10 Critical Questions to Ask Before Hiring a Consultant
The 10 Critical Questions to Ask Before Hiring a Consultant
Talk to as many consultants as you can before hiring one.
Even if you have one person or firm in mind, interview at
least a few others as a sort of due diligence. You'll
probably find that each interview helps you focus on the
issues you're hiring a consult to help resolve.
1. Most consultants focus on two areas: cutting costs and
raising revenues. What do you see as the relationship
between the two functions? Which do you do better?
Cost cutting is the consultant's usual expertise. It's what
most companies need. Most of these hired outside
consultants to take an objective look at organizational charts,
value-adding processes and competitive environments. "We
spend a lot of time talking to a company's customers, so we
understand what they like and don't like," one consultant
says. "What does the customer value? Is it time? Is it
quality? We define that." What this means is that a company
can cut jobs and still not touch on one non-value-added
activity or add value to the customer.
2. What was your professional experience before you became
a consultant?
Ultimately, you should want any consultant you use to have a
strong bottom-line sensibility. You want this person-or
team-to focus on the things that will add the greatest
amount of value to your company in the shortest amount of
time. This kind of thinking doesn't come naturally to many
people. It usually demands two kinds of experience: as a
chief executive officer or as a corporate turnaround
specialist. A consultant who has this kind of experience has
dealt with strict cost controls, high-pressure scrutiny and
the need for quick results. These are the same traits you
should look for in anyone giving you expert advice.
3. How many professionals work with you or at your firm?
Business consultants fall essentially into two categories:
Solo-practitioners and team players. The differences between
the two usually involve the type of work they take. Most of
the time, the soloists deal with less-specific, strategic or
vision-related issues; the teams get into more tightly
focused number crunching. Less-specific functions tend to
take less time (sometimes as little as one day); the more
specific take more. One of these functions isn't better or
worse than the other. The trap to beware: The marketing
soloist who claims he or she can also review all of your
accounting.
4. Will you sign a letter of confidentiality?
Will you refrain from working for our competitors?
Ask all consultants to sign a letter of confidentiality.
Some owners and managers assume that short-term strategic
consultants pose less of a threat to proprietary interests
than the number crunchers. Don't make that assumption. You
and your staff should feel free to discuss any business
subject with your consultant and trust his or her
discretion. If you feel uncomfortable, you won't discuss
things candidly. Your risk in these cases isn't usually that
the consultant will knowingly steal proprietary in formation
or material. Most are professional enough-and work in small
enough markets-that reputations matter. More often, the risk
involves a consultant unwittingly mentioning something. If
he or she has signed a confidentiality letter, he or she
will be more likely to think twice.
5. Who are some of your other clients? Who are some people
and companies with whom you've worked before? Can I call
them to ask about your work?
Don't be wowed by big-shot former clients. At big
companies, consultants are hired in teams to tackle
extremely specific projects. Just because the person in the
expensive suit claims Microsoft as a former client doesn't
mean he knows Bill Gates on a first-name basis. In fact,
it's better if the consultant has worked with companies
closer to your size and shape. They'll more likely
understand your needs.
6. With how many clients do you work at one time?
Do you have enough time to devote to our company
to accomplish our goals? Will you return phone calls
or emails the same day?
Asking other or former clients about the consultant's
responsiveness and attentiveness can be helpful. As
can more pointed questions of the consultant. These
questions all focus on the same point: How much
attention can the consultant afford to spend on
your needs? The number of clients a consultant can serve
well varies with the kind of service provided and client
involved. But some general rules apply: You want to have
same-day response to questions or problems. If you're
undertaking a major restructuring, you probably don't want
your consultant working with more than two or three other
clients. A caveat: Some owners and managers who've had bad
experiences with overly invasive (and expensive) consultants
warn that you shouldn't be the only client a consultant
has.
7. Will you teach us to do this work for ourselves and
become self-sufficient? How long will this take?
One common trap in using a consultant is becoming
dependent on him or her. From the consultant's
perspective, this may simply be good business assuring
future work for himself, herself or themselves. From your
perspective, it may be little better than the status you
had before you had the consultant come in.
By making training part of the consultant's job, you can
limit the chances of a prolonged engagement. Establish a
schedule within which the consultant can accomplish his or
her goals. Assign a staff person to work closely in this
process-and learn everything he or she can.
8. Have you written anything-published or not-that deals
with issues like the ones this company faces?
Consultants love to write about their experiences and their
theories. Sometimes this can be pretty rough reading, but
it will usually help you understand how the consultant sees
markets and business factors that may affect you. Also,
management or technical literature can be a good place to
look for consultants. While the latest management guru
writing for the Harvard Business Review may be beyond
your needs and means, you might be able to find useful
experts in trade or regional newspapers and journals.
9. How do you charge for services? Do your fees include
travel time and other miscellaneous charges or are those
billed separately?
There's no set standard for paying consultants: Some
work on a straight-fee basis, others work for a fee plus
performance bonus, a few work on a contingency basis-
tied to sales increases or cost reductions. As with paying
any outside contractor, your concerns should be assuring
a high quality of work and containing costs within a
predetermined bud get. With consultants, focusing their
use as specifically as possible will help accomplish both of
these ends. Also, make it clear from the beginning what
incidental expenses you're willing to pay and how you'll
pay them. Consultants who've worked at or for large
corporations may be used to expense accounts that you
aren't. Be very clear about how much you're willing to
spend on the whole project or series of projects. Insist
that the consultant warn you-in writing-if the project won't
be completed on time and within budget.
10. What kind of documentation will you give us when the
project is completed? Who will own that documentation?
Keeping a paper trail of the work a consultant does for you
accomplishes several ends-all of them good. First, if the
consultation has worked well, this will usually give you
some forms and tools that you can use to improve some part
of your performance. Second, it allows you to keep a record
of the analyses made of your company and the responses
you've taken. This kind of "scrap book" can be a big help
when dealing with future problems or other consultants.
Third, it makes clear what the consultant did-and didn't
do-while working for you. If any disputes should emerge over
payment or ownership or confidentiality, you'll have some
support. In general, all work (including spreadsheets,
computer programs, mechanical devices or literature) a
consultant does for you is your property. Sometimes-especially
in the cases of devices and literature-this becomes an issue.
Make it clear from the beginning that you want to own
everything that comes from the consultation.
About the Author
Jan B. King is the former President & CEO of Merritt Publishing,
a top 50 woman-owned and run business in Los Angeles
and the author of Business Plans to Game Plans: A Practical
System for Turning Strategies into Action (John Wiley & Sons,
2004). She has helped hundreds of businesses with her book
and her ebooks, The Do-It-Yourself Business Plan Workbook,
and The Do-It-Yourself Game Plan Workbook.
See www.janbking.com for more information.