Hiring consultants

Revised October 2008

This factsheet gives introductory guidance. It:

• gives advice about good practice in hiring external consultants
• focuses on issues experienced both by HR practitioners and the consultants they hire
• highlights some deeper issues for HR departments to consider.

This factsheet gives some guidance about good practice in hiring external consultants. It focuses more heavily, however, on raising awareness about a range of issues actually experienced both by HR practitioners and the consultants they hire, so that HR practitioners may see better ways to manage relationships before hiring consultants.

Why is it so important to consider carefully the hiring of consultants?

There are three main reasons why it is so important to be careful – risk, cost and compliance.

Risks for hirers

The risks are many and varied. They range from taking on consultants who misunderstand or manipulate the brief, though poor ‘fit’ with the organisation or its members, failure to deliver or to ensure sufficient expert cover to deliver, and possible bankruptcy of the supplier, to the risk of serious adverse effects on the business from poor advice. The degradation of the US company Figgie International in the 1990s, through a mix of poor advice and difficult management, is well covered in the book Dangerous company: the consulting powerhouses and the businesses they save and ruin¹ (which also chronicles the successful resuscitation of Sears through good consultancy).

Costs

The fees charged by HR consultants and trainers in the UK range very widely indeed. Some consultants charge as little as £250 per day; some large consultancies charge more than ten times this. Thus, a large project, such as engaging a consultancy firm to assist in the restructuring of staff and salaries, could easily cost well over £100,000. Hirers need to be sure what they are getting for their money, and they might wish more often to make full payment contingent upon delivery not only of the project plan but also of concrete outcomes resulting from the completion of the project. Contingent payment is a theme in some reviews of the competitive tendering policies of the 1990s (for example, Boyne's article on competitive tendering in local government²).

Compliance

Compliance issues also feature heavily today. Whilst Compulsory Competitive Tendering for the public sector was introduced mainly to increase efficiency, its tendency towards even more bureaucracy, increased transaction costs, reduced trust between principals and agents, and focus on process (sometimes at the expense of sensible decisions), has led to the emergence of more flexible approaches to ensure value for money. But the concept of competitive tendering and the establishment of preferred supplier lists continues (access to which in many cases requires suppliers to have policies covering equal opportunities, health and safety, the environment, and so on). A typical example is the BBC’s approach to suppliers, in which even the smallest have to go through a formal tendering process³ and many private sector hirers use tendering approaches to ensure transparency.

Some brief guidance

HR practitioners seeking consultancy help need to consider three angles – why hire any consultant, how to hire and who to hire.

Why hire a consultant?

Thereis a range of reasons, including to:

• bring in expertise or specialist skills or the latest ideas
• deliver projects for which insufficient internal resources exist
• refresh or reinvigorate or even challenge current thinking
• provide advice which influential people will respect.

It also requires HR to think carefully about the absence of such skills and capabilities internally. This might lead to a re-think for the future about recruitment and resourcing policies, training and development activities, and the positioning of the HR department as a well-respected and influential player in the organisation.

How to hire?

This will depend on a number of variables, or example:

• The form, length and size of any planned consultancy – if the consultant is to design and deliver a substantial project (rather than merely to offer advice), and the longer and bigger any project is, the more important it will be to make the right selection, and in such cases formal tendering and presentations to a representative panel of stakeholders will be appropriate.
• The balance of skills required in any consultant – if fairly ‘technical’ (for example, job evaluation, pay systems, etc), issues of consultant availability may come into play; if more ‘interpersonal’ (for example management coaching, soft skills training, etc) then issues of fit will be important (some good advice on this aspect is given in our online Tool Managing external coaches⁴).
• The requirements of the organisation in terms of hiring or tendering – these will vary widely, but all should have a clear process for invitation, initial selection and interviewing bidders. As part of good practice, to show real fairness and transparency and to encourage unsuccessful bidders to try again (which maintains a good market base from which to select), HR practitioners should always be ready to provide feedback to unsuccessful bidders.

Who to hire?

The selection of a consultant will also depend on the key criteria chosen by HR and agreed with any other stakeholders affected. These criteria should, of course, be informed by the reasons why any consultant is being hired. They should also be considered carefully in terms of the consultant’s ability and experience in:

• the activity or input stage - conducting similar consultancies such as interviews with senior stakeholders, running focus groups, etc
• the product stage - producing materials or delivering systems or structured interventions such as reports, manuals, pay scales, training programmes
• the outcome stage - helping to make a real difference, such as improved staff retention and motivation, more efficient working or other reduced costs, raised performance. This final stage is very important.

A straightforward checklist to build a specification for hiring a consultant is thus:

How relationships change when consultants are hired

 
Whilst the HR department acts as an internal consultant to the line there is really only one main relationship to manage. As soon as HR hires an external consultant to work with the line (for example a trainer to deliver project management skills) three relationships emerge as shown in the diagram below.




This is the sort of complicating issue that HR should consider in the run up to hiring any external consultancy help which will involve stakeholders other than the HR Department itself. It has both short- and long-term effects, as, for example, when training provision or 360-degree feedback processes are bought in or recruitment or payroll management outsourced, and requires proactive relationship management by HR. An interesting article from 2001¹⁰ recommends that the first task of the consultant is to check who the real client is to ensure that expectations are met, and suggests, interestingly, that the client is seldom the HR manager.

