Choosing a human resources consultant
Choosing a human resources consultant

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Choosing a human resources consultant

1 Characteristics of service provision

Choosing a service provider tends to be far more difficult than choosing a supplier of goods. While there may be tangible components in the service an HR consultant offers, what HR consultants provide is largely intangible. As a starting point the following activity asks you to consider the issues likely to be involved in the initial decision to use a consultant.

Activity 1

Imagine that you are considering using consultants for one of the reasons given in the introduction to this course. What issues would you want to consider before deciding to go ahead? Draw on previous reading and your experience of working with or as a consultant.

Discussion

There are major issues of control and risk to be taken into consideration. Thus you may have raised questions similar to those which follow.

Issues to be addressed when deciding whether to employ consultants include:

  • How central to the organisation is the work in question?

  • What loss of control might be involved and what might be the significance of this?

  • What risks are associated with use of a consultant? Where would the power lie in the relationship?

  • What expertise does the consultant bring that you lack?

  • Would it be better to develop this expertise internally rather than seek it externally?

  • How can you be sure that the consultant has the claimed expertise and will actually deliver as promised?

  • What other advantages are there to using a consultant and are there alternative ways of achieving these?

  • What impact might use of a consultant have on others involved?

  • What impact might using a consultant have on your own reputation within the organisation?

  • What personal development might you gain from working with a consultant?

  • What is it likely to cost?

  • Might there be more cost-effective ways of achieving a similar outcome?

Choosing a HR consultant can be particularly problematic. This becomes clear when you consider consultancy in terms of the key characteristics of services in general and their implications for the purchaser, as shown in Table 1.

Table 1: Key characteristics of services

Characteristic Implications
Intangibility It is harder to assess the quality of the intangible aspects of a product than of the tangible ones.
Variability Services tend to be more variable – the provider of the service might have an ‘off day’, or not be suited to that particular context.
Compatibility Many services depend on the quality of the interaction between provider and client, which depends on both parties. You may hate a hairdresser's non-stop chatter; an elderly client may love it.
Untestability It is often difficult to ‘try out’ a service – whether a ‘trial’ haircut, or a ‘trial’ change intervention.
Perishability The service is consumed as it is produced – the shelf life of a shortlist for a CEO vacancy is only slightly longer than that of an airline seat.
Scope for misunderstanding Intangibility means that it is much easier for there to be misunderstanding between provider and purchaser as to the exact nature of the service to be provided.
Difficulty of evaluation It is often far harder to evaluate a service once it has been received than it is to evaluate tangible goods.

Rashid (1998) points out that in markets where entry barriers are low, quality has the greatest tendency to vary. This applies to the market for HR consultancy, and such variability compounds the impact of the characteristics above. The situation is further exacerbated by the degree of ‘churn’, particularly among smaller consultancies: the ease of entering the market contributes to this. Keeble et al. (1994) found that around half of the one- or two-person consultancies in business at the time of their study had not been in business five years previously. (None of the consultancies employing 100 or more people had gone out of business during this five-year period.)

The factors in Table 1 combine to create real problems for purchasers of any service, not least management consultancy. The risks attached to purchase of a service are inevitably higher – a service cannot be tested beforehand, nor returned if found faulty. Purchasers of services tend in general therefore to spend more time on information gathering than purchasers of physical products. And the information will never be complete. Past good experience with a provider is of great importance. Word-of-mouth recommendations tend to carry substantial weight, as do credentials: qualifications of some sort, and relevant experience, are seen as a ‘guarantee’ of service. (This point was stressed in an advertisement for the Institute of Management Consultancy, with its assertion that ‘To be a Certified Management Consultant is to carry the hallmark of a consultant who can do what they say they can do’.) ‘Physical evidence’ is given a disproportionate weight: thus good premises, quality of brochures or letters, and of handouts at presentation can be highly influential. If a service has to be taken on trust, it is important to reinforce, by whatever means possible, the impression of provider reliability and competence.

