"So You Need to Hire a Consultant?", ME Online Web Exclusive, Nov. 20, 2006

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So You Need to Hire a Consultant?

by Philip H. Francis

Any company, small or large, should staff itself with the people it needs to manage ordinary operations, allowing for normal growth. Carrying a bigger payroll, just in case of emergencies, is wasteful, ineffective, and costly.

That's why everyone has met situations in which there is a need for someone with a particular skill or field of expertise, but no one like that is on staff. What about a temporary scheduling crunch? Or maybe your company needs a hot internal debate on a particular strategic or tactical issue.

What can you do to meet the extraordinary? That's where an industrial consultant can prove his or her worth.

Both you and your company can benefit by becoming more familiar with the use of consulting services, so that you can be even more cost-effective and competitive in the future.

Industrial consultants have been with us for more than a century. Arthur D. Little is generally given credit for creating the field when he was on the staff of the Massachusetts Institute of Technology in the late 1880s. The field was known then as "technology research," and his work shaped a budding industry into the giant that it is today. American financiers then were wary of investing in industrial research, and particularly in Little's field of chemicals. He and his associate, Roger Griffin, stumped across America, making the case that it was in the country's competitive interest to establish a U.S. center for industrial research. Today, Arthur D. Little Inc. is a consulting firm with offices in 30 countries.

Industrial consultants can be very useful as a "third arm" for managers. They are there when you need them, gone when you don't. They can provide needed domain expertise, a qualified team, objectivity, knowledge of the latest tools and methodologies, and wisdom. Their job is to deal with your problem when you don't have the resources to do it yourself.

Using an Industrial Consultant

Let's say that you have a need to engage a consultant, but don't have anyone in mind. How do you begin?

Every consultant or firm has its own particular core competencies for which they're known, so you should pick the right partner for your particular needs.

Large, multinational companies do it all for clients that need large projects that cross many fields, and they bring great scope to their clients. They tend to be expensive. Examples include Accenture, PricewaterhouseCoopers, Deloitte & Touche, Ernst & Young, McKinsey & Co., IBM Consulting, and several others.

Other large companies that have expertise in certain specific fields of practice. Examples include P.A. Consulting, and Bain & Co. These firms generally have most or all of the experience and reputation that the large companies do, within their own particular field of focus.

Small companies abound: Thousands of experienced proprietors or partnerships offer specialized services; they generally lack the breadth to take on larger engagements. But the fees for these "boutiques" are generally modest in comparison with the large and midsize firms.

Do you need a small "boutique" firm, or a larger full-service one? Most consultancies specialize, such as in strategy, operations, testing, and so on. Some engagements need detailed work, while others require only oversight. Small consulting firms generally don't have the "bandwidth" to tackle larger engagements. Large consultancies frequently have a wider span of expertise, but, as mentioned above, tend to be more expensive, and really may not be effective in executing smaller jobs. Local firms frequently offer a better alternative than larger companies for narrow projects.

Inquire from the individuals within the consultant's company regarding whom they have worked with before in similar projects. Satisfy yourself that you are getting the best person or team available for your project.

Advice From the Street

The ABCs of consulting practice have their own special and practical ground rules. To begin, get to know your consultant in some depth—more than just a casual suggestion from a friend. Get your consultant's résumé and more than one reference; probe into some of your consultant's recent jobs, and check with their customers. Have a good discussion with this person, about his experience and professional credentials. Inquire about the consulting firm's experience. Discuss frankly the risks, and ask what the consultant would do to keep on target with schedules, costs, and communication with you. After all, as the client, you must ultimately be responsible for changes of scope or approach. Are you comfortable, if not absolutely certain, that this investment warrants and needs your time and distractions? Is this project a good investment for you? For your company? And, of course, get your agreement in writing.

Clearly define the scope of work you need to be achieved, and provisions for changes if and as they're needed. If the project is at all large or complex, then engage a competent attorney to draw up the agreements to protect you. And quickly repair any disconnects or misunderstandings as to fees, expertise, deliverables, project timelines, ownership of intellectual property, or any one of a multitude of issues before they interfere with the project. Express your needs and expectations for the project. Are you getting the very best person or team available? Be particularly cautious if your job requires new ideas, technologies, or other unknown elements; address these issues up-front. Provide in your agreement a means to terminate the relationship if it goes sour—on either side.

