Why, How, When Should You Use Consultants?

Written by Super User. Posted in Growing Pains

Why, How, When Should You Use Consultants?

Can we hire and retain all the talent we need? Should we use external consultants? When is the right time to bring in an external consultant? These questions are discussed at Board and Management meetings everyday.

As companies grow, they begin to contend with growing pains. New challenges emerge that were not there before. As a leader who is alive to these changes, you may begin to see skill gaps in your team. You may begin to ponder the best responses to these challenges. Below are some thoughts that might point you in the right direction.

Staff Augmentation

An impactful role that consultants can play is to make up for temporary skill shortages. Companies often have short to medium-term staffing needs (in the case of government work, this can extend for several years) due to a variety of factors (e.g. recent downsizings, sudden expansion). Consultants in this situation “plug a hole” for the company by filling the role of full-time employees.  Say there is a sudden skill gap due to loss of a key staff, the company might engage a consultant to fill that gap pending replacement.

External Change Force (“political cover”)

It can be hard for companies to do what’s right for the business, particular when it affects "sacred cows". Job layoffs, salary and benefit changes/reduction, major operational and strategic shifts can be difficult to push through. Hiring consultants can be a way to reach the desired conclusions with sufficient political cover in case certain parties are unhappy (eg, a displeased Board or disgruntled employees).

Best Practices Across Industries and Functions

Consultants have the rare privilege of:

  • Serving multiple clients in the same sector (e.g. Beverages, Enterprise Software)
  • Serving multiple clients facing similar problems across different sectors (e.g. Nigeria, Ghana, South Africa)

This enables them to recognize common attributes of effective solutions, applying lessons learned in applicable situations. This knowledge is partially institutionalized at each consulting firm (in the form of white papers, databases, post-project reviews, etc); however, much of the information exists in the collective heads of partners and to a lesser extent, senior consultants.

A former McKinsey partner put it best when he called business consultants “masters at reinventing the wheel”

Analytical Horsepower

A corollary to staff augmentation, companies may need help solving issues and executing strategies where their skillsets and knowledge are insufficient. Consultants can be of great value given their training and capabilities. A note here on big vs boutique: big consultancies have a breadth of resources that they can bring to bear on problems (e.g. data mining and analytics, primary market research). Boutiques may have specialized expertise on specific dimensions (e.g. retail pricing best practices, financial industry benchmarks).

Fresh Perspective

Companies often need a fresh set of eyes – you’d be amazed at the amount of value consultants can add based on the most mundane observations and insights. Critics contend that this is an example of consultants selling “glorified common sense”, but for front-line client employees, it can be easy to fall into daily routines without a critical eye towards measurement, analysis, and improvement. It takes a fresh perspective to the sense in common sense.

Training and Skillset Augmentation

I’d argue that every consulting project – particularly ones with heavy client interaction – incorporates client training as a major ingredient. The best recommendations are worthless if clients can’t implement and maintain suggested changes. Thus, a large part of what consultants do is educate client employees on necessary knowledge, skills, and mindsets.

The Flip Side

Yes, there is a downside to hiring consultants - it is that their familiarity with the organizational terrain and landscape that is unique to the company is somewhat patchy and this can result in lack of adequate oversight and depth in the solution sets they come up with. In fact, one criticism against hiring consultants for any aspect of assisting organizations is the fact that they are not as familiar with the internal processes as the in house teams. However, experience of major companies has shown that  consultants have an all-round advantage over in-house teams, particularly when it comes to strategic and organizational change issues.

The best in class solution would be for companies to have their consultants work closely with in-house teams in order to gain the best of both worlds. For more on this check out our article How to Get the Best Value from Consultancy and Professional Services

 

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