If you are seeking HR consultancy, choice of service provider is both difficult and critical. While a good consultant, and one who is suitable for your context, can be hugely successful, the cost of a poor choice may substantial. A failed change intervention is not only more expensive than a bad haircut but seriously more disastrous. Clients seeking HR consultancy often face real and urgent problems to which they are expecting consultants to provide a solution. When major change exercises are being planned, any changes made in the light of consultant recommendations are likely to be extensive, expensive and irreversible. For this reason, evaluation of provision is important throughout the consultancy, to allow for adjustments where necessary during the process, to ensure that the consultant has delivered what was promised, to identify what else needs to be done and, most importantly, to inform future involvement with consultants.

In change consultancy, where the consultant is working as collaborator rather than contractor, the key question will be ‘What has the client – and the organisation – learned from the collaboration?’ As with much of HR activity, assessing benefits is notoriously difficult. Long timescales, the difficulty of finding objective measures, and the impact of other changes contribute to this difficulty. Client learning, although of central importance, is perhaps the hardest to quantify. Nevertheless, while it is important to evaluate the more obvious outcomes of a consultancy intervention, it is essential not to let this get in the way of paying substantial attention to answering the question ‘What have I, the client, learned from this exercise?’.

Activity 2

Consider a recent choice of consultants with which you have been involved. List the information used in making that choice and assess its reliability. Given the size of the investment, both in consultant fees and in making subsequent changes, how adequate do you feel the information was?

Discussion

It would not be surprising if you felt that the information had been inadequate, as it is extremely difficult to identify and obtain relevant information. When dissatisfaction with consultants arises, possible reasons are that the choice was based on inadequate information, or there was misunderstanding as indicated in Table 1, or that the pool from which the choice was made did not include any really suitable consultants.

Clark (1995) suggests the following difficulties in choosing a consultant:

  • determining the precise nature of the consultant's services in advance – what exactly is being offered

  • comparing this service to the services offered by other providers (and identifying these in the first place)

  • knowing what to pay

  • evaluating the service afterwards.

I would add a further, or rather, prior point:

  • knowing the nature of the service that you wish to purchase.

Clearly, it is no use knowing what services are on offer if you cannot match them against those you need, even assuming that you can determine what these are. (Indeed, it might be that when you investigate the nature of this service more fully, it becomes apparent that it could be better provided internally.)

But remember how difficult it is to know what a problem is before a proper diagnosis had been conducted. Herein lies one of the major difficulties. Many issues in HR are highly interconnected. An apparent ‘symptom’ in one area may result from a deeper problem in quite another. For example, a need to recruit staff urgently may indeed be an immediate recruitment issue, but if it results from lower pay than is reasonable, poor supervision or inadequate job design, the ‘solution’ will be temporary as the new staff themselves will shortly need to be replaced. Thus a consultant chosen because their offering matches your initial, possibly premature, diagnosis may deliver what you ask, perhaps very well, but fail to solve your longer-term problem. If even ‘simple’ requirements such as the need to replace staff are potentially problematic, the more ‘messy’ and amorphous problem situations which many change interventions are designed to improve are infinitely more so.

It is for this reason that the diagnosis part of a change intervention is often separated out as a separate assignment.

Activity 3

Offering diagnosis as an assignment to a consultancy might seem a useful way of testing their services. If their diagnosis is convincing, their conduct professional, and you enjoy working with them, does this address the ‘untestability’ aspect of a service in Table 1?

Discussion

Certainly, this might be a good way of testing a consultant for compatibility and professionalism, but there is one very real danger. Many consultancies offer a particular type of intervention as their main offering. This might be anything from a particular form of restructuring to a particular form of training. The danger is that their diagnosis will constitute a case for the consultants’ particular form of consultancy. While it is possible that this is a cynical marketing ploy it may simply be because that is the way they see the world and therefore the way their diagnostic tools are designed, or that their strengths lie more in the delivery of predetermined services than in diagnosis.

Diagnosis is clearly difficult to locate within a logical sequence of identifying, selecting and then contracting consultants, as it may be needed, to increasing depth, at each stage. This is why I have dealt with it first. You will find it recurs, however, in the discussion of stages which follows.

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