Businessman Holding Illusional Triangle

In Working with Consultants, Part 1, I detailed a humbling encounter with a prospective client. The lessons learned were as instructive to me as they should be to any consultant to management or would-be consumer of their services. Let’s see if I get it right this time.

Revisiting my initial interaction with Mike (the prospective client), my follow up to his question, “How can a consultant like you help…?” should have been another question. A simple inquiry, such as “What part of starting up your business is most challenging right now?” may have provoked a thoughtful response from Mike and served me better than the litany of generic gobbledygook I happened to belch. My quip was reactive, a mere offer to help tackle the pile of work Mike was facing to organize the new business. Frankly, doing the work – or delegating it to his staff – was his job. A better approach would have been to confirm his desire to tackle that work more effectively and efficiently, not offer to actually do it. If Mike really wanted someone to “help organize, manage and get things done” or “attend to the details” (as I had offered), he wouldn’t need a consultant. He’d need an assistant, an extra set of hands working at his direction to perform administrative or clerical tasks. This notion extends to programmers, business analysts, project managers and others who refer to themselves as consultants. If they’re directed to perform tasks that similarly qualified individuals can perform, they’re not consulting. They’re doing a job. A good consultant is an interventionist whose ideas influence an organization in an effort to improve its condition.

And so I learned.

Rule One: Hire a consultant to improve your organization’s condition, not complete tasks that you or your staff should be doing.

*     *     *

So many consulting engagements end with the production of “deliverables.” Consulting has become inextricably associated with the creation of reports and spreadsheets and PowerPoint presentations bursting with page after bloviating page of findings and recommendations and strengths and weaknesses and opportunities and threats and next steps and impediments. And all this paper flying about is often the only evidence a client needs to prove work has been done, and tens or hundreds of thousands of dollars have not been spent in vain. But what has really changed? How is the organization better off? The proud consultant spends six months of his life commuting to Cedar Rapids racking up Delta miles and Marriott points, working fifteen hours a day, only to present a magnum opus that is later circulated through the executive ranks, lauded for its thoroughness and finally shelved indefinitely while management attends to more pressing matters.

An effective engagement involves interactions with shareholders, management, staff members, suppliers, customers and the surrounding community in an effort to – you guessed it – improve the organization’s condition. The type and number of possible initiatives the engagement may include is virtually limitless. Technology adoption, process improvement, procedural changes, new productivity measures, workspace configuration, skills transfer, customer interactions, staff reassignments or something entirely different and unexpected are all possible.

Most likely, multiple, interdependent initiatives are called for (e.g., a new strategy may require the adoption of new technology; staff reductions may be preceded by an automation project). Engaging a consultant to design, organize, initiate and facilitate them will always yield a far more beneficial outcome than even the most impressively leather-bound, four-color, relentlessly critical (yet hopelessly optimistic) report.

My own misstep had me offering to deliver “optimized process models.” In retrospect, this approach seems to be misguided. An effective consultant performs a detailed inquiry into the current state of an organization, frames problems objectively and offers solutions designed to – get this – improve its condition. Only once a problem has been objectively defined and the likely benefits of a solution contemplated should an intervention begin (e.g., creating and implementing new process designs). Absent a definitive set of actions designed to improve the organization’s condition (let alone confirmation from Mike that his processes needed optimizing), my “optimized models” would be effectively worthless.

And so I learned.

Rule Two: Gain agreement with the consultant on the actions (interventions) required to improve the organization’s condition, not a list of deliverables.

*     *     *

My last bit of advice involves a common practice among consultants: billing for their time. Consultants tout their hourly rates as if they bear some relationship to their effectiveness. Clients engage consultants by the hour out of habit or as a matter of policy. Yet there is virtually no objective way to ascertain whether an hour of a consultant’s time is worth one hundred, four hundred or three dollars. Pricing consulting services by a unit of time is almost always driven by the cost to employ the consultant or sustain their lifestyle. It has little to do with the value they provide. Worse – and consider this carefully – the less time it takes a consultant to solve a problem, the more valuable they become. Yet, by billing for time, the consultant who takes six months to define and solve your problem is paid far more than one who gets the same job done in a couple of weeks. The price of the engagement should be justified by the expected value of the outcome, not how much time the consultant spends working on your behalf.

A related issue arises when you willingly hire a professional who does not properly address your problems. You want to increase sales, so you seek a sales trainer who charges $5,000 a week to conduct fifteen Sales Mastery Workshops. You want lower operating costs, so you hire an outside accountant for $300 an hour to review your books and find ways to cut costs. Employee turnover is high, so you engage a corporate coach for $2,500 a day to improve morale. But each of these examples represents a classic mistake: You’ve defined a problem, prescribed a fix and agreed to a time-based rate – before any objective analysis is completed. Rather than seeking a qualified opinion, an effective treatment and consensus on the value of that treatment, you’ve performed your own diagnosis and essentially hired an assistant to do what it is you believe needs doing. And you may or may not see an improvement.

An effective consulting engagement would involve reducing the average time it takes to acquire a customer, not running a series of classroom sessions. Or devising a marketing strategy that enables you to double revenue without incurring additional debt, not slashing your advertising budget to save money. Or discovering why morale was flagging by listening to staff, and empowering them by devising compensation plans that reward risk taking, not holding pep rallies or hosting corporate retreats.

Now, suppose these effective engagements were completed in three months. Or two. How would you quantify the consultant’s value? What would you be willing to pay? And who would you rather hire? A service provider with an incentive to rack up as many hours, days or weeks as possible to support their lifestyle, or a consultant with an incentive to get the work done quickly and move on?

Of course, my error was offering services for an indefinite period for a fixed monthly fee without directly addressing Mike’s concerns. The price bore no relationship to the value I might have otherwise added to his organization.

And so I learned.

Rule Three: Consider the value of the consultant’s intervention, not the cost of an hour of their time.

*     *     *

For the sake of economy I stopped this article at three rules. There are undoubtedly dozens. Scores, even. But these three fly in the face of convention. They dismantle deeply entrenched habits. And they’re distressingly overdue.

Peers may object. The sky may fall. Locusts may even take flight. But my hope is that you’ll glean something of value from these carefully chosen words. My hope is that, for the good of the profession – which has inspired far too many punch lines – you’ll take these rules to heart and enjoy some genuine benefit. And my hope is that you’ll learn from my mistakes without ever having to endure them yourself. Because that, dear reader, is the single most valuable thing a good consultant has to offer.


Rob Berg is a Principal and Director of Perr&Knight’s Insurance Technology Group (ITG). In addition to managing Perr&Knight’s internal development initiatives, Rob and the ITG team work with insurers to provide solution design, requirements gathering, vendor selection, business case development, project planning, risk assessment, business process design, IT governance, data management and staff augmentation services for their technology initiatives. He is a member of ISACA and a Senior Member of the American Society for Quality, a frequent speaker at industry trade events, and has been quoted or published in multiple industry trades including Best’s Review, IASA Interpreter, InsuranceNewsNet and the Journal of Insurance Operations, of which he is Editor-in-Chief.

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