WORKING WITH INDEPENDENT CONTRACTORS AND CONSULTANTS

by Joni L. Cassidy

Expectations:
What the client can expect from the contractorWhat the contractor expects from the client
Sample Independent Contractor AgreementThe psychology of the client/contractor relationshipAutomation consultants - Leasing the technical know-howModel for a formal Request for Proposal (Automation project)The question of ethical conductBibliographic sources consulted

WELCOME TO THE WORLD OF CONSULTANTS AND INDEPENDENT CONTRACTORS:

What is a Consultant?

A self-employed, independent agent or a small, self-contained service business. A consultant is paid per project per diem or on a retainer basis.
A consultant doesn't receive paid vacation, insurance, social security contributions or other benefits from companies that hire his/her services. A consultant is responsible for paying his/her own federal, state and city taxes, including self-employment taxes and, in New York City, the unincorporated business tax.

How does a Consultant differ from an Independent Contractor or Free-lancer?
The consultant's function is to advise the client while the free-lancer or independent contractor is hired to do the actual work

GROWTH OF THE FIELD:
A BRIEF HISTORY OF CONSULTING/CONTRACTING
1950's - During this period, consulting was common in only a few fields such as law, accounting, personnel recruitment and certain technical areas.

1960's - Extensive growth in the science and technology fields led to an increased need for consultants to interpret new technologies for companies. Many industries found it more cost-effective to buy research rather than to invest in permanent research facilities and staff.

1970's - In addition to continued growth of technology, the economic recession caused many companies to trim back their payrolls and rely more heavily on consultants and independent contractors on an "as needed" basis.

WHY HIRE AN OUTSIDE SERVICE

1) To augment the staff on an "as needed" basis.
2) To provide expertise and more up-to-date knowledge in a particular area.
3) To provide objectivity and a fresh impartial viewpoint when searching for a solution to a problem.
4) To take advantage of the contractor/consultants ability to work on a specific problem with all resources at one time.
5) To act as a catalyst and initiate change - sometimes an "outsider" can facilitate change where employees have failed to do so.
6) To instruct the staff on applications of now technology.
7) To take advantage of the fact that consultants and contractors are not permanent burdens to the payroll.

LAW LIBRARY FUNCTIONS THAT COULD BE CONTRACTED OUT:

1) Automation projects - online catalogs, serials check-in, accounting, acquisitions, etc
2) Cataloguing - reclassification, retrospective conversion
3) Relabelling and shifting the collection
4) Bar coding
4) Loose-leaf filing
5) Shelving books and shelf-reading
8) Move preparation
7) Space planning
8) Documents retrieval
9) Legislative monitoring
10) Weeding the collection
11) Setting up Memoranda or Form file
12) Database searching - information and research
13) Temporary staffing

HOW TO FIND CONSULTANTS/INDEPENDENT CONTRACTORS:
Decide if you are looking for a Consultant OR an Independent Contractor before you go shopping for either.
1) Directory of fee-based information services. Houston, TX: Burwell Enterprises. Annual.
2) Professional association directories - most freelancers are members of professional associations affiliated with their area of expertise.

> American Library Association (Chicago) Independent Librarians Exchange Round Table
> American Association of Law Libraries (Chicago) Private Law Libraries Special Interest Section, Independent Law Librarians
> American Society of Indexers (Washington, D.C.)
> Special Libraries Association (Washington, D.C.) Library Management Consultation Section
> Independent Computer Consultants Association (St Louis, MO)
> Association of Independent Information Professionals
> Institute of Management Consultants (Now York)
> Society of Professional Management Consultants (Now York)
> Association of Management Consultants (Chicago)

3) Check the advertising and classified advertising in professional association newsletters and journals.
4) Word-of-mouth: Ask your colleagues about contractors they use. A job well done is the best reference.
5) When you make inquiries about a contractor/consultant keep the following in mind:> Are they "good" at what they do: accurate, conscientious? Does the contractor/consultant realty possess the technical expense and knowledge he/she is selling?

> Is the contractor's staff pleasant to deal with? Are they accommodating?
> Is the contractor accessible to discuss problems?
> Are they flexible?
> Does the contractor deal with clients in an ethical manner?
> Are clients kept informed of changes in procedure, staffing and so on?
> Does the contractor keep his/her staff well informed?
> Do they deliver when promised?