Here's an example of just what can go wrong if your consulting agreements are not absolutely clear. A middle manager in our company once made an agreement to engage an outside consultant that was to improve a minor piece of our overall supply chain process. He felt that that his "patch" would streamline a piece of the overall process. He turned to a trusted consultant, and then engaged his director for approval. However, he failed early on to coordinate properly with the appropriate manager responsible for all outsourcing, procurement, and materials management. This misstep resulted in process confusion, which then led to a trail of mounting receivables, inventories, and costs. The message: Small issues can easily grow and create bedlam if not well managed.

Here's another personal consulting episode that is instructive in a quite different way. Early in my career, I was hired as a consulting engineer for a major food corporation to design a large, domed concrete structure used for fermenting yeast. I did the structural design. But while still in the testing phase, a glitch in the electrical system sparked, which then literally detonated, leveling the facility. In the aftermath of what might have been a major human disaster, we soon found that the clients' personnel had misused the electric safety controls, which then occasioned the explosion. There were no consequences other than capital and time. So, what's the message? As a consultant, internal, or outside, you simply can't be too careful in the face of any potentially dangerous situation. Make provisions in your consulting agreement that will deal directly with the particular risks that may arise, so that you can maximize your opportunities for success.

I'm persuaded that, as a class, good consultants rank among the top business professions. As a group, they are scrupulous, meticulous, and they deliver what they promise.

Of course, it is the responsibility of you, the buyer of their services, to have a serviceable agreement that works for both parties on two levels: personal and in writing. Stay engaged. And if the work begins to drift away from your understanding, promptly redo your agreement with your consultant to reflect the changes.

Any engineer who's been around can recall various experiences with consultants that have ended in failure. Most of them trace back to poor communications and implementations or contract disputes. Strive to have honest and quick feedback, and recourse when things go south.

Working with consultants is generally quite different from dealing with other co-workers. You never will have full control as projects unfold. Schedules, approaches, and methods generally are in the hands of the consultant. Therefore, you must coordinate even more tightly with an inside consultant than with an employee. And beware: Managing a consultant isn't for everyone. It takes multitasking skills, and technical and political skills.

Many large companies use a cadre of talented internal staff consultants who do much of the work that outside consultants might otherwise take on. These experienced staff members tend to be recognized internally as "can-do" people. They work directly with operations staff in tackling difficult projects, much as R&D people support the company's production operations. Indeed, one important aspect of using industrial consultants is their agility in keeping all the balls in the air at the same time: safety, timing, financial, and project management. It is indeed a difficult and delicate job.

These are just some of the ABCs of using industrial consultants. In summary, it is your responsibility to manage your consultant, not the other way around. Most consulting engagements that go sour do so because you, the client, do not stay close to the work as it progresses. In consulting, you must muster all your people and your technical skills to ensure that all goes well. Your job is to use your project management skills, time management, TQM, safety tools-while keeping all parties closely informed as to status and forecasts-using the appropriate kind of contract or agreement for the job, whether fixed-price, time and materials, or redeterminable arrangement.

In Summary: Manage Your Consultant

The key to success with consulting, of course, is getting your project entirely and satisfactorily finished, on budget and on time, as expected in your contract agreement. Here is where you must pay close attention; the details are crucial. You certainty should keep current about the progress of your project. Stay engaged. Pay attention whenever even a part of your project begins to stray off-course. You want to be assured; therefore, you are responsible for driving the issues and keeping the project on track to completion.

And, finally, make sure that all of your commitments and understandings are mutually fulfilled with regard to project timing, costs, documentation, changes of work scope, and testing results. Good luck.

The author is a former professor and department chair at the Illinois Institute of Technology, an engineering researcher at the Southwest Research Institute, and a senior executive of Motorola, Square D, and AT&T. He runs an industrial consultancy, Group Francis, in Georgetown, Texas (phil@groupfrancis.com).