Some oral survey results about hiring consultants – from both sides of the fence

A brief oral survey of some consultants and HR managers in Summer 2007 produced some interesting guidance and comments.

Types of consultant and the ways they tend to work

There are many books and articles on being a successful consultant (but very few on successfully hiring successful consultants!). Two broad schools of thought about consultancy may be distinguished:

• the ‘expert-supplier’ (‘doctor-patient’) model - consultants from this school would tend to assume that the HR department is buying information or a service they are unable to provide for themselves, or are asking for a diagnosis and a recommended remedy
• the ‘process consultation’ model - consultants from this school believe that clients are best helped to find their own answers to their problems, and would tend to assume that HR can do so. A useful book for the process consultation approach is Consulting for real people: a client-centred approach for change leaders and leaders¹¹.

Some consultants feel the need to develop ever greater technical expertise¹², at the possible expense of working on why technical solutions so often fail to be fully harnessed. This contrasts strongly with those consultants who believe that it is the often unseen or unspoken relationships between players that count.

Several important issues, however, impact on the selection and hiring of consultants who tend to be work from a process consultancy or client-centred base. Firstly, while process consultancy takes time it often produces better results in the long run, as clients learn to solve their own problems. This, in turn, means that clients often find they have to work harder – and at deeper levels, involving feelings, motivations, attitudes etc – than they might have expected with consultants providing straightforward technical solutions and system remedies. In addition, good process consultants aim to disengage, almost from the start and leave the client system to manage any agreed changes introduced (that is, they tend not to hold out for more business, nor to create unnecessary dependency on themselves).

Some ways forward

This factsheet has deliberately avoided simplistic select-and-hire checklists. It focuses instead on some of the deeper issues, and raised questions for HR departments to address before going into any particular process for hiring HR consultants including:

• why is any external consultant being hired
• who is the real client
• how best can any external consultant work with the HR department in terms of its position and power
• how best they can work within the wider organisation?

HR should check whether or not hiring consultants will eventually lead to greater pressure to outsource more HR functions. HR should also consider very carefully whether it is the technical/system or psycho-sociological processes of change that count. And, if consultants are hired in, what ways can HR find to develop their own internal consultancy expertise so that their role, credibility and future is better secured? Given that a common HR lament is about the need for professionalism and a place at the top table, HR might consider hiring those consultants who help them to achieve this goal.

References

1. O’SHEA, J. and MADIGAN, C. (1997) Dangerous company: the consulting powerhouses and the businesses they save and ruin. Random House: New York.
2. BOYNE, G. (1998) Competitive tendering in local government: a review of theory and evidence. Public Administration. Vol 76. pp695-712.
3. BBC (2006) Tender process [online]. Available at: http://www.bbc.co.uk/supplying/tenderprocess.shtml The text also refers to the Public Procurement Regulations in EU countries requiring principals to offer opportunities for bidding across the EU if the contract is to exceed £144,371 (excluding VAT)
4. CHARTERED INSTITITE OF PERSONNEL AND DEVELOPMENT. (2005) Managing external coaches: practical tips for HR [online]. Tool. London: CIPD. Available at: http://www.cipd.co.uk/subjects/lrnanddev/coachmntor/
   _manextcoach.htm
5. The role of the HR consultant. (1995) IRS Employment Review. No 589, August. pp6-11.
6. GAYNOR, R. (2005) How to hire an HR consultant. People Management. Vol 11, No 11, 2 June. pp44-45.
7. COOLEY, M. (1994) Selecting the right consultants. HR Magazine. Vol 39, No 8, August. pp100-103.
8. How to select an external consultant. (1994) Personnel Management Plus. February. pp26-27
9. PREEDY, J. (1987) What you should expect from consultants. Personnel Management. January. pp20-22,25.
10. GAMMIE, A. (2001) Why consultants don’t work much for HR managers. Topics. 83, pp9-14.
11. COCKMAN, P., EVANS, B. and REYNOLDS, P. (1999) Consulting for real people: a client-centred approach for change leaders and leaders. Maidenhead: McGraw-Hill.
12. HUNTER, R. (1999) The “new HR” and the new HR consultant: developing human resource consultants at Andersen Consulting. Human Resource Management. Vol 38, No 2, Summer, pp147-153.

Further reading 

CIPD members can use our Advanced Search to find additional library resources on this topic. They can also use our online journals collection to view selected journal articles online. People Management articles are available to subscribers and CIPD members on the People Management website. CIPD books in print can be ordered from our online Bookstore.

• Go to Advanced Search
  
• Go to our online journals collection
  
• Go to People Management online
  
• Go to our online Bookstore

Books and reports

BRIERLEY, E. (2006) Talent on tap: getting the best from freelancers, interims and consultants. London: Chartered Institute of Personnel and Development.

JOHNSON, M. (2005) The independent consultant's survival guide: starting up and succeeding as a self-employed consultant. London: Chartered Institute of Personnel and Development.


This factsheet was written by Iain Thomson, a Fellow of the CIPD and Managing Director of Squared Circle Consulting.