How to Pick a Consultant
February 3, 2023
By Keith Kemph, BlackFin Group, President & CEO
Mention the word consultant and for some folks, the first thought that comes to mind are the “Bobs” from the famous 1999 movie, Office Space. “You have to interview with this consultant. They call them efficiency experts. But what you’re really doing is interviewing for your own job.”
While this caption may certainly be the role of a consultant from time to time, layoffs are the not the primary reason to bring consultants into your organization. Consulting engagements for our clients generally range from assisting with M&A, strategy, selection, and implementation, or testing of new technology, business and technology optimization, helping lenders get agency approval, capital markets optimization, servicing reviews - and the list goes on. Right sizing is generally a small fraction of what consultants do.
Before highlighting how to pick a consultant, let’s first answer the very basic question of what does, or at least should, a consultant do?
Consultants offer their subject matter expertise to help Clients improve overall business performance. Moving clients from point A to Point B - implement a new system, help select a new technology, get agency approval – just to name a few examples. Because consulting experts generally have relevant experience, defined methodologies, frameworks, and strategies they have used for decades – consultants should be able to help move a firm from point A to point B far more efficiently, and economically, than a company laboring to try and to do it themselves (figure it out as they go syndrome). When considering over 75% of all projects fail, it makes for a strong argument to invest in consulting support.
The subject matter expertise of a consultant generally fits within one of the five core competencies to running a successful business: strategy, sales and marketing, operations, technology, and people (training and change management). The more specialized a consultant is in an industry, the better. Their value grows exponentially when they have seen the problems your firm is facing multiple times before, a perspective that is hard to find inside a company.
Additionally, consultants do not add to the long-term expenses of the firm. They are used to bolster the internal team, even in leadership roles, for the duration of a given initiative and then can be let go. The best consultants will leave the organization stronger than it was when they arrived by transferring some of their specialized knowledge to the internal team. While a consultant may cost more in the short run than a hire, in the long run there can be significant benefit and savings.
Most often, consultants operate as either independents or part of a management consulting company. A consulting company can often be described on one end of the spectrum as boutique (niche) or on the other end of the spectrum are considered a big four consulting firm.
Sure, independents are generally far less expensive because they have very low overhead or are between full time salaried opportunities. This can certainly make for a win/win arrangement. However, independents are generally limited in the size, scope, resources, and expertise of what they can do for a client. While success stories abound with disciplined independent consultants, many times we find Clients who are frustrated as they learn their independent consultant is limited in the needed knowledge, skills, and experience for a particular engagement. Capabilities were oversold and the engagement objective was never achieved.
The benefit of Big Four firms is that they can bring an army of unlimited resources to any corporate initiative (project). However, we’ve routinely seen the army of resources ultimately assigned to the project are generalist and not specialized in a particular industry. Sure, the Partner who sold the engagement to the Client might be a specialist in that industry but too often we see after the Client has signed the million plus contract, the people assigned to the project are not. The resources are expected to learn as they go, which is on you – the Clients, dime.
Boutique management consulting firms often strike the right balance between specialists, cost, and value. Providing Clients more agility and willingness to engage projects at less than a million-dollar contract value.
The next critical component to consider is understanding traditional consulting versus non-traditional consulting. A traditional consulting model can be found with independents, boutique and large consulting firms. Traditional in the sense there are minimum contract requirement in terms of months, resources assigned, and dollars. Whereby positioning consultants for a long-term engagement and the potential to live on a firms P&L. And to a consultant’s defense; time and expertise does equal money. The benefit to a client is a sense of stability while also having to manage the engagements progress.
Non-traditional consulting models are generally defined in terms of no minimum contract values, no minimum number of required resources, no minimum contract duration required – success is based purely on overall Client satisfaction. Length of contract is determined based on the Clients wishes to pursue additional work in collaboration with the respective consulting firm. A non-traditional consulting firm empowers the Client to control the contract and ensures the consulting firm executes with integrity.
Lastly, when choosing a consulting firm, it’s important to gain commitment on the resources that’ll be assigned to your project and do your homework. Even though a vast majority of consultants are tremendous resources to help move your firm forward, many are best described as, advisors. Meaning, they have valuable opinions, insights, and perspectives based on various experiences of the years. Instead, the most valuable consulting resource(s) to your firm, are those who have done the work, lived in your shoes, was at one point laboring in the middle of the pain you’re wanting to avoid or remove. Subsequently, they will bring exponential value to your team and the overall engagement by way of their empathy, by way of their coaching, and by way of their wisdom to execute more quickly. It’s no different than a person telling you how to raise your kid, when they’ve never had one themself.
Don’t be sold on bravado or a namesake, invest in proven hands-on experience, frameworks, services, and methodologies to ensure successful execution in a ‘timely’ manner.
Keith Kemph is President & CEO of BlackFin Group, a management consulting firm that specializes in the banking, mortgage, and financial services industry. Keith has dedicated his career to helping firms ensure successful execution of critical business and technology projects to help them operate more efficiently and effectively. Keith's career includes management and executive roles with Citigroup, Bank of America, Dime Bank, Merrill Lynch and nearly a decade with a traditional top tier consulting firm in the financial services industry. For more information contact email@example.com