Hiring consulting for SMEs
Consulting can be a very broad topic (1,2,3). However, in this article we will try to propose some concepts and principles that can guide you when you feel the need to hire a consulting service. By principle of accounts, the consultancy is a specialized professional service, and generally external, that can help the general direction of the company to face situations that prevent the full operation of the business. In this sense, the consultancy can serve the entrepreneur both in diagnosing and solving problems that limit the company's current profitability, and in identifying and taking advantage of opportunities that may be the engine of its future growth.
Different types of consulting: First, it is important to distinguish that there are different types of consulting, which we will explain by means of a medical analogy. In the first case, it is a person who experiences a difficulty with their health that causes disturbances in their normal life and, as a consequence, turns to a doctor. The doctor, after a brief interview, draws up a diagnosis; if the problem is not serious, he will make a prescription; and the patient, if he has felt confident in the doctor, will take the medications and it is very likely that in a short time he will be productive and enjoying life better.
A second possibility occurs when a person does not experience a health problem but also does not feel productive and happy. In this case, the doctor will surely make a very careful diagnosis of the patient's situation. Most likely, when not finding a specific physical health problem, the doctor, in addition to any prescription that recommends, not necessarily medication, will also try to make him see the advisability of changing some lifestyle habits, such as reviewing his style Working, exercising more, changing your diet, vacationing, or having some fun, will also advise you to return to a progress review after some time. As in the previous case, if the doctor inspired the patient's confidence and, furthermore, his recommendations were convincing,it will carry them out. Furthermore, if the doctor's prescriptions are really effective, the doctor will have won a patient for a long time, and the patient will have found someone who has the capacity to help him be more productive, grow and be happy, no only from the medical (technical) point of view, but also from the personal (interpersonal) point of view.
Key aspects of consulting: Although with some limitations, the above analogies illustrate some concepts, principles and processes that occur in business consulting. By principle of accounts, the expert is called a consultant; and the patient, client. On the other hand, regarding the relationship that occurs in the first case above, it is called technical consulting and its main characteristic is that its effectiveness depends, fundamentally, on the capacity and technical information of the consultant and, to a lesser extent, measure of your interpersonal skills. Typical company situations for this type of consulting are when the entrepreneur consults an engineer to design a structure for a new factory or a prosecutor to give him an opinion on how the IMSS of his company's personnel is being paid.
On the other hand, in the second case, although technical knowledge and statistical information are also important, there is no doubt that, in this situation, the interpersonal skills of the consultant are those that determine the process that occurs with the client to the greatest extent. For this reason, this type of consulting is known as process consulting or management consulting and can be very useful both in situations where the company faces obvious difficulties, eg. ex. If you have a lot of complaints about customer delivery dates or due to quality problems, such as in situations in which although we do not feel obvious complications in the company, we are not particularly enthusiastic about the way "things are done", with the work environment and much less with the economic results that our company produces.E.g. Although the production turns out with quality, it requires a great effort to get it out or frequent reprocessing.
Another aspect that is basic in the analogy that we have used and that is also decisive for success in consulting is the way in which the diagnosis of the situation is prepared and the confidence that the consultant is capable of inspiring the client. It is evident that in technical consulting, the fundamental ingredient of this trust is the capacity and technical information of the expert; and in management consulting, trust is created both by the technical capacity and the consultant's human interaction skills. On the other hand, in technical consultancy, the consultant has a greater responsibility in preparing the diagnosis. In contrast, in management consulting, the diagnosis is a result of the client's interaction with the consultant. This means that, in management consulting, the consultant also helps the client,and your organization to develop their abilities to diagnose, solve and prevent possible difficulties.
A final aspect of the consulting process that we are interested in highlighting from the analogy that is being reviewed is that related to the implementation or »implementation» of the solutions. In both types of consulting, technical or managerial, this task is the sole responsibility of the client and this is so because it is he who is responsible for the execution and control of the actions that occur within the company. This situation, which apparently diminishes the consultant's responsibility for the success of consulting projects, is, however, his most important challenge: influencing the client and his management team, without having formal authority over them. In parentheses, in this last stage of consulting projects is where inexperienced consultants or those professionals who, being unemployed, failThe first thing that occurs to them is to dedicate themselves "to giving advice", without having a clear vision of the task that corresponds to the professional consultant in consulting projects. The primary task of the consultant is not to "give ideas", although this is a necessary condition, but rather to achieve a level of involvement such that the client, and his management team, are committed to implementing the actions that solve the problems detected in the diagnosis.commit to implementing the actions that solve the problems detected in the diagnosis.commit to implementing the actions that solve the problems detected in the diagnosis.
The phases or stages of a consulting process: By way of synthesis, up to this point we have said that there are various types or styles of consulting and that these are between the extremes of technical consulting and managerial or process consulting. We have also described the normal phases or stages with which a consulting project is carried out, see Figure # 1 (4). Namely:
1. The client experiences a problem or feels that through external help his company can do better.
2. The client contacts an external consultant and, if he inspires confidence and their costs are affordable, they will start a professional relationship.
