Advice for companies working with a consultant for the first time.

• Companies can really benefit from the help of a consultant, in a number of ways and in several different situations.
• Some thoughts and advice on how to make the most out of it.

Why are we hiring a consultant in the first place?

Companies reach out and engage consultants for several reasons - but mostly for skill set or staff augmentation. This topic would really merit a more complete discussion, but as a short introduction, at times companies are facing a new challenge they don't have the personnel with the desired skill set for. And why would they? In this situation the activities necessary are not core to their business and may be entirely outside their circle of competence. In this type of situation (skill set augmentation), a consultant comes in to enlarge that skill set, often temporarily (over the course of weeks or months). Hopefully, by working with a consultant, the competence gap is closed and the company gets the skills required and obtains the results needed - solving a particular issue, clearing a certain hurdle or completing a project.

At other times, companies are facing a "bandwidth" problem. The personnel possessing that required skill or knowledge is - simply speaking - just too busy! The company has the requisite competence within its workforce, but it wouldn't be fair to ask the group to take on yet another project. In this case, the consultant comes in and works as additional "horsepower," oftentimes "plugging in" as another member of the team, under common leadership for other staff. The company is able to complete its project on time and more efficiently with the aid of the consultant.

Independently of the reasons to hire a consultant, some benefits are common to all alternatives. For instance, bringing on a consultant also brings in an independent perspective and an outsider's view. Group-think is usually present to some degree at companies and, with the presence of a consultant in the room, company leadership many times get asked questions that would not be possible without "fresh eyes" over an issue. That new perspective leads to discussions and solutions that would not come into play without that "foreign body" in the room.

Thoughts on how to best work with a consultant.

While the value proposition for hiring a consultant is usually clear, companies working with a consultant for the first time, or considering hiring one, should consider a few things as they prepare for the consultant engagement. These are key for the establishment of some basis for success, for any engagement.

1. Have a clear set of expectations and communicate those expectations. In my experience, most consulting engagements that fail, fail due to a complete misalignment between what the company expects of the consultant and what the consultant believes is needed of her/him. For this reason, there should be a very clear discussion at the outset of any engagement, or even prior to signing up for working with a consultant, about the company needs and expectations. This should probably include (at a minimum) the type of deliverable (what the company expects to see as the result of the engagement), the timeline (how long things should take), the responsible parties (who is responsible for the engagement internally), what personnel/resources are needed and available, what are some of the "ground" rules for communication (frequency of updates, format, blackout times or dates), and what is the sense of urgency (emergency/"fire-drill" or a more strategic project). Asking the consultant to produce a clear and concise document delineating the set of expectations, resources and constraints (including dependencies), timeline, etc., and circulating that document as a "draft", could help establish the alignment necessary (but not sufficient!) for a successful engagement.
2. (Really!) clarify the scope of the project. Another clear candidate for the failure of engagements is misalignment in the scope expectations. While (technically!) this should be encapsulated by item (1) above, the determination and clarity around the scope is so important as an alignment factor that "scope" merits its own "bullet". Scope-creep should and will be avoided by serious, experienced and competent consultants, since ever changing goals and timelines are highly detrimental to the success of any engagement. Experienced and competent consultants are, and must remain, flexible - as the nature of engagements requires that of the consultant even in the best of scenarios. However, scope-creep creates issues that make the job of the consultant really difficult, especially because it creates confusion, leading to a lack of focus, dissipation of energy, the extension of timelines and cost overruns, and ultimately, a generalized sense of failure (by both the consultant and the company). Changing scopes create tension between the company resources and the consultant that should ideally be avoided (and the best way to do that is to have the conversation on what is really needed upfront).
3. Maintain an open mind. Consultants have the benefit of seeing issues at a number of different organizations, and (hopefully!) bring on some serious business baggage with them. That is (or should be) the reason your company hired that firm / individual in the first place! The consultant's business expertise, combined with the independent perspective, leads a consultant to sometimes re-shifting the company's "ask." In my experience, at times a company comes to the consultant with what they believe to be the need (the "ask" for a "pre-packaged" engagement if you will), but the consultant will indicate that the company is, instead not ready for that. In this situation, another step is (or steps are) necessary in order to arrive at the company's ultimate goal, and the consultant will propose a different project. At this occurrence, companies have a choice of sticking to their beliefs or listening to the outsider's view. The consultant should be able to describe and explain why the company would really be better served by a different project as it progresses toward its goals. Client companies would benefit from having an open mind and considering the consultant's expertise at this stage. Client companies would benefit from describing pain points and long-term, ultimate goals (as opposed to not immediate goals or a "pre-packaged" project.) The discussion on the basis of pain points and ultimate goals could really help the consultant describe her or his understanding of the client needs, which coupled with the expertise and marketplace practices knowledge, leads to a more productive discussion (and higher chances of success for the engagement.)
4. Allow the consultant to guide you. Client companies are oftentimes culturally excessively set in their ways. Personnel should be reminded (and that message usually has to come from a someone in a leadership position) that the consultant is the company's "friend," that the project is of serious importance to the company (otherwise why spend that kind of resources and money on it) and that the consultant's expertise is to be valued. With these elements, the company should allow the consultants to do their job and guide the company to a successful completion. This is not to say that the consultant should make decisions (unless determined by the upfront agreement - most consultants work in an advisory role) but that the consultant's expertise should be considered seriously enough by the decision makers as to allow the consultant to be effective in the engagement.
5. Keep communications clear and honest. Companies should strive to be open and honest with the consultant, sharing the relevant information (while understanding confidentiality issues - and most serious and competent consultants will protect the company's data and other information) and providing valuable (and frequent) feedback. Intentional, active listening is a helpful practice here - on both sides of the equation. By following these suggestions, companies can foster an environment of honest, productive communication with their consultants, leading to more successful engagements and better outcomes.

Consulting engagements are always different. A lot depends on the original fit between the consultant and the company, but there is a lot a company can do to be prepared to work with a consultant. While there are no guarantees of success, by remembering the above points - "colored" by years of consulting experience - a company can increase their chances of having the right engagement with the right outcomes.

How can we help? We are specialists in financial modeling with several years of experience in working with clients in M&A, IPOs, Restructuring and Strategic Reviews, among others. Most times, when guiding clients through Corporate Finance decision-making processes, we develop and make use of quantitative tools such as integrated, three-statement financial models.

Please reach out if you have a Corporate Finance-related consulting need. We'd love to discuss how we may be able to assist you in your decision-making process.

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