How to Pay a Management Consultant

Perhaps you're seriously thinking of engaging the services of a management consultant or you know someone who has. If you've had little or no experience in this respect, then you could do with a bit of training on one very important issue, namely, how do you pay that person. Although this may seem blatantly obvious, things are seldom what they appear to be. Because you want value for money, you be interested in the rest of this article.

You'll find that the majority of management consultants charge by the day. The less confident will work for almost anything; the more confident and experienced will have immutable rates. But, it all amounts to the same thing: They'll bill you according to the time they spend working in your organization.

Here's a truism: Just because everyone is doing it doesn't make it the right thing to do. You should not pay anyone for their time, and here's why.

Before the Industrial Revolutions of the 18th and 19th centuries in England and the US, respectively, the only people who were paid for their time were the unskilled: day laborers who drifted from one farm to the next, digging ditches, mucking out, and anything else that anyone could do. Those who were skilled, however, were paid for what they did; not for how long it took them to do it.

The Industrial Revolutions changed all that. Quotas that formerly were the bailiwick of the skilled were applied to the newly hired factory workers, who themselves were largely unskilled; but everyone employed there was paid for their time. That means that the practice of charging for time is about 300 years old. Remember, however, that the criterion for payment was according to whether the workers were skilled or unskilled.

When you contract a management consultant, that person is saying in effect that he or she is not just highly skilled, but exceptionally skilled; yet in the same breath that same person is also insisting on charging for his or her time. Why? Because he or she has no idea where the custom came from. As far as consultants are concerned, it's always been that way. Don't fix what isn't broken, and all that.

This brings up another irony. Many consultants claim to specialize in changing the companies run their businesses or how to manage their people better. But these are the very same people who won't change the way they charge their customers..

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How to Hire a Management Consultant

It may be that despite being cautioned about using management consultants, you still feel that they could benefit your company; and you know what? That's perfectly okay. As long as you do it with your eyes wide open. But, if that's what you've decided to do, then you'll need to know how to do it.

Like many other services, it's better to get a referral from someone you trust than to make a choice through a directory or by surfing the internet. Professional associations can be a reasonable place to start, but all that membership in such an association will really tell you is if they've been disciplined for unprofessional behavior. Once they're in, their competence as consultants will seldom be called into question.

But, suppose you're at the stage where you're interviewing someone with a view to awarding a contract to a consultant. Now what?

You will need to decide what questions you will ask. Although interviews alone, whether for a job such as this or in an actual hiring situation, are no more reliable than asking a novice to throw a dart at a dartboard. That's because decisions on who to employ or contract are usually made within 30 seconds of the candidate walking through the door. In other words, that person doesn't have to say anything, which rather obviates the interview process.

There's one question that is seldom asked, and that is "How will you measure the impact of what you do?" This will scare a lot of those people who pitch for your business, because when it comes to dealing with non-financial issues, most people don't know how to measure what their results. So instead of telling you what they'll do, they'll tell you that there are so many things to consider and such a long time before the results will be felt, that it can't be done.

They couldn't be more wrong. The problem isn't that their efforts can't be measured; rather it is that they don't know how to do it. It's true that considerable skill in constructing questionnaires or gathering data in another manner is required; but that doesn't mean it's not possible; and it's equally true that some advanced statistical techniques will also be appropriate. For that sort of thing, a research-based Masters or quantitative PhD will provide the knowledge for how to do this.

So, from now on you can hold everyone who approaches you for consulting work accountable for their work.

By the way, if you're thinking of starting a business of your own, then you might be interested in http://www.terrydeaninterview.com.

Or, if you'd like to learn more about staying employed, then download my new FREE ebook. You can get it at http://www.p-advantage.com/freeEBook.html.

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View the Original article