3. Between the client and the consultant they will form a diagnosis of the company, which will serve as a frame of reference for the consultant's intervention and the possible solution of the identified problems.
4. Design the intervention strategy of the consultant in the client company and specify more precisely the origins of their problems.
5. Convince and involve the client and also his management team, so that, taking a moderate risk, they implement a solution strategy, or at least the displacement of the identified problem.
6. Evaluate the impact that the solution strategies implemented have had on the results and profitability of the company.
It is in this cycle of consulting projects, especially management consulting, where the client and his management team learn to identify their company's problems and take the risks of implementing effective solution strategies. This learning, sooner or later, will make them independent of the external consultant to improve the effectiveness of their company. On the other hand, the consultant will have accumulated more valuable experience and will generally also have improved their diagnostic tools; their methods and strategies for solving problems; their technical knowledge of the client and their skills. As a consequence, the consultant will be better able to help the client in the future,as well as making a more effective contribution to the dissemination of best management practices in the business environment.
Benefits and costs of consulting: Now, to what extent can small and medium-sized companies benefit from consulting? On what issues or problems can external consultants help small and medium-sized companies? How much can it cost? to a small and medium-sized company, a consulting intervention? And finally, what steps can be followed to hire a professional consultant who can really help us improve the results of our company? The rest of this article aims to guide the reader in relation to these questions.
In our experience of working with small and medium businesses, we have found that these companies can greatly benefit from external consulting interventions. We believe that this is mainly due to the fact that the external consultant establishes a very close relationship with the general management, who is also normally part of the company's property; since, it is probable that only before an external agent, who is the consultant, the general management of the company will be able to recognize certain realities of its actions and its management style that are dysfunctional for the effectiveness of the organization, its results and, of something that sometimes does not see clearly the general direction: the competitiveness and profitability of the company. Otherwise,When the general management of the small and medium-sized company learns to use the help that external consultants can provide, the results are surprising because, in general, the organization of these companies does not have great inertia and also their complexity is less than that of a large company.
Regarding the issues or problems in which an external consultant can help small and medium-sized companies, the following can be mentioned: In the aspect of consulting that we call technical, in fact, most companies use accounting consultants, legal, fiscal, technical of the product or production, market and systems studies, mainly. On the other hand, regarding the consulting that we call managerial, in our experience, we have worked with small and medium entrepreneurs in strategic business diagnoses; in resizing or thinning the organization; in the formulation and implementation of a company development strategy; in planning and controlling the logistics of operations;in the synchronization and reduction of the cycles of the supply-production-distribution chain; in the design and implementation of dynamic compensation schemes based on business performance and results; in the search and evaluation of the managerial capacities of its executives; in studies of the organizational climate and measurement of employee attitudes; and in the integration, training and development of working groups. In other words, when the management of small and medium-sized companies really knows how to take advantage of the services of external consultants, they can help them in practically any critical process to improve the competitiveness and profitability of the company: in management processes,in the technical processes and in the social and human processes that determine the success of the organization (5).
Regarding the cost of consulting services, these obviously depend on the type of consulting company that is hired. Thus, for example, an international consulting company, when presenting a project quotation, normally estimates the real time that the project demands from its consultants and applies an average per diem rate that can range between 1,200 and 1,600 USDlls per day. In these terms, a consulting project involving an estimated effective participation of 10 consultant-days (which in reality may become 12 days and the project will be fully completed in 7 to 9 weeks), will have an estimated cost of 14,000.00 USDlls. On the other hand, if a similar project is contracted to a local consulting company, its cost could represent about 8,600.00 USDlls. On the other hand,If both consulting companies are professionals, the services and results achieved with the intervention of consultants, it is very likely that they will be equally satisfactory for the small and medium businessman. In both cases, there may be some additional costs that the consulting project will cause, such as travel, lodging, food and room rental, if the project includes any training or work meeting of the management team or staff, outside the the company's installations.such as travel, lodging, food and room rental, if the project includes any training or work meeting of the management team or staff, outside the company premises.such as travel, lodging, food and room rental, if the project includes any training or work meeting of the management team or staff, outside the company premises.
Steps to successfully hire an external consultant: Below we recommend to the small and medium entrepreneur, a 5-step process that you can follow to hire the services of an external consultant:
The need for outside help. As soon as you feel the need for specialized outside help, talk to at least three acquaintances about how the problem or difficulty you are experiencing is being solved in their companies. These acquaintances may be business colleagues or CEOs, clients or suppliers with whom you feel confident to discuss your need for outside help. Surely from these comments you will get valuable information to face the problem you are experiencing and you can also ask them if they use external consultants in your company; who they are and, if applicable, how satisfactory their services have been.
