There are many good reasons to hire consultants. One of my favorite industry commentators, Robert X. Cringley wrote an excellent column about hiring consultants. A gold star idea from his analysis is that most IT projects fail at the requirements stage. If business owners cannot define their future state workflows, hiring consultants to implement automation will fail.
I've been a consultant to some organizations, so I've felt the awkwardness of parachuting into an organization, making recommendations, then leaving before those recommendations have an operational impact. Many of my friends and colleagues work in consulting companies. Some consultants are so good that I think of them as partners and value-added extensions of the organization instead of vendors. From my experience, both hiring and being a consultant, here's an analysis of what makes a consultant good or a consultant bad.
1. Project Scope
Good - They provide work products that are actionable without creating dependency on the consultant for follow-on work. There are no change orders to the original consulting assignment.
Bad - Consultants become self-replicating. Deliverables are missing the backup data needed to justify their recommendations. Consultants build relationships throughout the organization outside their constrained scope of work, identifying potential weaknesses and convincing senior management that more consultants are needed to mitigate risk. Two consultants become four, then more. They create overhead that requires more support staff from the consulting company.
2. Knowledge Transfer
Good - They train the organization to thrive once the consultants leave. They empower the client with specialized knowledge of technology or techniques that will benefit the client in operational or strategic activities.
Bad - Their deliverable is a PowerPoint of existing organizational knowledge without insight or unique synthesis. This is sometimes referred to as "borrowing your watch to tell you the time".
3. Organizational Dynamics
Good - They build bridges among internal teams, enhancing communication through formal techniques that add processes to complement existing organizational project management approaches. Adding modest amounts of work to the organization is expected because extra project management rigor can enhance communication and eliminate tensions or misunderstandings among stakeholders.
Bad - They identify organizational schisms they can exploit, become responsible for discord and cause teams to work against each other as a way to foster organizational dependency on the consultants.
4. Practical Recommendations
Good - Recommendations are data-backed, prioritized by relative value (cost multiplied by benefit), reflect current community standards, and take into account competing uses of the organization's resources and time.
Bad - Recommendations lack depth. They are products of uncorroborated interviews. They lack factual details and are a scattershot intended to create fear, uncertainty and doubt. They focus on parts rather than systems. Implementing these recommendations causes energy to be drained away from more strategic and beneficial initiatives.
Good - Consultants use markup factors (amount they charge verses the amount they pay their staff) such as the following:
Staff augmentation / placement only, with no management oversight = 1.5
Commodity consultants, largely staff augmentation, but with "account management" = 1.5-2
Consulting / systems integration, project-based = 2-3.5
Management consulting / very senior and high-demand specialists = 3.5-4
Bad - The engagement partner becomes more concerned about billing you than serving you. Meetings appear on your calendar weeks before the end of a consulting engagement to discuss your statement of work renewal. You begin to spend more time managing the consultants than managing the project. Consultants justify a markup factor of 5 or 6 by saying "We're so good that we have high overhead".
6. Balancing Priorities
Good - Complex organizations execute numerous projects every year in the context of their annual operating plans. Although consultants are hired to complete very specific tasks, good consultants take into account the environment in which they are working and balance their project against the other organizational priorities. In this way, the organization can adapt to the changes caused by the presence of the consultant while not significantly disrupting their other work.
Bad - Meetings are consistently scheduled with little advance notice that conflict with other organizational imperatives. Any attention paid to organizational demands outside the consulting engagement are escalated to senior management as being "uncooperative".
7. Quality of deliverables
Good - The deliverables are innovative, customized to the organization, and represent original work based on significant effort, due diligence, and expertise.
Bad - Material is reused from other organizations. The volume of deliverables is increased with boilerplate. The content seems unhelpful, general, or unrelated to the details of your organization.
8. Managing project risk
Good - Risk is defined as the likelihood of bad things happening multiplied by the impact on the organization. Real risks to the project are identified and solutions are recommended/developed collaboratively with project sponsors.
Bad - There is greater concern about risk to the reputation of the consultants than the risks to project success.
9. Respect for the org chart
Good - Work is done at the request of the project sponsors. The chain of command and the hierarchy of the organization are respected, so that consultants do not interact directly with the Board or senior management unless directed to do so by the project sponsors.
Bad - Governance processes are disrupted and consultants seek to establish the trust of the organizational tier above the project sponsors. Sometimes they will even work against the project sponsors to ensure organizational dependency on the consultants.
Good - Transparency, openness, and honesty characterize all communications from the consultants to all stakeholders in the organization.
Bad - Every person is told a different story in the interest of creating the appearance of being supportive and helpful. This appearance of trustworthiness is exploited to identify weaknesses and increase dependency on consultants.
I'm the greatest ally of good consultants. Per Robert Cringely's article, we'll bring in a few "Consulting Type A" experts each year for specific well-defined tactical projects requiring deep expertise.
If survival of the fittest applies to consultants, then the good ones should thrive and the bad ones should see fewer engagements over time. However, I'm not sure Darwinian selection pressures apply to consultants, since organizations may have short institutional memories about consulting experiences due to their own staff turnover.
The best you can do for your organization is think about the good and bad comparisons above, then use them to evaluate your own consulting experiences, rewarding those who bring value added expertise and penalizing those who bring only "powerpoint and suits".