Consultants can net anything from £250 a day to £100,000 for an entire project; Annie Hayes finds out how to sift the good from the bad.

The market

An endless cycle of downsizing, outsourcing and efficiency initiatives has catapulted the job of the consultant into constant demand. Put simply, the consultant’s job is to effect significant business change; and there are plenty of market players vying for a wedge of the pie from the big names, including Watson Wyatt, Hewitt, KPMG, Accenture and IBM, right down to the one-man bands outfits.

The Management Consultancies Association (MCA) industry report for the year 2006/07 says that HR consulting has increased by 22 per cent to a whopping £358 million; a faster growth rate than the year before, when HR consulting grew by 16 per cent.

The public sector is a particularly heavy user of consultants, driven by the need, according to the MCA, to increase efficiency as outlined in the government’s Gershon review.

Skills expertise and impartiality

Most organisations point to a lack of skills availability within their own organisations, or the ability for consultants to get results more quickly than would be achieved with an internal resource, as a key reason for hiring in the big guns.

Sue Gilbert, manager of the HR advice and consultancy department for First Assist, a provider of health and wellbeing, says that demand includes: “Assistance on discipline and grievance issues, absence management, redundancy and bullying. We are seeing a growing trend for mediation and investigation work too.”

It’s not just experience and expertise that clients are looking for, though. Sandra Beale, FCIPD, says that removing the obstacles of office ties is a plus: “Being an ‘outsider’, they tend not to get involved with office politics, which can cloud many judgements of permanent members of staff.”

Chris Burrows, HR manager at Coventry City Council, says that a main benefit is pushing forward change: “Often recommendations from external consultants are acted upon, whilst similar recommendations from internal staff may not be taken so seriously. External consultants bring a level of expertise and independence that often cannot be provided by internal staff. They have a fresh pair of eyes in relation to the organisation, but ones that have probably seen the issues before in other organisations, and therefore have witnessed what has/hasn’t worked elsewhere.”

And for HR member Jeremy Thorn, sometimes it’s a liberal smattering of laziness and passing the buck that results in the call up:

“Often I find we are asked to do something which clients could perfectly well have done themselves, but didn’t want to. Maybe they were too busy, or wanted something doing urgently, or just wanted another perspective. And sometimes, clients just want somebody to take responsibility if things should go wrong, or to tell them what they already knew as an independent outsider.”

Saving time, money and face

Of course, for many the decision to draft in the experts is one based on time and cost savings. Beale says: “Time is saved by, for example, outsourcing a project that existing HR professionals in an organisation can’t spare from the usual day-to-day tasks.”

Being an ‘expert’ also guarantees a level of aptitude for dealing with business leaders at a certain level, often where the hard hitting decisions are made, and consultants can be useful in ensuring that decisions are based on benefits to the organisation, not whether it will upset the opinions of certain individuals.

Cost savings can also be gleaned, by not having a permanent member of staff on the books with the associated employment costs.

Getting it right

Iain Young, former head of HR for Cofathec Heatsave, says the key is planning: “Too many employers don’t actually know what they want the consultants to do before hiring them. They often also fail to brief them.”

Nik Kellingley, an independent consultant, agrees: “Often companies fail to set an appropriate brief or establish a sense of trust with consultants before engaging with them.”

Consultants worth their salt will have a range of tools at their fingertips charting what they expect to do and how they will get from A to B. Having a tracking process in place is one way of ironing out the problem and ensuring that amendments to plans are agreed up front.

So how can businesses ensure they find the right consultant or consultancy?

HR Zone member Steve Wright says that the best consultants are usually found through word of mouth. And Denis Barnard, of HRmeansbusiness, says that the right consultancy is one with clear values about being of benefit to the client. For Thorn, it’s those that are there when you want them and know your business.

Of course things can and do go wrong. Beale advises ensuring any agreement allows either party the option to cancel with short notice.

For Sandy Boyle, HR director at regional law firm Mills & Reeve, it’s a question of getting it right from the outset with a fail-safe tendering process: “We will normally contact two to three providers who we know or have heard of through others and then make them pitch for the work. This is part of our standard procurement process. The pitch will cover the usual things you would expect as part of making a business case – objectives, suggested approaches, personnel, costs, business benefits etc.

“We decide on our preferred provider and then negotiate fees (normally we will want a fixed or capped fee arrangement). The ROI will normally be determined based on the proposal we accept and may have both quantitative and qualitative measures.”

Contingency payment is one way of protecting businesses from poor results. Without the proper planning, communication and consideration in place, consultancy projects can and do fail; and with the sums of money being poured into them this is not an option for the new commercially-minded HR function.