The first contact with the consultant: From the information above or using the directory, or in the future Internet, select no more than three external consultants and call them for a first interview in which you comment that you are considering the possibility of hiring a consultant external to help you solve your problem. Normally, from your first contact, try to appreciate both the technical capacity, as well as the cunning and interpersonal ability of the consultant to conduct the interview, look for the information he needs to have a first idea of the real problem that you are concerned about and raise a first solution proposal. If this first appreciation you make of the consultant convinces you and the consultant inspires you with technical and interpersonal confidence,Ask him to present you with a written proposal for the consulting process you just suggested.
This proposal, in general, must contain the objective of the intervention; a delimitation of the scope of the consulting project; the phases it contemplates, as well as the expected results of each phase; a brief description of the activities, information, instruments and methods that will be used in the project; a work schedule and a specification of the part of the activities that will be the responsibility of the client and those that will be the responsibility of the consultant; and finally, the cost as well as the conditions and payment terms of the consulting project.
The study of the consultant's proposals and references. Receive the proposals and try to have a clear understanding of the implications that the proposal has for your company, as well as the results that you will achieve with the execution of the consulting project. In the event that the consultant still does not fully convince you in this presentation, in his technical capacity or in his interpersonal ability, you can ask him to provide you with some references and telephone numbers of clients who have hired you and to briefly tell you the type of projects of consulting in which he has worked with those clients. Feel free to verify, with some of the references provided by the consultant, all those concerns that you may have about technical skills, interpersonal skills,the services and even on the ethical principles of the consultant. This information can be very useful for making an effective decision on whether or not to hire a specific consultant. When the cost of a consulting project may tip your hiring decision over one consultant's or another's proposal, before making your decision about the cost of the consulting project, make sure that the proposals you are considering are comparable in Regarding the services and results they offer you.When the cost of a consulting project may tip your hiring decision over one consultant's proposal or that of another, before making your decision regarding the cost of the consulting project, make sure that the proposals you are considering are comparable in Regarding the services and results they offer you.When the cost of a consulting project may tip your hiring decision over one consultant's or another's proposal, before making your decision about the cost of the consulting project, make sure that the proposals you are considering are comparable in Regarding the services and results they offer you.
Development of the consulting project: Once the consulting project has been hired and started, try to finish it, unless something dramatic happens to the company or with the evaluation made of the capacity of the consultant. You should maintain a periodic review and evaluation of the progress and results being achieved of the project and, if at any time you feel that the project is losing its way, discuss your feelings with the consultant, not so that you feel threatened, but to the proposal, the direction, the times and the expected results of the project are reviewed. Only in an extreme and unsolvable case do you cancel a consulting project that you have hired, as such cancellation will cause you to lose credibility as the company's CEO, both with your management team and with your staff.If you can really establish the level of interpersonal trust that is required for a successful consulting relationship, you can always find ways to complete successful consulting projects (6).
Caution: Refrain from hiring a friend as a consultant, unless you want to help solve a problem. Normally, company managers hire a consultant to help them solve their company's problems, not the other way around. A key aspect of consulting services is that the external consultant normally maintains professional objectivity and independence in the judgments he makes about the company, its organization, its processes, its results and even, as mentioned before, about the environment and the predominant management style in the company. A friend that you hire as an external consultant could hardly maintain this objectivity and autonomy in his trials (7).
Our intention in writing this article on external, technical and managerial consulting services has been for you to understand what consulting is, how it is done, what it is for companies, especially small and medium-sized companies and, finally, how you can You successfully hire a professional external consultant. In a later article, we will write about what external consultants contribute to the general management of small and medium-sized companies, as well as present some illustrative situations of how the intervention of consultants can make these companies more competitive and profitable.
References:
1. Kubr, M. Business Consulting: Guide to the Profession, Editorial Limusa, México, Trabajo (OIT).DF (1986). Publication of the International Labor Office (ILO)
(There is an excellent new edition of this book. I highly recommend it)
2. Block, Peter, Flawless Consulting: A Guide to Getting Your Expertise Used, The Pfeiffer Company, San Diego, California (1981).
3. Albert, Kenneth, J. How to Solve Business Problems: The Consultants Approach to Business Problem Solving, McGraw-Hill, New York (1993).
4. DOS Consultores, sa de cv, Internal Working Document, (1995).
5. Prentice Hall Editorial Staff, The Prentice Hall Small Business Survival Guide: A Blueprint for Success, Prentice Hall, Englewood, New Jersey (1993).
6. Sachs, Wladimir, and George Calhoun, The Role of Outside Consultants. Published in Albert Kenneth, J. (Ed.), The Strategic Management Handbook, Cap. 25, McGraw-Hill, New York (1983).
7. Fish, R., JH Weakland and L. Segal, The Tactic of Change: How to Abbreviate Therapy, Herder Editorial, Barcelona (1984).
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