KEY POINTS:
Did you hear the one about the company that asked a consultant to look at a business unit? The manager said: "Come back with a solution but just don't tell us to sell it."
The consultant came back and said: "Sell it."
The company kept running the unit at great cost for another three years, then sold it for a fraction of its previous value.
As a manager, you are going to bring consultants into your business for a variety of reasons. The issue for management is how to use them intelligently and to make sure they deliver the added value that they promise. If they don't, it is more likely to be the fault of the senior management team rather than of the consultants.
Consultants can only add value if they have the support of the senior management team, says Alex, a business consultant with experience at senior levels.
At times, she has been promised senior management resources which don't eventuate once she arrives. This can set a project back and cost the company.
"You have to have tangible evidence of CEO and the board of directors' commitment to the project," she says.
There are ways of showing this. "In well-run projects, you have a steering committee of senior people and the steering committee has a review every couple of weeks. It's an opportunity for them to critically review the process."
Management teams should remember the best-practice words - communication, co-ordination and control - when bringing in external consultants.
Alex says companies bringing in a consultant should make sure they are asking the right question in their brief.
"I think a lot of value can be added in the question that is posed but you need to ask the consultant the right question," she says.
"You may be brought in to answer question X but, after three weeks in the company, you find that the question is really Y."
Half the time the answer is already "inside the organisation", says Alex. But it can take someone "outside the organisation to flush it out".
Recommended consultants should be allowed to do what they do best. They're bright people and they like a challenge.
"It's varied, you work in different industries, there's always the challenge of looking for a new answer and the assumption is that the answer will be different every time," says Alex.
You often hear about past employees of a company going back as consultants. It can work well for both operations.
Johan Barton is director of organisational learning and development at KPMG, which uses a number of consultants. She says bringing a former colleague back as a consultant can work in some cases, but not in others.
"I think if somebody has worked inside the firm recently, they totally understand where the firm is at and what it is trying to achieve. It can be extraordinarily good," she says.
"If they have not been around the firm for a while, they might not appreciate that the firm has moved on and this can be an issue."
If someone has been out of the company for a period, they might have some misconceptions about the company's culture and take the wrong approach.
"It's really important that a consultant has a values match," says Barton.
Generally, people who have worked in the firm previously are "warmly embraced".
KPMG has just arranged for a senior staff member to come back as a consultant although she is moving to Hawkes Bay.
"She has a huge amount of intellectual capital and she's a superb operator. We are going to employ her as a consultant so that she can help on projects and keep things going. We don't like to let good people go," says Barton.
"The benefit of that is that we really know the calibre [of the person]; we know she fits the clients." And she will not be afraid to challenge the company.
When a new managing director or CEO comes into a company, one of the things they may do is check the external consultant count and see if it rings any alarm bells.
"If there are a lot of consultants and many of them are not short term, then that would say to me they've got a capability gap. You need to make a judgment and find out why," says executive coach Chris Johnson, partner at recruitment firm Kerridge & Partners.
A former company director and now an executive coach, he's been in both camps.
In a situation where consultants have almost become employees, this needs to be addressed, he says.
"There needs to be a start and an end [to their contract]. If you ask someone, 'Tell me what am I getting in return for my money?' and the answer is vague - it's because they've always done it - that's not good enough," he says.
One side-effect of external consultants coming into your company is that they can make staff nervous, says Katheren Leitner, director of TrainingPlus, a performance improvement training company.
They feel their work might be criticised.
"This would be a shame. We might find holes but we are striving for excellence."
Companies should look upon consultants almost as forensic specialists.
"Is it a symptom versus an illness? Which is it? All you know is, you are getting a headache. Most of the time you don't know what is causing it, there's so much else going on. I think that's where the value of consultants come in," says Leitner.
Senior management should recognise that consultants are bringing in such a wide perspective. "If I think about the stupid questions I asked that unwittingly unfolded some answers, that's some of the strength that a consultant can bring.
"A consultant can also help managers avoid the trap of going from problem to solution before understanding the full extent of the situation."
* Gill South is a freelance business writer based in Auckland