ASK THE RIGHT QUESTIONS WHEN YOU MEET THE PROSPECTIVE CONTRACTOR:
1) How long will the project take?
2) What tasks will the contractor be responsible for? What will be your responsibilities?
3) Who trains your staff regarding new procedures associated with this project?
4) How will you be notified of changes in procedure, etc.?
5) Who will supervise the project?
6) Can you see samples of the contractor's work? (The confidential nature of some work may make this impossible).
7) Can you have a list of client references to call to discuss the quality of the contractor's work?8) What is the fee structure? How is billing done? How often?
9) How will the contractor's staff by scheduled for your project? How flexible is their scheduling?10) How do they handle holidays when the client is closed?
11) What kind of "quality control" is done to catch and correct errors? How will your account be credited?
12) Discuss the qualifications of the contractor's staff and specific task assignments.
13) Do they have written procedures for each client?
14) How often will you have an opportunity to meet with the contractor to discuss problems, suggestions, etc.?
15) How can a contract be broken?
16) Will work by done on- or off-site?
17) What kind of on-going, maintenance services do they provide?
18) What are the consultant/contractor's professional affiliations, association memberships, etc.?

"Setting Up as an Independent Consultant"

"Setting Up as an Independent Consultant" By Jela Webb Introduction

The nature of the workplace has been changing, with organizationsslimming down and outsourcing many types of activities; this has givenrise to the loss of both job security and long-term employment.

Consultancy may be defined as 'providing independent services to meetclients' needs in exchange for a fee'. Consulting has become a viableoption particularly with the focus on the knowledge-based economy.

It is important to distinguish consultancy from contracting - aconsultant has much greater autonomy, often assisting more than oneclient at a time, often choosing the hours worked, deciding forthemselves whether to work on- or off-site and being responsible forthe final product or service.

The consulting industry is diverse and covers a wide range ofactivities. Broadly speaking it can be broken down into fourcategories:
1. Strategy firms
2. Full service firms
3. Boutique firms
4. Independents

This article will concentrate on 'independents' - more than 50% ofconsulting firms are 'one-man bands' and it is increasingly becomingan attractive proposition for many who feel that corporate life is nolonger for them. Whilst giving up full-time paid employment to set upas a consultant might be a daunting prospect, with proper planning anda methodical approach, you should be able to fully reap the rewards ofworking independently.

Keys to success lie in having the rightpersonal qualities and skills together with an understanding ofmanagement practices. Establishing your own consultancy is a risk and the pressuresassociated with it should not be underestimated. You will be stakingeverything on your own ability and must be able to deal with thedownsides as well as the upsides. There is no doubt that it can be arewarding experience but firstly ask yourself why do you want to setup as an independent consultant.

Reasons may include:
* Independence - however, working as a consultant will entail working with and for others so you still need to be able to work in or as part of a team
* Job satisfaction - wanting to do something in your own way and style will often lead you down the self employed (consultancy) route
* Achievement and success - there is a real 'buzz' attached to running your own successful business but be prepared to deal with the challenges this brings and equip yourself to deal with any difficulties
* Money - starting and running your own consultancy does not guarantee wealth. Starting a consultancy when you feel you have no other choice is a situation you should be wary of. Is consultancy for you? -

Consultants need an area of expertise - clients typically buy servicesthat they don't have 'in-house' so you need to think about what it isthat you are selling - clients are busy people so you need to make itquite clear at the outset what it is you can deliver and how it willbenefit them. Having an area of expertise may mean that you want toconcentrate on a specific discipline (e.g. organisational development)or in a specific sector.

If you limit yourself to a particular sectorthen do be aware of the impact of any industry downturn and what thatmight do to your own business. Some consultants prefer to market themselves as generalists where theysell a range of skills across the market. A word of caution: clientscan sometimes be suspicious of someone who purports to be able tosolve all their issues. If you feel that you are more likely tosucceed as a generalist then I'd advise you to sell your services asan expert in the client's most pressing area and introduce othergeneralist skills as the assignment develops.

Self-assessment - It is advisable to undertake some self-assessment and analysis beforeembarking on a new consultancy venture. Firstly assess your skills,undertake a self audit exercise - detail your skills (technical,business, leadership, selling, organisational) and attributes;consider how you might apply these in consultancy work.

Be honest andobjective; ask friends, colleagues and family members their opinion. Consider the type of consultancy projects you would like to work on -have you undertaken similar/relevant work before? Can you provideevidence of your ability? Have you published any work in relatedsubjects? Are you able to construct a portfolio of consultancyprojects, references and articles that can help you sell yourself topotential clients?

To run your own consultancy business you need to be pretty resilientand answer some searching questions honestly :- Are you realisticabout your own capabilities? Are you motivated and self-disciplined?Do you have a support network? Are you prepared to dedicate yourselffully to establishing the business? Do you have good interpersonalskills? Are you decisive? Do you cope well with stressful situations?Do you 'stick it out' when times get tough? Do you take advice andlearn from mistakes? Are you in good health? Do you fully appreciatethe risks in establishing your own consultancy? If you are able to answer affirmatively then you have got what ittakes to move forward. If not, don't despair - by thinking carefullyabout the areas I have highlighted you will have identified aspectsthat need to be worked on and where to focus your improvement efforts.

