At least
three issues interact: the problem, the relationship, and the contract. Until
they are all addressed, we won’t know what to do, or how, or when. Until
then, it’s hard to estimate cost or value.
by
John D. Trudel, Certified Management Consultant
What’s a consultant? Managers are trained and experienced in hiring workers, full-time or temporary, corporate employees or contract workers. Retaining a professional consultant, whether his firm be large or small, is different.
This issue is easily misunderstood. A decade of downsizing has resulted in many unemployed people. Some now work for "temp" agencies. Others seek jobs, and some have found that printing up cards that say "consultant" is a good way to get interviews. Some hire out as contract workers. Seeking permanent jobs, some are willing to work cheap or free.
Still, confusing contract workers with independent consultants can create major corporate liabilities. IRS delights in collecting penalties for "misclassified employees" and there have been many such cases. Workers posing as consultants are easy prey, but typically don't have much money. Their clients, having deeper pockets and much greater liabilities, are the real targets. Just defending such a case costs much more than any consultant’s fees. More obvious risks in using contract workers as consultants range from conflicts of interest, to issues of qualifications, ethics, and reliability.
In contrast, Certified Management Consultants (CMCs) are certified by the Institute of Management Consultants (IMC) to assure competency and adherence to a written code of ethics. Most of us are sole practitioners or with small firms. Many of us have well respected practices with national reputations. I am one. My business model is based on value creation.
When does work start? The first working meeting with the client is often the most difficult phase of a consulting engagement, and I think that it’s best for both parties to clearly distinguish this from sales presentations. As one client said, "Talk is cheap, but whisky costs money."
Large firms usually have one team sell the project and another do the work, which helps separate selling from working. That works well for the large consulting firms, if perhaps not for their clients. The catch is that the "rainmakers" sometimes land the job and vanish, leaving "newly minted MBAs" to do the work. With a small firm you know who will be doing the work, but it’s less obvious when the work starts.
Therefore let’s agree: work starts at the meeting to scope the project. It’s where client problems are revealed, relationships explored, and the project scope set. The deliverable is a statement of work (SOW) describing the client’s problem and what the consultant is going to do to help.
In many ways, this is like the first visit to a doctor, to get a diagnosis, prognosis, and an estimate. It’s a crucial step, and the best mode for a consultant is to listen and question. His primary goal at this meeting should be to deeply understand the client’s needs. In fact, it’s a code of ethics issue for CMCs to act in their client’s best interests, and I can’t do that if I don’t understand your needs. As a colleague said, "Prescription without diagnosis is malpractice."
The first date? Another colleague (Jerry L. Talley of EdgeWise Consulting in Mountain View, CA) teaches seminars on how to scope engagements. He uses the "first date" metaphor, "Not because it is especially accurate, but because it will tease us to take a new look at an old dilemma." Indeed there are similarities:
So this first working meeting does indeed have all the dilemmas of a first date. Both parties are laying the foundation for a relationship as well as managing a single encounter.
At least
three issues interact: the problem, the relationship, and the contract. Until
they are all addressed, we won’t know what to do, or how, or when. Until
then, it’s hard to estimate cost or value.
For example, the problem might be: "Our sales are flat, our profits are eroding, and our products are old. We need innovative new products." That lets us start, but it’s only one piece of the puzzle.
One relationship to address that problem might be: "We want you to lead a team to solve that problem in 90 days." Another might be: "We are budget constrained. We have a project manager assigned, but he is inexperienced and we’ve not done anything like this before. We want you to provide mentoring, coaching, and a safety net." Another could be: "We think it’s under control, but we want an outside look in the context of best practices."
The contract is the third dimension. It might include things like, "We want to conduct at least 50 key customer interviews in Asia, Japan, and Europe."
In any case, the first visit to scope a project is crucial working meeting that adds value. Therefore, please:
If you will do that, here is what you get in return, from me:
What’s Your Cost? I normally combine the first visit to qualified clients with a short talk on a current topic of interest to you. Attendees get handouts and an open Q&A period. You will get some valuable information, and the interaction gives you a chance to get to know me and what I do. For the talk, you will pay normal commercial rates. I also charge for my travel costs. Regardless of what your accountants may prefer, I don’t stay in motel 6s and I don’t fly economy class on ValueJet. I normally travel business class on major airlines.
If we do later work, your firm and The Trudel Group will sign a contract. I’m not an employee of your firm. I am an independent contractor and have been for over a decade. I provide my own office and staff, and I cover all my normal business expenses. It’s best for both parties to distinguish that relationship – and the greater the distance we keep from standard employee practices, the better for us both. (If your firm books my travel arrangements, or provides me an office or an Internet node, the IRS might claim I was your employee. That is very bad news for us both. At best, an encounter with the IRS potentially wastes large amounts of time and money.)
Note: I may choose to travel first class or in our corporate aircraft at my option. I may take side trips or bring my wife. If I do, it won’t cost you a penny more. I do this for my own convenience and business effectiveness. I charge clients only for business class airfare, and at the rate that it would have been if the trip was booked when we agreed to the visit. If you give me enough notice, it’s possible I can get other funded business scheduled in your area. If I do, I will prorate the airfare portion between clients.
I regret that I must insist on advance payment for the first visit. Sometimes it takes firms long periods to process the first invoice from a new vendor, and I find discussions with accounts-payable clerks to be quite unproductive. Advance payment also helps to avoid misunderstandings and disputes. After the visit, I will send you an IRS acceptable invoice, with receipts. If my travel expenses are less than expected and you have overpaid, you will get a refund.
And in closing -- I HOPE THIS NOTE CAN MAKE OUR FIRST WORKING MEETING MORE EFFECTIVE AND PRODUCTIVE. I stand ready to discuss my fees, qualifications, and experience at any time. If you need information, just ask. If you need help, please call me at 503/538-1169. contact us.
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