Hello and welcome back to Smart Consulting Sourcing, the only podcast about consulting procurement.
I am Hélène, and today we will discuss why measuring the performance of consultants matters.
However, before that, let me give a recap of last week’s episode.
Consulting agreements are routinely used by companies working with consultants to define, in details, the services to be provided and the terms and conditions. I strongly recommend working with a legal counsel to lay down the terms of the contract instead of using the template from the consultant.
Your consulting agreement should include 4 important elements:
- The Statement of Work which outlines the expectations and how success will be measured
- The Payment Terms , including how and when payments will be made .
- The Delivery conditions, including the confidentiality , Intellectual property, Liabilities and warranty aspects
- The Escalation measures, including what will be done if a problem arises.
If you want more details you can listen to the complete podcast, ‘How to build the right consulting agreement?‘
However, this week, I want to discuss why measuring the performance of consultants matters.
If you’re running a business, chances are you’ll need to hire a consultant at some point. After all, consultants can offer a wealth of knowledge and expertise on a variety of topics.
But how do you know if a consultant is truly worth his or her salt? One way to measure performance is by looking at the bottom line – in other words, how much did the consultant’s advice help your bottom line? Did you see an increase in sales? Did you save money on costs? Did you improve your efficiency?
But it’s also important to take into account the intangibles. For instance, what was the quality of the consultant’s advice? Was it well-reasoned and thought out? Did it make sense for your business? Did it take into account your company’s unique needs and circumstances?
These are all important factors to consider when measuring the performance of a consultant. By taking all of these things into account, you can get a good sense of whether a particular consultant is right for your business or not.
What’s happening in the consulting industry?
As a Consultant, it doesn’t matter how well you measure or analyze your performance as long as clients keep buying services.
Management consulting is an industry that has not normalized and standardized the measure of the performance and the impact.
This phenomenon can be attributed — in part at least — to the nature of the service-based industry. Here clients typically seek help for problems without getting any tangible solution from consultants. What they are getting is advice on how to best handle certain situations rather than actively managing them like some other industries.
But for Clients who want a better return on their investment (ROI), measuring and analyzing are necessary parts of acquiring such service efficiently with an aim to getting maximum benefits out of every dollar spent.
In most consulting firms, partners are at the same time rivals and collaborators. Some firms take this idea to an extreme by having one partner surveys his colleagues’ clients. The problem is that it sometimes ends up as “little arrangements between friends.” I gave you an good evaluation and you invite me on your next big project. Since just being on the proposal can be a source of revenues for consulting partners, it’s a win win situation.
This type of “teamwork” undoubtedly encourages individuality and short-term thinking because it rewards individuals based solely on their relationships with their colleagues rather than the quality of the work their deliver.
Actually, what really shows how much consulting firms care about measuring their performance is how they focus so heavily on the number of times customers come back for more.
This is why partners are encouraged by upper management to bring in as many dollars and conduct projects without necessarily cultivating good long-term relationships with clients from initial interactions.
Why should measuring the performance of consultants matter for their clients?
As a client, you want to always work with the best. And if you follow my podcast, you know 3 things.
First that the consulting firm you know is not always the consulting firm you need. Consulting firms are not commodities and you need to know what type of projects they are best at before you hire them.
Second, the success of a consulting project relies heavily on the competency of the partner or their project manager.
Third, you need to have some measure of the performance of your supplier panel in order to manage it properly. This is category management 101.
Now you also know that consulting is intangible, and it is difficult to measure the performance. However, you can use client satisfaction as a proxy. So what should you be looking at?
The first thing is Commercial Approach:
Was the internal client convinced by the proposal? The pitch? Was the proposal in line with the client’s expectations? Answers to all of these questions would determine whether the approach proposed by the consultant was viable for the client or not.
Second is the Delivery posture:
Relationships are key in the success of a consulting project. A good consuting firm will make sure that they build the trust with upper management and considered credible by the teams they work with.
We have all heard stories about arrogant consultants showing off and looking down on operational personel. This is not considerd as good consulting work.
How do your teams perceive their posture? Were they available? Flexible?
The ability to interact and collaborate at each level of the company is what makes great consultants.
The third dimension is Expertise:
We usually hire consultants for their expertise. It can be a technical expertise, thought leadership, experience handling such and such project.
And during the commercial phase, consultants will “sell” us their expertise in a given fielkd and their track record.
So here is the question is simple: is the expertise at the level we expected?
And subsidiary question, did we learn something during this project?
Next we have, Project Management:
It is an important part of measuring the performance of consultants. By looking at project management, clients can hold consultants accountable and make sure that they are meeting the project objectives. To know more about the delivery, first, take a look at the schedule. Are they early, on schedule, or behind schedule?
Second, look at the budget. Are they under budget, on budget, or over budget?
Another way to measure performance is to track milestones and deliverables. This tells you whether the consultant is making progress and meeting deadlines.
You can also look at the quality of the work that is produced. If the consultants can produce work that is of a higher quality than what is typically expected, then this could also be an indication of their performance.
Ultimately, measuring performance is about looking at both the quantity and quality of the work that is produced.
And finally, ask yourself if the project is on track to meet its objectives. If the answer to all these questions is yes, then you can be confident that the consulting firm is performing well.
Now, when it comes to measuring the performance of a consultant, impact is the king.
The goal of any business consultant is to help their clients see positive results, and those results should be quantifiable.
If a consultant can show that their work positively impacted their client’s bottom line, then they have done their job well.
Of course, measuring impact can be tricky. Sometimes, the benefits of a consultant’s work may not be felt immediately. In other cases, the effects maybe subtle but cumulatively significant.
Whatever may be the case, measuring impact is essential for determining whether a business consultant is truly effective or not. By taking the time to assess the impact of a consultant’s work, you can ensure that they are getting the most bang for your buck.
Let’s not forget about Client satisfaction:
Many times when we talk about measuring the performance of a consultant, we think about numbers and metrics.
But one important metric that is often overlooked is client satisfaction. After all, a consultant is only as good as the results they deliver to their clients.
So how can you measure client satisfaction? There are a few key indicators to look for.
First, you should check how happy you are with their performance?
Second, take a look at their work quality and time rate. How satisfied are you with it?
Finally, look at the overall health of your business – are you growing or is your business still stagnant after hiring the consultant?
If you’re seeing positive indicators in all of these areas, it’s a good sign that you, as a client, you are satisfied with their work!
As a client, you want to always work with the best. But Consulting is intangible, and it is difficult to measure the performance. Why should you care then?
To begin with, the consulting firm you are familiar with is not always the consulting firm you need. Consulting firms are not commodities, and before you employ them, you should know what types of assignments they excel at.
Second, the competency of the partner or project manager is critical to the success of a consulting project.
Third, in order to successfully manage your supplier panel, you must have some gauge of its performance. This is the fundamentals of category management.
We all know that measuring the performance is important, but what many people don’t realize are the benefits of internal benchmark.
These are all important factors to consider when measuring the performance of a consultant.
If you want a more detailed understanding of how your consulting suppliers perform, then there’s no better way than getting candid feedback from those who work for the consultants!
And that marks the end of our podcast. Next week, I want to talk about why even without competition, you still need RFP. So, stay tuned.
Till then, stay safe and happy sourcing!
If you have other questions about measuring the performance of your consultants, remember you can always contact me directly on LinkedIn or by email because I am always game for a chat!
Bye and see you next week! Au revoir!
See you at the next episode. Till then, stay safe and stay connected with us through our community @LinkedIn
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