Marketing - Consultants also need to be able to promote and market themselves. Asan independent you will be responsible for your own marketing andalthough it is relatively straightforward to set up a soleproprietorship consultancy, establishing and sustaining businessactivity calls for marketing and promotion. Promoting yourself,persuading people to support you and winning clients is crucial tosuccess.

A new consultant may become involved in a good deal of speculativework in order to establish a client portfolio, sometimes you have to'speculate to accumulate' but be aware of offering too much for freeas you will run the risk of devaluing your services if you don'tcharge for them. It's a careful balancing act, which becomes easier asyou become more established. Most consultants will have contacts in their area of expertise fromtheir previous experience/employment and can target these for work.

I always encourage people starting up not to overlook existing contactsas potential future clients. Stationery, publicity material and business cards should be welldesigned and printed on good-quality paper. These days, with theadvent of the PC and suitable software, it is possible to produceprofessionally-looking material without going to huge expense. Other marketing-related activity might include speaking at conferencesand local business events, presenting to professional associations andwriting articles for relevant industry journals.

Local newspapers run'advertorials' in their business sections so you may want to advertisethe launch of your consultancy this way. Mailing packs can be distributed to potential clients - these couldinclude a CV, details of services offered, details of memberships ofprofessional bodies, details of previous assignments (opportunitiesmay have been possible whilst still in full time paid employment),details of any conference speaking engagements, published articles,references and feedback from previous projects.

Think about presentingthe material in a creative way - in an unusually shaped parcel or in atube (this happened to me once and was a real attention-getter!). The Internet provides opportunities to establish your own web site formarketing and promotional purposes. The investment in a web site canpay dividends and helps to present a professional image. Do you meetthe 'Google factor?' If a potential client types your name into asearch engine what results are returned?

Networking - Networking is very important and for most consultants it is the singlemost important business-getting tool. To succeed in consultancy youneed to establish a personal and professional network. It is noexaggeration to suggest that your network should be in the region of200 and needs to be nurtured and updated regularly. It is interestingthat whilst so much business (not just consultancy) is obtainedthrough networking, these skills rarely appear on any business schoolcurriculum.

You probably already have a personal network from: * Family * Friends and neighbours* Colleagues* College/university and a professional network from: * Previous employment * Conferences* Exhibitions* Trade associations* Business/professional associations* Contacts from presentations attended/given Make a list and start building and cultivating your network months inadvance of starting your consultancy.

Formal networking events can sometimes feel daunting, remember theunease that you feel is no different from how others feel - look outfor someone standing on their own, initiate an approach, ask themabout projects they are involved in, find common ground. Be sincereand don't be afraid to circulate; set yourself a target of makingthree new contacts at each networking event. Develop your 'elevator pitch': describe what you do and importantlyhow you benefit clients, in a couple of short sentences. Keeping in touch with many contacts is made easier with e-mail - anewsletter, a launch of your new web site or an e-Christmas card forinstance.

Chargeable Rates - The amount you charge a client will largely depend upon the market.Ascertain what the 'market rates' are and price accordingly. If youprice your services too high then you may not secure any work.Alternatively, if you price too low, then you may not secure workbecause you may give the impression of a cheap and not very valuableservice. How much can you charge? This is an age-old challenge for newconsultants.

The five-step plan below gives an indication of how youmight work out your chargeable rate:

1. Calculate annual household and personal expenditure (food, clothes, mortgage, holidays, rent, telephone, tax, pension, insurance etc.)
2. Calculate the income required to cover the above items
3. Add all the annual business costs to the income calculation
4. Divide the total by the number of days you plan to work each year
5. Add on the profit you wish to make (a margin of 15% to 25% is not unreasonable)

This will then enable you to work out your daily chargeable rate. Itis important to bear in mind that you will not be generating income onevery 'working day' of the year. There will be days when you need tobuild your skills, (attend courses, conferences, exhibitions, etc.),days spent on administrative matters, days spent on marketingactivities, days spent putting proposals together, etc. As a broadrule of thumb, I'd recommended using 60% of the available working daysfor fee income work and price your services accordingly.

Legal aspects and other requirements- Aspects that you need to consider are bank accounts, insurance, tax,VAT, national insurance as well as deciding what form the businesswill take - sole trader or limited company. It is best to seekprofessional advice. Write a business plan, set targets and goals and don't forget your owncontinuing professional development.

