Calgon, Chaos, and Consultants

Remember that old commercial where the kids are screaming, the phone is ringing, someone's at the door, the dog is barking... and the all-too-harried star is just about to lose it? Moments before the inevitable, as if chanting some secret religious incantation, she exclaims "Calgon! Take me away!" An instant later she is dramatically transformed into a calm, relaxed and — dare I say? — happy woman; the bubbles from her bath eliminating all her stress and strain. For all she knows, little Timmy is setting fire to the dog and letting in the strange-looking "repairman" that had mysteriously and unexpectedly shown up at the door. No, those things don't matter, not while she's having her "Calgon Moment".

The day to day life of a business can sometimes seem like that commercial. The phone can seem to ring endlessly. Streams of customers come and go all day, every day. And every now and again, there may even be a bit of screaming (you know who you are). To make matters worse, there are few — if any — Calgon moments in business.

In the last several years, we've seen how advances in computer technology can help businesses manage that sort of chaos. Even a garden-variety personal computer is capable of great things, and seemingly greater things each year. New networking technologies are making our offices more connected than ever. And with the incredible resources and connectivity available on the internet, there has never been a greater opportunity to work smarter instead of harder.

If only it were that simple.

Unless your business is technology, there's probably very little time or energy available to keep up-to-date with all the advances that can help your business. Like most people, you expect to turn on the computer and it just works . Anything less makes the computer less of a servant and more of "one more thing to deal with." As if you didn't have enough to do already.

Perhaps you've considered hiring technical staff to keep all your business systems running smoothly. But adding personnel is expensive! Not only is there the cost of basic salary and benefits (which can be substantial), there's also the potential for considerable setup expenses. Each person you hire needs a desk, space for that desk, a phone, most likely a computer, numerous software titles... the list goes on and on. And what about training? How much money is available to get a new person oriented to your way of doing business?

Then there's the issue of your time. How much time do you have available to review resumes, call prospects, conduct interviews, fill out all the regulatory paperwork, and get everything set so your new employee can hit the ground running? Following that, how much time will be needed to ensure your new employee is really being productive? Stated another way, if the problem is that you're too busy, is adding more items to your To Do list really the best solution?

Wouldn't it be great to have an employee who comes to you with extensive training? Someone with experience solving a variety of issues? Someone who doesn't require a mountain of paperwork or human resources effort, and can just go away quietly when you don't need them anymore? And what if that person came to you with their own desk, phone, computer, and software? And if that's not enough, what if you could completely forget about paying for benefits? Would that not be an excellent hire?

Fortunately, there are thousands of people just like this all over the world, operating under titles like Technology Consultant, Software Consultant, or even Software Solutions Provider. Like employees, consultants are available with a wide variety of training and experience. However, unlike employees, consultants don't typically require a long term commitment. Instead, as an employer you have the freedom to add or subtract consultants as needed. And you can do it without a lot of paperwork, regulatory issues, and complex interpersonal dynamics.

Perhaps you're thinking, "But... consultants are even more expensive than employees!" Looking only at the hourly rate of a consultant vs. an employee, this can appear to be true. However, for most companies, you have to look deeper than simple hourly rates. When you better understand the return on your investment, it becomes clear that a consultant can save you money — sometimes a great deal of money.

When deciding between adding an employee or a consultant, the first issue to be resolved is need. Do you need someone every working day of the year? Or do you need a person only when there are things to be done? If the answer is "every day", then you may be better served by an employee. On the other hand, if your needs are more task-oriented, a consultant may be the better option. To help clarify this issue, a number of questions can be asked, such as:

  • What — specifically — will this person be doing?
  • What will the person do after the assigned tasks are complete?
  • Will that list of tasks require a full time, indeterminate-length investment?

The goal of these questions is simply to arrive at a full understanding of where this person will fit into your organization, and for how long. If you find yourself thinking "I don't know what this person will do all the time, but I'm sure we'll find something," a big red flag should go up. You see, over time the most significant cost of an employee isn't the salary, or the benefits, or the training, or the setup, etc. Rather, the most significant cost of the employee comes from paying all of these amounts in perpetuity — even after the need has passed.

