Almost every organization faces situations where it needs external consulting, regardless its size or industry. But choosing the right consulting firm is challenging. The quality and competence of a service provider is difficult to assess in advance and contracts often come with financial and long-term commitments. However, wrong choices not only imply monetary losses, they have further consequences: if a consulting firm is not suitable for the assignment, organizations face delayed projects, demotivated employees and competitive disadvantages. So, how can companies avoid such negative outcomes and make better choices when contracting a consulting firm?
When hiring a consultancy, you have to be very clear about what it is that you really need from them. Are you looking for expertise in a certain business or methodology area, an external authority to overcome internal management conflicts or additional resources to handle the workload of a huge project? As you can see, there are various reasons why organizations hire external support but those different reasons have implications on the selective criteria. Here are some thoughts for the most common scenarios:
Ask yourself: Do I need authority or integration?
The answer to this question depends strongly on how you want your change management support to look like. Are you in need of someone authoritarian, who gets in, realizes the change initiative with an external team and leaves you with a plan on how to proceed from here on? Or do you want the change to come from inside your organization and you are looking for someone, who can form a joint team with your employees and empowers them to drive the change themselves?
If you identify with the first case, find a consulting firm which is able to understand the different perspectives of your management team, will be accepted by them and is an expert in the industry of your company.
However, if you need someone to form joint team with you employees, supporting them to reach a certain goal, you want to look for additional qualities. The consultants guiding your change have to withhold strong communication skills and a collaborative work ethic. As change management has to be seen as an ongoing process, like we discussed in one of our articles, it makes sense to hire someone with additional coaching expertise, as change can affect your employees in different ways, even on personal levels.
In both cases, it’s important to ask consulting firms for their experience in change management and to include relevant stakeholder in the selection process, as it will increase their willingness and commitment for the upcoming change initiative.
Ask yourself: Do I need a project leader or a whole project team?
Sometimes you will only need one external consultant, sometimes you will need a whole project team. Depending on the situation, you should clarify in the selection phase if the consultancy has the flexibility and resources to mobilize the manpower you need. Big consulting firms will be able to provide you with a lot of manpower. However, smaller consultancies may have a broad network of consultants at their disposal and might be able to offer you the right support as well.
We would recommend you to discuss the following questions during the selection process:
Ask yourself: Do I need a specialist or a generalist?
We would recommend you to differentiate between topics which deal with operational processing and topics of incremental strategic development. The digitization of your business model is a good example for an incremental strategic development project, where you need someone with experience in transformation management and long-term business development.
As we already discussed in one of our previous articles, digital transformation has to be steered from a strategic point of view, which includes the technical perspective of an IT department, but also has the professional expertise to install processes that take the future needs and demands of the whole organization into account. Obviously, it also needs vision.
So, while you want experts involved in your projects, they are not always the ones to go to when you need guidance on how to define and implement complex transformation initiatives. Topic expertise means that the consulting firm must have experience in running comparable projects but it does not mean that they have to be a group of experts in a narrow business area. Because usually, consulting firms have the means and networks to involve expertise in all kind special business areas, even though they are not part of their own team.
An example for operational processing and therefore where you should go for a consulting firm with topic expertise is when you need someone to help you through a M&A process in a standardized way. In this case, go with the one who has done it hundreds of times before. Those consultancies are most likely to have their tried-and-tested methods and get the job done clean and simple.
Ask yourself: Do I need a brand or a consulting firm?
Consulting firms like BCG and McKinsey are undisputedly great at running complex analysis and providing their clients with high-end solutions, because their consultants are exceptionally trained to do so. Additionally, they have another benefit which is especially great when you are looking for a validated approach, which will find great acceptance among the board members and executives: they embody a strong brand.
Brands resolve information asymmetries, which can be especially helpful when choosing a service provider. Within the consulting industry, brands like BCG or McKinsey have a certain impact on the perceived quality a consulting firm might offer. Working together with consultants from well-known firms like the mentioned ones, might not only support the sensed importance of your project but also resolve skepticism about the promoted solution.
But having a well-known name doesn’t always make the consultancy the right one for your needs. In fact, big names can backfire. As some consulting firms are known for their sharp concepts and hierarchical working culture, employees might not be too happy about having them on board. Their reputation can inhibit cooperation, which is greatly needed for joint projects and implementation initiatives. So, before paying extra to get a well-known brand involved make sure it fits your situational needs.
To sum it up: There are four main reasons why organizations hire external support from consulting firms. In this article, we gave you some scenarios to think about when hiring a consulting firm, helping you to ask the right questions in the selection phase. If you are currently looking for external support on a project, check out our homepage or simply get in touch with us. Maybe we are just what you are looking for!
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