically get paid by the hour, and we estimate the number of hours it will take to complete the job. We have three agendas in addition to delivering value:
1. Foster trust and--dependence
2. Get return business--there is always more work to be done.
3. Maintain a sufficient level of client relationship and knowledge of the client's business--it's "easier" not to educate another firm to do the next project.
What To Do
To increase your satisfaction exponentially, and the value of your consulting dollars proportionally, we recommend:
1. Be clear about why you need a consultant. Is it to validate your ideas? Give you a sense of security? Fix an operational logjam or address a strategic issue that you cannot get a handle on? Is there someone in house who, empowered and legitimated, can do the job as well--if not better? At least 50 percent of consultant time on the majority of engagements is spent on getting, and in some form regurgitating, your staff's knowledge in a neatly organized and repackaged report.
2. Before you engage a consultant, state the specifics of the "deliverable"--know what will be presented to you at the end, identify the time frame for completion, and have a realistic idea of what it will cost. |
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3. If you are engaging a consulting firm, be very specific about the qualifications and expertise of the team you want. Interview the whole team, not just the project manager. Large consulting firms often have a senior project leader or "face" person who coordinates, but doesn't really manage, a large contingent of junior associates. Most partners have to generate a minimum of $3 million in annual billings. That's a lot of associate hours, even at $200 a pop. For an interesting expose, we recommend the book, Dangerous Company: The Consulting Powerhouses and the Businesses They Save and Ruin by James O'Shea and Charles Madigan.
4. Communicate with your staff the nature of the consulting engagement and your expectations. Mid-level managers are particularly afraid that consultants are there to judge their performance and report on their competency. Too often they think consultants are hired because management has lost faith in their performance and abilities. They are frequently afraid to talk about what the consultants are or are not doing. Consultants know how to get and keep the ear of those in power, with influence over the dollars. Use your staff to evaluate the performance, interpersonal communications, and results of the consultant--not vice versa.
5. Insist on progress reports on the work and on how the budget and timetable are being met or exceeded. All too often consultants tell the client that the work is costing more than was agreed upon initially, due to circumstances beyond their control. You are defenseless if you haven't managed both the budget and their time.
6. Some consultants believe they get paid by the word; others prefer to give an overall presentation to the board or senior management with little documentation. Whatever the format, communicate your requirements for the final work product in advance and hold their feet to the fire.
7. Don't be afraid to ask a consulting firm to put a percentage of the total project fee at risk, based on satisfactory project completion. For over ten years, SMG has had a tradition of including a contingency-based performance component in our strategic, operations, and turnaround management consulting. A firm should put up a guarantee of between 10 and 25 percent of their fee based on your satisfaction.
8. Don't let consultants substitute for the management talent you need, unless you need an organizational turnaround.
Conclusion
Consultants can bring value if you know what you need them to do and how to manage them. You may need their expertise, but you must never relinquish your fiduciary responsibility for your business.
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