Of course, you could make it a practice to periodically fire employees when they're no longer needed, but this carries its own costs, liability potential, and morale issues. Fired employees may be eligible for severance monies, unemployment benefits, extended health insurance, or other benefits. And what if the employee feels he or she has been wrongly terminated? Corporate reputation notwithstanding, legal costs to defend the company can be significant.

In contrast, consultants simply move on when the job is complete. As long as a company has things to be done and is happy with the results being produced, the consultant provides services. When there's nothing left to do, the consultant moves on to serve the next company and the cycle continues. This not only reduces the company's liability and termination costs, but the annualized cost of the consultant is reduced as the company pays nothing for a consultant who is serving someone else.

But what about loyalty and confidentiality? Can consultants be trusted with the intellectual assets of the corporation? In a word, absolutely. And if a word isn't enough, you can get it in writing.

Most consultants will agree to sign proper agreements limiting their use of the intellectual assets of the company. Commonly, a non-disclosure agreement (NDA) is used which defines the intellectual property boundaries and usage guidelines for the consultant-company relationship. NDA guidelines may also be incorporated into a standardized consulting contract. Incidentally, only rarely will companies require these types of agreements with employees. Often this oversight is a more significant risk.

What about accountability? How can the company ensure the consultant is maintaining an adequate level of productivity?

Any project, whether assigned to an employee or a consultant, should have measurable benchmarks strategically located along the project timeline. If a person isn't meeting or exceeding those basic milestones, you're free to find someone else who can. The difference between an employee and consultant is that the consultant recognizes that they are easily terminated, in contrast to the difficulty commonly associated with terminating an employee. For this reason, many consultants invest a portion of their non-working time to learning new methodologies or techniques to help them achieve the greatest productivity possible. As the hiring company, you then reap the benefits of all this extra training with zero financial investment.

The final question often raised by people considering hiring a consultant is one of support. How can a company get adequate support for the work done by a consultant after that person has moved on?

Most consultants will offer support for their work long after the original contract is ended IF the consultant is still available. While this may seem like an obvious distinction, it's a pivotal one. New consulting companies seem to rise and fall on a nearly continual basis. And, oddly enough, one principle factor in whether a consultant will be around to answer your questions is - believe it or not - their hourly rate.

As you review the sea of consultants looking for opportunities to serve, you'll probably find some with rates that are next to nothing, others with rates that could make your eyes water, and all shades of gray between the two extremes. With such wide disparity, it may seem natural to jump at the lowest bidder with the expectation that you'll save money by the decreased rate. While it can happen, a low rate is no guarantee of savings. In some cases, someone who charges even three times as much may be the better investment.

Consider this: Which is better — a consultant that produces three times the results, or a consultant that charges one-third the rate? While it may seem like a wash, the consultant producing triple results is actually a better investment. Consider:

  • Projects that are in development for a longer period are more likely to be changed before the project is complete. As more changes are added, the project becomes less likely to be finished on time and/or on target. When a person produces more rapid results, the project is more likely to be completed and in use before change requests become issues. These changes can then be addressed as separate and distinct tasks. Or they can even become separate products for the company, which can provide new profit opportunities for companies who sell those products.
  • Consultants who produce results in less time tend to have more experience across various fields, which can benefit your projects both directly and indirectly.

Consultants who are consistently in the middle ground of rates also tend to have been in business longer, which means they are more likely to be around to support their work months or years after the original deployment. Those who charge too little tend not to last very long, which can be problematic for long-term support. Furthermore, those who charge too much tend to have high overhead costs that may provide no real benefit to your company. Most importantly, don't be afraid to ask for justification of the rate; the answer may tell you much more about the consultant than you could get from any other source.

Finally, as you would with an employee, be sure to check references for any consultant you hire. If a consultant says they can produce rapid results, or that they are consistently completing products on time and on budget, get some independent verification. After all, it is your limited money and time that will be invested in the effort. Also, consider cold-calling the consultant to see how easily they can be reached. If you can't reach someone before the project starts, there's a pretty good chance you won't be able to reach them after the project is completed.

Bottom line, regardless of all the advances in technology, there will always be a need for people to make it all work. Sometimes an employee is a good fit. Other times, a consultant is a better fit. With careful consideration of all of the issues with each option, you'll be better prepared to make the best decision for you and your company.


Jan/Feb 2015