Engaging Management Consultants - or how to avoid getting ripped off

Engaging Management Consultants - or how to avoid getting ripped off
Management consultancies have a reputation for ripping off
their clients. But is this always deserved? There are
many reasons for engaging management consultants. You may
need a particular technical skill, you may need an
objective, third party opinion, or you may have some short
term needs for expertise in change management. There are
also lots of instances when you shouldn't use consultants:
you're not sure what the problem is and you want them to
tell you; you have a budget you need to expend by a certain
date; you want them to make some people redundant. These
are not good reasons for engaging a consultancy and will
inevitably lead to disappointment. Taking a responsible
role when contracting with consultancies will ensure this
disappointment is avoided.

First Step: Decide whether you need a consultancy or not

To decide whether it's appropriate to engage with a
consultancy or not, consider the following:

What is the need or problem you want to address and why do
you think this need or problem exists? Will it be solved by
this intervention or will the underlying issue still exist?
What skills are you looking for? What value might a
consultancy bring to your business? What risks are there to
your business in using an outsourced resource?

Second Step: Draw up the initial brief

Once you've convinced yourself and the business that it is
appropriate to engage a consultancy, draw up a brief. Your
brief should be jargon free and contain:

1. A summary description of your organization: its purpose
and values, what it does, its size and structure

2. The need or problem and why you think this problem exists

3. What you want the consultancy to deliver in terms of
outputs and deliverables

4. What role you want the consultant to play

5. Who will be managing the role of the consultants and
what reporting you expect to take place - weekly, monthly
etc

6. A provisional budget. To decide on a budget think about
the impact of the problem and potential value of the
solution. Basing buying decisions purely on cost is not
always effective. An hourly or daily rate will not tell
you the whole story - a consultant with a high hourly rate
may produce value faster than one with a lower price. In
addition, experience suggests that if you force consultants
to quote daily rates they will charge you for every single
project meeting, conversation or journey. An overall
project fee may provide the basis for a more productive and
flexible working relationship.

7. A description of the kind of person(s) you want to
engage: their skills, experience and skill set. Industry
experience can be a massive plus factor but you have to
trade this off against the actual project demands that may
not be industry specific. A specialist software consultant
may be more suitable for a software project in the oil and
gas industry than an oil and gas specialist.

8. Timetable for the work

Third Step: The Pitch

After shortlisting your potential suppliers you will want
to meet them face to face.

During the pitch don't be impressed by techno babble.
Attempts to impress you with an extensive list of acronyms
and niche industry speak often hides a superficial
understanding of the real issues to be addressed. Instead,
look for a company that listens to you and makes a
presentation or pitch that is both specific and sympathetic
with your company's objectives, not just one where they
have performed a "find and replace company name" from a
previous document.

Assess the individual and the consultancy. Remember big
consulting companies are not always the best in every
situation. Larger companies can lack flexibility in both
internal processes and the way they handle clients. Larger
companies also have costly head office functions to support
- these costs will be passed on to you through higher fee
rates.

Boutique or niche consultancies can provide specialist
advice in a particular expertise area. They can be more
cost effective than larger consultancies. The disadvantage
is that they may not have the breadth of experience in
house to service a large scale change project. The same
applies for one man bands.

Fourth Step: Reference Checking

Your original brief gives the basis for assessing which
consultancy you should hire. When deciding who to work
with review your personal contact through phone calls,
meetings; written information such as research reports,
websites, CVs and the written proposal; and references or
recommendations from other people.

Fifth Step: Contracting

Your fifth and final engagement step involves drafting a
formal contract which should include:
- The work to be done

- The person(s) who will be delivering the work

- The person who is the lead contact in the organization

- The timescale and deadlines for the stages, if relevant

- The fees to be paid and the schedule of payments

- What expenses will be charged for, and at what rate

- Whether VAT is charged and on what

- Any required insurances (such as professional indemnity
insurance)

- The work to be done by your organization eg arranging
meetings, room hire

- Copyright of written and other creative materials (unless
agreed otherwise, copyright belongs to the creator, ie to
the consultant/trainer)

- How and when the work will be reviewed and what will
happen if either party is dissatisfied

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Pam Kennett is Founder and Director of Chiswick Consulting
Limited a management consultancy which provides advice and
direction to clients in marketing and human resources. Pam
has been a management consultant for more than 15 years.
Contact her at pam@chiswickconsulting.com or visit
http://www.chiswickconsulting.com .