Question from V.C., in California: "We seem to know our problems but wish to interview various consulting firms to help us solve them. In addition to the obvious questions we will ask, what other considerations are there?"
How To Retain
The Right Consultant
Thomas Reagan III, Executive V.P. Legal Affairs, Gene Levine Associates
Today's businesses face a complex mosaic of contemporary problems, involving everything from personnel, materials and money to government, machinery and data. Sometimes consultants are the answer to solving, or better yet, avoiding problems. Usually consultants are retained when it appears that no one person in a firm has the expertise and/or the necessary time required to diagnose, handle and solve a problem. Deciding to hire a consultant is one thing; picking the right one is quite another.
If you went to a doctor with a pain in your side, and the doctor immediately took out a scalpel to start cutting out your appendix, what would you think? You probably would grab your clothes and bolt out of the office. In visiting a doctor, you expect a complete examination, a clearly explained prognosis, and then a prescribed treatment.
A professional consultant handles your business issues the same way – examination, clearly explained prognosis and treatment. Step one is the very careful analysis of the available opportunities. The consultants investigation (usually called a "survey") puts your business or organization under his or her microscope to provide you with information that answers at least the following questions:
1) What, if anything, is wrong?
2) Where is it wrong?
3) Why is it wrong?
4) How is it affecting your present and future competitive position?
5) What exactly can be done about it?
6) How long will the makeover take, and how expensive will it be to correct?
7) What are the benefits (money-wise and organization-wise) of the consultants proposed plan?
The consulting firm's final report should be an unbiased, objective preliminary appraisal of your business, which can be used as an timeline outline and springboard for a modernization program. A professional consultant should guarantee confidentiality, and his/her analysis should be presented only to the personnel you designate, thereby minimizing any employee confusion, breach of information security and distress over proposed changes.
Narrowing the Field:
It is important that your survey be conducted by a firm knowledgeable in your industry. The firm's expertise however does not have to be limited to your specific products. Information acquired while solving problems related to other products usually can be easily applied to your business.
The best place to start looking for a consultant is through personal recommendations. But make sure the consultant is capable of solving your particular problem(s), not just those of that person who made the recommendation. If you find a consultant other than through a personal recommendation, it would be prudent to ask for and check references. Also, evaluate the consulting firm by calling its clients and asking any questions you deem applicable to your situation.
Be particularly cautious of a person who cold calls on you and is only a salesperson for the consulting firm. Most salespeople selling consulting services have gained a reputation of being unprofessional high-pressure closers whose only interest is getting you to sign on the dotted line. They are experts in telling you what you want to hear. That's why you should only interview the principles members of the firm who will be the ones actually working the assignment.
When interviewing consultants, determine how well they fit your personality as well as initially defining your real problems. This preliminary approach is necessary to determine whether a particular consulting firm is the right one to help you. Succinctly, a firm must gain your confidence by qualifying its abilities to find and solve your problems using a safe, sure evolutionary manner.
The consultants should be able to evaluate the indicators and factors affecting your bottom line without disturbing your employees. Look for a consulting firm that has earned a commendable reputation for being human asset oriented as well as technology savvy.
You also should interview each of the consultant's associates who might be coming into your business and doing the actual work. It’s not good enough to receive assurances from those firm members selling you that their firm is staffed adequately to supervise its junior consultants. Your consulting project may not meet your expectations if you have the wrong resident consultant being supervised only occasionally by one of the firm's senior management people. Before you sign any contracts, visit with any resident consultants who could be assigned to your project.
Prior to signing a contract for a firm's initial survey, you also should require the consultant(s) to furnish you with a list of planned questions and activities. Carefully review his or her list, and then do some work on your own. Begin to probe and dig for the answers to their questions. You probably will uncover problems you didn't know existed.
No consulting firm has seen it all, but if you deal with a seasoned, professional organization, you will get meaningful answers based on the facts you provide for the project Most consultants combine and test your data against their observations and their proprietary database information prior to providing you with the safest, surest path out of your multi dimensional maze of business issues.
The caveat is that even if a consultant has produced great results for others, there is no guarantee that s/he can do it for you. However, you can help ensure a consulting projects success by having current factual information and specific questions ready when you begin interviewing prospective consultants. A professional consultant will surely want to know the following:
What do you consider to be your largest problems written down on a list sorted by the most pressing issues at the top of the list.
What is your percentage of direct labor efficiency, overall and by departments or teams?
What is your in-process time, overall and by departments or teams?
What is your quality level, overall and by departments or teams?
How effective are your costing techniques?
What are your direct labor variances?
What is your percentage of turnover, absenteeism and tardiness, overall and by departments or teams?
How effective are your personnel practices?
What is your degree of people orientation?
How effective are your managers and supervisors?
How successfully do you feel your employees are motivated?
If all your employees were fully motivated to work up to their potential, what overall productivity percentage increase would you experience?
If you are non-union, how vulnerable are you to a union organizing attempt?
- What is your company's mission and vision?
It also is important to clarify accountability and responsibility for all parts of the project. You may have resources within your organization that are slated to help with or complete parts of the project. Determine and clarify the consultant's responsibilities and your organization's responsibilities. This includes identifying who bears the cost of incomplete phases or overruns, and who benefits from any time or money left over at the end of the project
In closing, hiring the best doctor to take care of your medical needs may come with a high price tag, but usually works out to be money well spent. Likewise, retaining the right consultant could determine whether your business fails, just survives or really thrives. You're betting your money against the future of your business, so get the best odds you can.
In closing, If you can't make a decision, you just made one.
Thomas
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