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When to Hire—or Not Hire—a Consultant: Getting Your Money's Worth from Consulting Relationships

Book Description

When to Hire—or Not Hire—a Consultant:Getting Your Money's Worth from Consulting Relationships is a hands-on, practical guide for anyone thinking about hiring a consultant to set strategy, solve problems, increase profits or revenue, develop new products, open new markets, or improve efficiency.

Consulting is one of the fastest growing professions in the United States. According to the U.S. government, there were 719,000 consultants in the U.S. in 2010, and you can expect an additional 274,000 by 2020. Cloaked in "expert" status, consultants might seem to be the answer to many business problems. You call someone in to solve a particular problem or develop new markets, then send them away once the job is done—while reaping the benefits of their expertise. Consultants sometimes do work miracles, but once in a while they wreck a healthy business. And far too often, the benefits gained by calling in consultants disappear far too soon after they leave.

Yet as return on investment (ROI) and accountability for results become bigger and bigger issues, business professionals in search of answers to performance or strategy challenges are turning more and more to outside guidance for help. Indeed, few businesses do not use some kind of consultant at some point in their existence. But how can you leverage the skills consultants can bring to the table without adding undue risk to your operations? How can you effectively manage the consultant relationship to get the greatest benefit for the least cost? What metrics can support your decision to hire—or not hire—a consultant? When should you use home-grown talent to solve problems instead? That's what this book is all about.

While there is a multitude of books on how to be a consultant, this is the first to help an executive determine when to hire one. You will learn strategies to decide when a consultant is needed and how to support that decision with hard evidence, how to select the right consultant, how to set clear expectations, and how to know when a consultant is either a valuable resource or a hindrance to the company's success.

The authors of this book bring together two opposing perspectives. Linda Orr has served as a consultant in many companies and situations, while Dave Orr has hired consultants many times. Together, they can help you make the most strategically and financially sound business decisions. This books shows you how to:

  • Work through ROI and other issues to support a decision to hire a consultant.

  • Maximize the benefits consultants can provide.

  • Explore options other than hiring a consultant.

What you'll learn

  • Where consultants "come from" and what qualifications you should look for.

  • How to compute ROI for consultants.

  • When consultants can be effective and when they cannot be effective.

  • How to select the right consultant, then set expectations.

  • How to negotiate a consulting contract.

  • How to form an effective consulting relationship.

  • How to fire a consultant who is not adding value.

  • Your options besides consultants to solve business problems.

Who this book is for

When to Hire—or Not Hire—a Consultant: Getting Your Money's Worth from Consulting Relationships is designed for owners and managers who need help navigating the decisions to be made and the choices faced when they need—or think they need—outside help. Most companies use consultants occasionally, but many executives have not had the experience of dealing with consultants and using them profitably and effectively. It's also for those who have had a bad experience with consultants and need a better process for ensuring a successful relationship with a consultant.

A secondary market for this book is MBA students. Giving that the consulting industry is so large, a basic part of strategy training should be when do you "outsource" your management decisions. (Linda Orr plans to use this book in her MBA classes.)

Table of Contents

  1. Titlepage
  2. Dedication
  3. Contents
  4. About the Authors
  5. Chapter 1: Introduction
    1. Why We Wrote This Book
    2. How We Wrote This Book
    3. The Outline of the Book
  6. Chapter 2: The Industry
    1. Why the Growth?
    2. Trends in Consulting Growth
    3. Types of Industries that Use Consulting
    4. Types of Consulting
    5. Types of Consultants: Different Business Models
    6. Types of Consulting
    7. Summary
  7. Chapter 3: Origins
    1. A Brief History of Consulting
    2. What It Takes to Become a Consultant
    3. What’s a Manager in Need to Do?
    4. Summary
  8. Chapter 4: ROI
    1. Categories of Gains
    2. Understanding Types of Gains
    3. Consulting Costs
    4. Payment Structures for Costs
    5. Putting It All Together: The ROI Spreadsheet
    6. Paying for the Consultant
    7. Summary
  9. Chapter 5: Mistakes
    1. The Decision Rules
    2. Bad Reason #1: To Replace, Repair, or Enhance a Survival Skill
    3. Bad Reason #2: To Provide or Repair a Skill or Knowledge that Cannot Be Trained
    4. Bad Reason #3: To Validate an Initiative that a Company Already Plans on Doing
    5. Bad Reason #4: When a Company Is Looking for a Quick Fix
    6. Bad Reason #5: The ROI Will Never Work Out, But You Go Ahead Anyway
    7. Bad Reasons #6–9: The Company Does Not Have Time, Resources, or Abilities to Effectively Form and Manage the Relationship
    8. Summary
  10. Chapter 6: Good Decisions
    1. Too Small for a Full-Time Hire
    2. To Fill a Skill Gap for Which an Employee Can Be Trained
    3. While Conducting a Search for a Full-Time Employee
    4. When Your Employees and Existing Methods Fail to Find the Root Cause of the Problem
    5. When Your Need Is Temporary
    6. When You Need a Breakthrough Change, or Creativity, Innovation, R&D, or Cross-Industry Fertilization
    7. When You Need Someone with a Highly Specialized Skill
    8. When You Need an Objective or Anonymous Opinion
    9. You Require Professional Expertise Like Compliance or Auditing
    10. Summary
  11. Chapter 7: Selection
    1. Processes to Select Consultants
    2. Criteria to Select Consultants
    3. The Selection Process
    4. Evaluating the Proposals
    5. Summary
  12. Chapter 8: The Relationship
    1. Contract Development: Must Haves and Pitfalls
    2. Contract Overview Outline
    3. Necessary Meetings
    4. Metrics and Sustainment
    5. Undermining the Consulting Project
    6. Critical Success Factors
    7. Survey Results for Client Satisfaction
    8. Summary
  13. Chapter 9: Options When Consultants Won’t Do
    1. Strategy
    2. Developing a Plan for the Future
    3. Selecting and Evaluating Managers
    4. Evaluating Company Performance in the Marketplace
    5. Overcoming Productivity Killers
    6. Root-Cause Analyses
    7. Summary
  14. Appendix A: Tools
    1. Top Consulting Firm Strengths and Weaknesses
    2. Top Industries Using Consultants
    3. Top Consulting Industries
    4. Project Checklist
    5. Return on Investment Template
  15. Appendix B: Requests for Proposals
    1. Introduction
  16. Appendix C: Sample Consulting Contract
    1. Sample Consulting Contract
  17. Appendix D: Sample Nondisclosure Agreement
    1. Nondisclosure Agreement
  18. Index