How to Hire a Management Consultant
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- What is a management consultant?
- What kind of management consultants are there?
- How can I tell if I need a consultant?
- How do I determine what needs to be changed?
- How do I find a competent consultant?
- How do management consultants charge for services?
- How do I screen recommended consultants?
- How do I make the final selection?
- What kind of an agreement do I make with a consultant?
- How do I assure successful completion of the project?
- How do I assure confidentiality and avoid conflict of interest?
- How do I evaluate the project's success?
Q. What is a management consultant?
A. A management consultant is a professional who, for a fee, helps the management of client organizations define and achieve their goals through better utilization of resources. The consultant may do this by helping to define and identify current or future problems and/or opportunities, and recommend solutions. Management consultants are change-agents who not only propose change but help implement it as well. As an independent professional, a management consultant's sole concern is the welfare of the client's organization.
Q. What kind of management consultants are there?
A. Management consultants may be sole practitioners who work with a small staff or members of a consulting firm who work with professional colleagues and a large support staff. They may be generalists able to work with top management on a wide range of concerns, or specialists whose background and experience focus on more specific areas of management.
Common consulting specialties include:
- Strategic & Business Planning Sales & Marketing
- Financial Planning & Control Research & Development
- Organization Planning & Development Physical Distribution
- Wage & Salary Administration Electronic Data
- Human Resources/Labor Relations Administration
- Incentive Compensation Manufacturing
Q. How can I tell if I need a consultant?
A. There are no hard and fast rules for deciding whether to bring in a management consultant. Here are some common situations suggesting that a consultant may provide help:
- Management feels that performance could be better but is not sure what to do to gain improvements.
- Management does not have the specific knowledge and skills necessary to solve the problems it has identified.
- Management has the necessary knowledge and skills but not the time or staff available to solve the problems it has identified.
- Management efforts have not produced the desired long-term improvements.
- Management requires an independent third-party opinion, either to confirm a decision or to provide an alternative.
Often a situation will require that a consultant be retained until in-house capabilities are enhanced by a permanent staff addition.
Q. How do I determine what needs to be changed?
A. At times, you will be able to specify the issue, such as a puzzling increase in workplace injuries. Often, however, this will not be possible. In such cases, listing symptoms or desired goals will usually indicate the type of consultant you need.
Be aware, though, that often a consultant's biggest contribution is to help clients define problems or opportunities. Your initial conversation with a consultant should tell you if your problem has been properly defined.
Q. How do I find a competent consultant?
A. You can turn to many sources for help in selecting a consultant. Your organization's attorney, accountant or banker may be a good source of referrals, as may your trade association. To widen your search, you can turn to one or both of the following organizations:
Institute of Management Consultants USA
2025 M Street NW, Suite 800
Washington D.C. 20036-3309 USA
Voice: 800-221-2557 Fax: 202-857-1891
Email: office@imcusa.org
Website: www.imcusa.org
IMC USA certifies the professional competence of individual consultants, accredits professional practices, and certifies individuals within those accredited practices. They have a referral service on their website.
Q. How do management consultants charge for their services?
A. A management consultant's fee will be influenced by a number of factors, including the client's need for special knowledge and experience; how much competition for clients there is; the consultant's reputation; and, if known, the benefit to the client of a successful outcome.
Consultants may be engaged for a specific project, or retained for an indefinite period to provide continuing advice to management, with out-of-pocket expenses (travel, entertainment, communications and special services) billed separately. In a typical engagement a consultant will charge a portion of the total fee up front before the engagement begins, and the balance is payable within a mutually agreed upon timeframe.
An experienced consultant should be able to estimate the length of time of a project and quote a "not-to-exceed" figure or a figure that when reached triggers a joint evaluation of results-to-date and an estimate of time and fees needed to reach a satisfactory conclusion. Some may quote a range. When the dimensions of a project are hard to define, the quotation may be on an hourly or per-diem basis until the scope of the project can be determined and agreed upon.
Q. How do I screen recommended consultants?
A. Select for interviews two or three consultants whose experience comes closest to matching the situation you have defined. It is important to determine that each consultant, not just the firm, displays a thorough familiarity with the situation. The references each candidate provides should confirm the consultant's previous success in a similar context. You will want to learn the outcomes of relevant consulting engagements, whether the consultant used honesty and tact when making recommendations, and how well he or she worked with the organization's people.
You will want the following information: the consultant's experience in handling similar situations; what references say about the consultant's ability to make things happen, and whether the consultant has established personal rapport with management during the initial interviews. Experience is important, but not to the exclusion of the other considerations.
Q. How do I make the final selection?
A. Once each consultant's references have been checked and experience confirmed, use the following considerations to make your the final selection:
- Breadth of experience that encompasses and goes beyond the situation as defined.
- Demonstrated ability to complete assignments on schedule and within budget.
- Demonstrated ability to develop practical recommendations and to have them implemented successfully.
- Demonstrated ability to work with people diplomatically and effectively, with minimum disruption of ongoing operations.
- The degree of trust and rapport established with management during initial contacts.
Q. What kind of agreement do I make with a consultant?
A. The consultant's proposal should spell out, in as much detail as needed, such things as:
- The objective and scope of the assignment.
- What the consultant will do, what the client will do, and what they will do jointly during and following the project's completion to assure its success.
- The nature of completion or agreed upon evidence of delivered value.
- The anticipated charges, basis of charges, expenses, and terms of payment.
- The conditions under which the client or the consultant may cancel the agreement.
Q. How do I assure the successful completion of the project?
A. You can assure the successful completion of a consulting engagement by doing the following:
- Make certain that everyone in the organization will provide what the consultant needs in order to gather information and make recommendations.
- Inform all concerned, either through a general meeting or personal memos, that a consultant has been engaged, and explain the nature or purpose of the engagement.
- Allay any anxiety that may result when employees learn that a consultant has been engaged.
- Be available to the consultant to review progress, clarify information, or help in resolving temporary difficulties. Candidly voice concerns to the consultant.
- Avoid pressuring the consultant to discuss findings or recommendations until the consultant has thoroughly researched the situation and is ready to do so.
Q. How do I assure confidentiality and avoid conflict of interest?
A. All reputable consultants consider the detailed knowledge they gain about a client's operations and staff to be confidential. Such information is not to be discussed with, or disclosed to, a third party without the client's express permission. These are requirements of the Code of Ethics to which all reputable consultants subscribe.
Q. How do I evaluate the project's success?
A. The success of a consulting project can be measured in many ways. Frequently, the change that results from an engagement is obvious - for example, measurable savings realized, new business generated, or delays eliminated.
Some projects, however, may have payoffs that are only realized gradually. In such situations, you should be able to see progress in achieving the project's goals.
To gain subjective appraisal, ask the question, "On balance, and considering everything, would I hire the same consultant again?" If the answer is "Yes," then the project can generally be considered a success.
Published with permission of the Institute of Management Consultants, (C) 2004
