How to hire a consultant and get your money’s worth
Many consulting projects disappoint for reasons set before the work begins: a fuzzy problem, a loose scope or the wrong kind of expert. These steps put the hard thinking up front, where it costs the least.
Define the problem and the outcome
Write one paragraph describing the problem, the decision or result you need and the date you need it by. Then define success in terms you can check later, such as a cost reduced, a system launched or a plan approved by the board. If you cannot describe the outcome yet, the first engagement may be a short, separately priced diagnostic to define it.
Decide what kind of help you are buying. Advice ends with recommendations, implementation means the consultant does the work, and extra capacity fills a temporary gap on your team. Set a budget range and name the person inside your business who will own the project.
Pick the right kind of consultant
Decide first between an independent consultant and a firm. Independents often cost less and give you the senior person directly, but a single illness or competing project can stall your work. Firms bring depth, specialists and backup, usually at higher rates and with junior staff doing much of the daily work.
Then match the specialty to the problem rather than hiring the most famous name you know.
- Strategy: growth plans, market entry, pricing and major investment decisions.
- Operations: processes, supply chains, costs and quality.
- IT: system selection, implementation, security and data.
- HR: hiring processes, pay structures, policies and organization design.
- Marketing: positioning, campaigns, channels and measurement.
Find and vet candidates
Ask peers, your accountant, your attorney and industry associations for names, and shortlist two or three. The most important question for each is who will actually do the work, because the partner who pitches may vanish once the contract is signed. Get the names of the people who will staff your project, meet them and ask for a clause requiring your approval before key people are replaced.
Then ask for references from engagements like yours in size, industry and problem, and call them with questions like these.
- Did the project finish on time and within budget?
- How did the consultant handle disagreement or bad news?
- Could your team use the deliverables without the consultant in the room?
- Would you hire them again for the same kind of work?
Write a tight statement of work
The statement of work turns a conversation into a written plan both sides can hold each other to. Vague scopes are where budgets break, so make every item specific enough that a stranger could tell whether it was delivered.
- Objectives: the business result the work supports.
- Deliverables: the specific reports, systems or decisions you will receive.
- Timeline: milestones and review dates, not just an end date.
- Assumptions: what you will provide, such as data, staff time and system access.
- Acceptance criteria: how each deliverable will be judged complete.
- Change orders: how new requests are priced and approved in writing before work starts.
Choose a pricing model that fits the work
Each pricing model divides risk differently between you and the consultant, so match it to how well the work can be defined. Whatever the model, tie payments to milestones or accepted deliverables, and agree in writing which expenses, such as travel, you will reimburse.
- Hourly or daily rates: flexible for open-ended work, best paired with a not-to-exceed cap.
- Fixed project fee: predictable when the scope is tight, with changes handled by change order.
- Retainer: a monthly fee for ongoing access, so confirm the hours included and whether unused time rolls over.
- Value-based fee: priced on the worth of the outcome rather than the hours it takes.
- Performance fee: partly contingent on results, which works only if the baseline and the measurement are agreed in advance.
Get the contract terms right
The statement of work describes the job, and the contract governs the relationship. These terms matter most when something goes wrong, so read them before you need them.
- Intellectual property: under U.S. copyright law, a contractor generally owns the copyright in what they create unless they sign a written assignment, and a work-made-for-hire clause covers only a few types of commissioned work, so require an assignment of the deliverables to you on payment.
- Confidentiality: what information is protected, how your data is stored and when it must be returned or deleted.
- Termination: your right to end the engagement on reasonable notice, paying only for work completed.
- Liability: any cap on damages, often set at the fees paid, and whether the consultant carries professional liability insurance.
- Independence: disclosure of any referral fees or commissions from vendors the consultant recommends.
Manage the work and keep the knowledge
Give the consultant an internal owner with authority to make decisions, and arrange data and system access before day one so paid hours are not spent waiting. Hold a short weekly check-in on progress, risks and decisions needed, and review drafts early, while changing direction is cheap.
At the end, measure results against the success measures you wrote at the start, and make the handover part of the deliverable.
- Working files, models and source data, not just the final slides.
- Documentation for any process or system that was built or changed.
- Training for the people who will own the work next.
- A short review of what worked and what to do differently next time.