This is part three of our series on how to get great value from your consultants - and how to figure out how much to pay them. See parts two and three.
Getting good value from your consultants is a vexed question for many HR and organisational development staff. How do you know you’re getting good value from the consultant you’re hiring? And how do you increase it? The crux of the issue is that you’re hiring the consultant to solve a problem, but the amount you pay them is based on how much time they spent working with you. You can see the problem immediately – these are not the same things. The amount of time they work with you, is not the same as solving the problem.
Now it’s fair to say, that some of the circumstances will be outside the consultants control, and so naturally you can’t establish how much to pay them solely on the basis of whether or not they helped you solve your issue. After all you, or the program participants, have to do their bit as well, and the consultant shouldn’t be judged, on factors which are outside of their control. But, they should be paid just for the amount of time must spend on something either - that just encourages them to spend more time on. So what to do?
There are a couple of solutions to this issue:
- You pay for an end-solution. If the amount you pay for the solution is less than the cost of the problem or issue - it’s a “no-brainer”. If the solution costs more than the problem – why are you solving it! Leave it alone.
It seems simple enough, but in practice it’s often difficult to measure the outcome, and there are often too many variables at play to be able to single out the consultant’s contribution. Furthermore – be prepared for a steep upfront bill. If, for example, staff retention was an issue and is costing you say, $150,000 per year - and I give you a solution that lasts five years - the why shouldn’t my bill be one fifth of what I save you – in this case $250,000. But wait, you say, you only did three months worth of work! So what I say, I’ve just saved you $1,250,000 – even if you pay me to only $250,000 you’re still $1,000,000 ahead.
- You pay for the value you get - the part of the solution that is within the consultants’ control. The best way to think about this is with an example. Supposing you identified that stress levels are creeping up in your organisation, engagement is sliding, and some of the reason is an issue around how people apply themselves to work. You reason that developing the ability of your staff to focus and understand neuroscience would solve these issues (you’re right, by the way). You hire a consultant to deliver a program around “Working Smarter”. You advertise or call in some people you know and make a shortlist – and now you have a dilemma – you’ve got two consultants who both claim they can do the work - from which we do get the best value? In fact, how do you define value?
- You could hire the consultant with the lowest daily rate – in terms of quantity of time – that would be good value. This is a very simple but ineffective measure of value in which Value (V) = Time(days or hours). The real value you want is change in the behaviour of your staff.
- You could hire consultants by the amount of change achieved:
Value (V) = N (number of participants) x D (depth or degree of change). So a workshop on which 15/20 participants change by 50 % gives you more value than a workshop on which eight people change by 10%.
i.e: V = 16 x .5 = 8.0 as opposed to V = 8 x .1 = 0.8 – TEN times greater value.
The solution: Go back to your consultants who offered the lowest rate and see if you can determine how much change, s/he achieved amongst the participants, compare it with your other consultant and THEN choose. Read part two for more on how to figure out how much change that achieved.
Cris takes great pride in delivering awesome value to you - outcomes that really shift your people and create high performing, high innovation organisations. And yes – we do have a program called “Work Smarter” which helps your staff get 30% more work of the right work done each day. Call or email us to get the benefits for you: email@example.com or (+ 61) 0438 545 607.