Hiring an outside consultant can help your business plan for growth, identify areas of difficulty, add temporary, specialized resources or knowledge, or recover from the brink of disaster. Bringing in an expert third-party perspective can help you solve problems, develop creative strategies, and improve efficiency. Despite the potential benefits, however, many businesses resist hiring a consultant because of the fear that it will be difficult or impossible to determine whether the consultant is adding value to the company. Because consulting fees can represent a significant investment in your business, it’s vital to implement criteria that help you measure a consultant’s value.
Engage in Advance Planning and Communication
Getting the most from a consulting relationship starts long before you interview or retain a consulting firm. The first step to success is identifying the specific reasons you are looking for a consultant. Some common reasons businesses bring in consultants include
- Saving money and/or improving efficiency for an underperforming location, facility, or department;
- Analyzing the development potential for a new project or product and overseeing implementation;
- Evaluating whether a failing company can benefit from turnaround consulting or whether it should be sold, dismantled, or dissolved.
Going into a consulting relationship with broad, vague questions or intentions is one of the biggest mistakes an organization can make. Hoping that a consultant will “help improve your business” or “increase profits” without identifying more specific areas of focus is a common mistake that makes it nearly impossible to define success or measure the consultant’s performance. Setting out clearly and specifically what you want to achieve from a consultant relationship is vital to finding the right consultant and evaluating their performance over the length of your partnership.
Use Regular Benchmarks and ROI Consulting Contracts
Once you’ve identified what you want your consultant to do for your organization and found the right consultant for you, evaluating the ongoing success of the relationship can include a number of different criteria. Regular check-ins and reports encourage open communication and ensure that the consultant is achieving results (or identifying additional challenges that are dampening expected outcomes). ROI consulting contracts build in incentives for success and mitigate the risk to the business by tying a consultant’s compensation to meeting benchmarks, thereby ensuring a good return on investment.
A consultant’s ongoing success can be evaluated by factors such as
- The consultant’s actual performance compared with benchmarks (e.g., “improve revenue in ABC Department by 5% by February 1, 2018”)
- Improvements in performance overall or within a project, department, or facility
- Risk reduction (decreased potential liability, failure rates, or other potential costs)
- Quality improvements (e.g., product performance, employee retention, customer satisfaction)
- Revenue growth
- Cost savings
- Time savings
- Performance improvement (e.g., increased efficiency of technology or personnel, improved company culture and worker satisfaction).
A contract that includes regularly scheduled evaluation based on factors appropriate to your objectives allows you to frequently check in and measure your consultant’s performance and value.
Every Consultant-Business Relationship Is Unique
Just as no two businesses are exactly alike, there is no one way to measure whether a consultant is effective. A successful consultant-business relationship depends on great initial and ongoing communication. This helps both sides identify what’s working, what needs improvement, and what the next steps should be towards each goal.
A skilled consultant can be an invaluable asset to help your business troubleshoot problems and plan for growth. Cornerstone Consulting Organization’s executive and senior business management consultants have a wide variety of areas of expertise, previous experience, and technical specialties to provide the consulting services you need. Contact us today to find the consultant that’s right for your business.