What to Do When Hiring a Consultant
A few years ago, UPS ran a TV commercial in which two consultants suggest a series of changes to an executive. The executive ponders the recommendations briefly, then says, "Great. Do it."
After a moment of awkward silence, the consultants say, "Sir, we don't actually do what we propose...we just propose it."
In thirty seconds, that commercial summed up what many organizations fear about hiring consultants: misunderstandings about what they're getting, paying for words and not action, and relying on people with a lot of input and no accountability.
Consider this, though: If the client allowed a project to get to that point without clear expectations, then he or she is also worthy of ridicule. How can you avoid that scenario? By understanding the basic process of finding, engaging, and working with a consultant. The following are some guidelines designed to help.
Understand the consultant's job
Consultants can play different roles. Sometimes they serve as advisors, analyzing situations, diagnosing problems, and proposing solutions to those problems for your staff to implement. Others execute particular tasks, such as conducting a search for a chief executive or presenting a board development workshop.
Your job is to know what you want a consultant to do before you hire one. Put your goals in writing, and then use them as the foundation of your search for and relationship with a qualified professional.
Deciding to use a consultant
Consider hiring a consultant when you're facing a key challenge or opportunity or are considering changes to your organization's work/mission/vision. For such challenges, you often need deeper knowledge and an awareness of best practices, as well as counsel that can spark fresh thinking, deliver new solutions, and challenge the organizational status quo.
Nonprofit organizations often hire consultants to help with fundraising, board orientation and development, strategic planning, executive search, facility planning, membership promotion, marketing, public relations, and event planning.
Choosing a consultant
The best way to find a consultant is to ask around. Get names from organizations that have worked successfully with consultants. Tap into professional groups such as the Association of Fundraising Professionals or the Alliance for Nonprofit Management, which publish codes of ethics and professional practice guidelines for their members.
Once you've gathered names, consider using a modified RFP process to narrow your search, collecting information about capabilities, areas of expertise, understanding of issues affecting your organization, and processes for working and charging for services. And be sure to ask for the names of past clients with similar needs or projects.
Once you've reviewed the responses to your RFP, interview firms that could be right for your organization. Look for qualities similar to those you would expect of a salaried staff member: at a minimum, expert knowledge in the subject/project area, experience with projects similar to yours, a respected track record, and a working style that fits with your organization.
Consider whether you will be hiring a firm or an individual. An individual might cost less, but firms often can put more people on a particular project and get a broader perspective on problems. Also, for each candidate, ask two or three previous clients for performance assessments.
Next, ask for proposals from one or more firms well-suited to your needs. As you review the proposals, consider whether the consultant:
- has the appropriate experience and qualifications;
- understands the goals of the project;
- can complete the project on time and within budget;
- asks creative questions about the organization and the project;
- earns favorable reports from former clients.
Balance these factors with your budget. If you would like to hire a specific consultant but the cost exceeds your budget, discuss it with the consultant. A revised proposal outlining a narrower scope of work may meet your needs as well as those of the consultant.
Formalizing the relationship
After selecting a consultant, draw up a written agreement that stipulates:
- scope of the work;
- specific tasks to be performed;
- who the consultant will report to and how progress should be communicated;
- description of the final product (written report, oral presentation, or a combination);
- clearly defined timeline, roles, and responsibilities;
- payment schedule and fees.
Paying for services
Consultants typically use one of two billing scenarios: hourly or project-based. Project-based billing relying on a quote based on the scope of work is the most common. To arrive at a fee, consultants usually estimate the time involved and charge according to that estimate. If the consultant underestimates the time they actually put into the project, there is no additional charge. Such an approach safeguards the client's budget against unanticipated costs.
Hourly billing is common if the client seeks general counsel, coaching, or advice on an as-needed basis. Be sure to understand the consultant's hourly rate and what activities (phone calls? Face-to-face meetings? Travel and accommodations?) will be included in the hourly rate.
While fees based on specific results might be tempting, be careful of consultants who offer them — often they tend to focus more on their compensation than your needs. And bear in mind that commission-based fundraising is against the Association of Fundraising Professionals Code of Ethics.
A quick note about funding the cost of a consultant: Many organizations don't budget for consultants. In those cases, the cost is paid through capacity-building grants, donors close to the organization, or board members. To give your organization flexibility, consider budgeting for a consultant even if you are undecided about using one.
With clear expectations and a shared objective, your consulting arrangement should work smoothly. However, to keep the relationship on track, be sure to develop some basic expectations and a process for regular check-ins, especially if the project is anticipated to take longer than six months.
Throughout the process, expect your consultant to be:
- candid — willing to tell you "what you need to hear, not what you want to hear";
- objective — able to dispassionately hear concerns expressed by other stakeholders;
- inquisitive — willing to probe for new ways of conveying your organization's message, opportunities to approach potential funders, and engaging current and new volunteers;
- informed — that is, able to converse about major trends in philanthropy and to apply that knowledge for your organization's benefit.
The final scene in the UPS commercial mentioned above shows the consultants walking out of the executive's office, already thumbing away on their PDAs. As they leave the scene, one consultant says to the other, "Can you believe that guy?"
It's a funny shot, showing the consultants to be as clueless as they think the executive is. But what it really underscores is the key element missing from their relationship with that executive — and the common theme running through the advice given above: the need for clearly articulated expectations.
Knowing what you need, how a relationship should work, and what you'll get out of it will ensure that you get the most out of a relationship with a consultant — and will help you avoid the kind of awkward moments that become fodder for painfully funny TV commercials.
Feldman and Sternberg
Derrick Feldmann is president and CEO of Achieve, a consulting firm for small to medium-sized nonprofits. Dave Sternberg is vice president of Achieve.