Wednesday, January 9, 2008

When to Hire Consultants

I'm sure you've heard the consulting stereotypes.

"For a large sum, they will ask for your watch and tell you what time it is."

"They gather an immense amount of knowledge from the organization, create a splashy presentation summarizing what you already know, then leave the organization taking that knowledge with them to apply to other consulting engagements."

However, there are 3 specific circumstances in which I hire consultants.

1. As part of change management by having an external group validate the path chosen
Change is hard and sometimes politics in an organization are such that no internal stakeholder can champion the new idea. Bringing in consultants to publicly validate the idea can build transparency and break down barriers. It may sound strange to pay an external party to explain to an organization what it already knows, but sometimes it is necessary. Also, I've seen stakeholders in politically charged situations be more honest and open with external consultants than with their peers. Many staff seem to be happy to tell all to an external party, which can accelerate information gathering.

2. To extend the capacity of the organization for short term urgent work
I've recently been asked to significantly expand the services offered by IT. All of my existing staff are working at 120% on existing projects. Bringing in consultants for a very focused, short term engagement will enable my staff to focus on their deadlines while getting extra work done by consultants in parallel. A few caveats about doing this. Consultants need to be managed carefully to ensure travel expenses are minimized and the time spent is tightly scoped toward a specific deliverable. This means that consultants will take management time and staff time, so adding 1 consultant FTE comes at a cost of .5 FTE to manage and provide support for the consultant. Also, the organization must buy into the consulting engagement. I've seen passive/aggressive behavior toward consultants, so stakeholders should ask for the consulting engagement rather than have one forced upon them.

3. As contractors that add new knowledge to the organization
In 2002, I had a serious network outage because there aspects of network management "that I did not know that I did not know". We brought in experts in network infrastructure and applications (DNS/DHCP) design. These folks were more educators and contractors than consultants. We now have one of the most resilient networks in healthcare due to their education about best practices.

There are also reasons not to hire consultants

1. Do not outsource your strategy to consultants
Although many talented consulting firms offer strategic planning, I've not seen business changing strategic plans come out of outsourcing strategy. Consultants can be helpful facilitators of strategic planning, organizing all the ideas of employees, customers and senior management, but the strategy should belong to the organization, not external consultants.

2. Do not hire consultants as operational line managers
Sometimes positions are hard to fill and consultants are brought in as temporary staff. This can work. However, hiring a consultant to manage permanent employees does not work. It generates a great deal of resentment from the existing employees and it's hard to sustain because everyone knows their manager is temporary. It's a bit like having a substitute teacher in school.

3. Do not allow consultants to hire consultants
Sometimes consultants are self-propagating. A tightly scope engagement grows as consultants discover new work for other consultants to do. Keep the consulting engagement focused and move the work to the permanently employed staff in the organization as soon as possible.

On rare occasions, I make myself available for one day consulting engagements doing comprehensive IT audits of healthcare organizations. When I do this, I donate all fees to BIDMC or Harvard, not accepting any payment for my time. I create an overview analysis of the strategy, structure and staffing of the IT organization as a guide for the existing management and staff. I hope these efforts follow my guidelines above - bringing external validation, extending capacity, and offering new perspective.

8 comments:

jessica lipnack said...

As an accidental consultant (sequella of writing books), I read this post with great interest. Two quickies: 1. principal reason people hire us is because of unique expertise, never to plug holes. 2. I draw a line between contractors and consultants. Contractors replace; consultants augment. IMHO.

Matthew said...

"Consulting: If you can't be part of the solution, there is money to be made in prolonging the problem."

Quoted that from a Despair Inc. Calendar.

Hey John,

Have you been following CES any? If so, what products are you excited about that you see can apply to the health care industry (if any).

John Halamka said...

I'm intrigued by the Sony prototype of Organic LED flat panel technology - it's as thin as 2 credit cards

http://www.news.com/2100-1041_3-6148330.html

sks said...

Great posting. Any recommendations on staff augmentation firms if you want primarily local resources in the Boston area?

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平平 said...

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Laurel said...

John,

Very well stated. I have been a partner in the big four and an entrepreneur in an innovative consulting company as well as a purchaser of consulting services.

It amazes me how so any of the engagement problems and issues still exist after the last ten years I have worked in the Professional and Executive Coaching world. You have hit the nail on the head - know the purpose for hiring a consultant and stick with it.

I am in the process of writing a book and am very interested in your views and thoughts on consultants - the good and bad.

Laurel Rolls
The Consultant's Consultant