Managing Expectations When Hiring a Consultant

 

In recent weeks, we had a discussion with a prospective client.

We submitted a proposal and in further discussions, he asked several good questions and then stated that because, in the past, he had negative experiences with consultants regarding his expectation, results and fees he asked for more clarity on our proposal.

 

Mismatched Expectations …

He requested that we provide him with additional information which we were happy to do. But we also realized that there are many other potential clients whose projects often fail because they bring in the wrong consulting group or they and their consultant have a mismatched set of expectations.

 

Are You Well-Matched?

So, how does a company avoid this problem. The first step is making sure the size and employees of the consulting group are matched to the company.

Many of the top tier firms with offices around the country focus most of their practice on large companies both public and private.

Their methodologies and experience, and in many cases, fees, would not typically be a good match for a privately owned smaller or mid-market firm.

If your company is backed by a larger venture capital or private equity firm, your investors or board members may have experience in former lives with the brand name firms. Regardless of the referral, make sure that the firm has the experience and appropriate expertise to meet the needs of your company.

 

Making Empty Promises …

Consulting firms are sometimes accused of making empty promises, stating the obvious or even lacking the relevant experience on which to base their recommendations.

And often, the plans lack sufficient detail to be executed by the client’s organization and thus, lack sustainability.

How can this all be avoided?  By a careful match of the expected deliverables with the expectations of the client. 

 

Types Of Consultants …

There are many types of management consultants, but the most common are strategic and operational.   While most groups focus on some of each, often the expected deliverables are very different for the client.

A strategic consultant focuses on one or more strategic problems facing a client and develops plans to address them.  It may be a market issue, it may be a financial issue or it may just be a problem within management.  

But in any case, the expectations of the client are to get a viable plan for the organization to execute and have the organization be in a position to execute that plan.  In dealing with an operational consultant, the company may understand its strategic issues, but does not know how to take advantage of the knowledge.

 

A Good Example …

As good example of this is an RP client that had a business that had grown rapidly through acquisition (the strategy) but eventually experienced a downturn in revenue and profit.  

Because the company had a significant amount of debt, (part of the strategy) its current bank declined to renew its loan.   At that point, the client asked RP to find them a new bank and negotiate new terms for the company (operational).

 

What We Discovered …

We discovered in our efforts that two separate banks were needed; one that specialized in working capital loans and another that would fund the long-term debt of the acquisition.  

Meanwhile, it was important to maintain the relationship with the outgoing bank while this effort was progressing.  The company’s strategy has not changed.  This was a “feet on the street” effort to find and negotiate with the lenders while the management of the company operated its business.

In yet another case, a US division of a large Japanese company was faced with both strategic issues as well as significant operational issues related to the forming of the division through a merger.  After several years, the division remained unprofitable.

 

Because of the scope of the various problems, RP was asked to form a new interim management team within the division to address the numerous issues.  Although the issues were resolved, from a strategic point, the division was no longer part of the parent company’s larger strategy and that decision led to a successful sale.

 

What To Expect …

As a client, what should you expect from any consulting group that you might retain?

1. Impartial Advice: As an outside party, a consultant is not conflicted by organizational or financial issues within the company. They bring experience in multiple situations and strategies and know what has worked and what has not. And, above all, they may be the only people connected to the organization that will tell you what you don’t want to hear. It is these often harsh, but accurate views that will make the difference between success or failure of your company.

2. Dedicated to Solving the Problem: A very focused individual or team that is dedicated to solving an identified problem can be very valuable. They are not caught up in company politics; getting a raise; or advancement. They come in, use their expertise and leave when the problem is resolved.

3. Access to More Information: As in the case of the company needing a bank, after a number of years working with banks, we were able to identify and contact the ones whose lending criteria matched the company in a much shorter time than if the company had gone through the learning process.

4. Fresh Perspective: Companies experiencing challenges often need a fresh viewpoint. The right consultant can add a fresh viewpoint and identify underlying problems. Often employees of a company become busy with their daily jobs, and/or, in some companies, hide problems due to fear of criticism.

5. Providing a Plan including Deliverables: The project should include a concrete plan that outlines what needs to be done, who is responsible, the time-frame the tasks will be accomplished and what tangible benefits (either strategy and/or operational change) will be delivered when the tasks are complete.

 

Get Their “War Stories”

When considering working with a consultant, be sure to match your expectations with that of the consulting group you are considering working with.

And while references and reputation are certainly helpful, a conversation regarding the “war stories” of how the consultant has helped companies like yours, is often the best criteria.

 

Revitalization Partners is a Northwest business advisory and restructuring management firm with a demonstrated track record of achieving the best possible outcomes for our clients.

We specialize in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.