Manager's Guide to Hiring Outside Consulting Firms

Introduction

Hiring a consultant is often a costly endeavor for a firm. However, there are times when an outside consultant is necessary. When a job entails skills that fall outside the core competencies of the firm, it is sometimes necessary to engage the services of an outside consultant. There are many questions involved in this decision that must be carefully considered. For instance, should one hire a consultant on a permanent basis as an inside consultant, or hire an outside consultant each time a need arises? This paper explores the pros and cons of the working managerial relationship with outside consultants.

Opinions differ as to the advantages and disadvantages of hiring an outside consultant, as opposed to taking on another staff member. Consultants are supposed to represent the best and brightest in their given field. However, for every positive experience, one can find a negative one. Ultimately, blame usually falls on the consultant when things do not work out as planned. Yet more often, failed consulting relationships result from miscommunication and a mismatch in goals. The most important aspect of the relationship between executive leadership and the consultant is the ability to communicate goals clearly. If executive management and the consultant are not aligned on common goals and objectives, it is next to impossible to develop a positive working relationship.

When to Hire a Consultant

The primary question management must decide is when to hire an outside consultant and when to rely on internal talent. A related question is when to hire a consultant versus when to bring on a new employee. There are positive and negative aspects to each of these options. As other business sectors struggle under high energy prices and credit crises, the management consulting industry continues to grow. One of the key reasons for this growth is that as times get tough, businesses want to ensure they are operating as efficiently as possible (Daks, 2008). This is a primary reason why many businesses hire outside consultants.

However, the question remains: why not simply use internal talent? The answer is that an outside consultant brings a different perspective and can see things that someone inside the firm may not. There may also be political factors within the company that would prevent an insider from offering an entirely honest opinion. For instance, internal staff may be reluctant to criticize management's position on certain topics. Criticisms are more likely to be received objectively when they come from a paid consultant, as they are less likely to be taken personally from an outsider.

In a study by Koh, Ang, and Straub (2004), meeting supplier obligations was identified as the single most important factor in building excellent customer relations for IT outsourcing agents. In meeting these obligations, a consultant brings a variety of experiences that go beyond those of someone who has worked at the same company for many years. Consultants have encountered many different situations and therefore hold a broader perspective than an inside employee. They have seen what works and what does not (Paris, 2006). Consultants can focus on the specific problem at hand, rather than managing it alongside the many other normal activities of the workday.

Some managers question the real value attached to a consultant's performance. Consultants are expensive, and managers often wonder whether they received a good return on their investment. In a study involving practicing school psychologists acting as consultants, the presence of these professionals was found to significantly improve student outcomes (Winn, Skinner, Allin, et al., 2004). While individual circumstances and outcomes vary, this example suggests that in at least some cases, a consultant is worth the fee.