Summary- A single-person consultancy can be started relatively easily and atvery little cost. Give it some careful thought and planning - theissues outlined provide you with guidance, there is a good deal toconsider and it can be a very satisfying experience.

There are risks and pressures associated with it. You need to have the right skillsand temperament to succeed. It is important to assess your abilitiesand aptitude honestly before proceeding with your ideas. Do your homework, you are taking a chance; if after considering allthe issues, you feel you have a viable proposition go ahead - give it100%. Good Luck!

Useful links <http://www.imc.co.uk>
<http://www.mca.org.uk>
<http://www.top-consultant.com>
<http://www.bni.com>

The Consultant as Equilateralist

The Consultant as Equilateralist
Harvey Bergholz, Jeslen Corporation

A Matter of Orientation
Long term, most independent consultants will subsist at best and starve at worst. The tragedy lies in the ease with which both can be replaced by success. It is a matter of orientation and most independents have the wrong one. They do not see themselves as business people. They might see themselves as consultants, as Human Resource Development professionals, as system integrators, as management theoreticians, as performance technologists; as most anything but business people running a small business, out to earn a profit (no, Martha, it is not a dirty word).
The Three Skill Sets
Three different sets of skills and traits are important to long-term success: those in the technical competence area, those required of a consultant, and those where many are weakest--small business management. The three sets of skills and traits form an equilateral triangle, with the sides consisting of technical competence, consulting competence and business management competence. Were you to take a quiz on all three, chances are your score would be lowest in small business management.
For example: Are you a corporation, a Sub-S, or a partnership? Now that you have answered that, explain why you chose the form that you did. If you finish your fiscal year with $25,000 left in the kitty, how much will the government take? What will you do with the remainder? How will you divide it among the three uses for profits (reinvest in the business, hold as cash reserves, and distribute to the owners as dividends)? Assuming you are incorporated, who pays for your disability insurance -- you or your company? (The answer could mean a substantial difference in the net benefits received.) Quick: how much business must you do in a year to cover all your expenses, including deposits to a pension or profit-sharing plan? And while we are at it, what is the difference between a pension plan and a profit-sharing plan?
The aspiring independent who cannot answer these and perhaps a hundred other questions might not belong in business as an independent consultant.
My observation of consultants who do not make it tells me their orientation is not that of a business person out to build a successful (i.e., profitable) small business. They are not equilateralists. Perhaps they have an isosceles profile: technically strong, with solid consulting skills, but little know-how in the third critical area. In fact, for most, when they lose the option of remaining independent in their professional area, they choose to stay in the field, though not in their own businesses.
At the other extreme is the entrepreneur who considers the type of business secondary. It is being in one's own business that counts. Which would you choose: remain in the field, or remain in your own business even if it meant switching fields?
You have seen the results of the weakness of which I speak: the competent pro who sets up shop and folds in two years; the firm with a "name," five practitioners, a few large contracts, and closed doors six years later; the "jumper" who goes from corporate job to independent consultant to consulting firm and back to a corporate job.
For some, the impetus for setting up shop is the lure of bigger dollars. For others, it is the idyllic notion of blazing new trails. And for still others, it is the freedom bug: "nobody to answer to" is a typical description. As objectives, these are little more than stairways to black holes for the eager-to-be-independent.
"Nobody to answer to." That is silly. People who say that are saying they do not understand what it means to manage a business they also happen to own. As an independent, you answer to more people than if you worked for someone in a company. You answer to the IRS, state and local authorities, the better business bureaus, clients, employees, peers, your accountant, your attorney, the Labor Department, and yourself.
The Right Reasons to Open Your Own Shop
The right reasons to open your own shop are simple: (1) you have identified a need in the marketplace that needs filling; (2) you have the ability to fill that need; and (3) you have an entrepreneurial streak dominating your central nervous system; that is, you possess -- in massive doses -- these qualities: self-discipline, a willingness to take risks, a sense for marketing yourself, a long-term perspective, an ability to respond under pressure, an over-sized ego, and a need to own something. Note that most of these traits have little to do with competence in consulting, or any particular technical competence, and that is the critical point. The traits and talents leading to success in business are quite different from those necessary to succeed on the other two sides of the success triangle. No wonder so few succeed long term. It is tough enough mastering one set of skills or traits, or even two -- but all three? Have we not seen the engineer whose technical competence as an engineer was the chief reason for being moved up to the managerial level? And have we not seen such people fail for lack of the different traits and skills needed by managers? That or we have created programs to help them succeed. There are abundant instances of competent practitioners in many fields who decide to make the quantum leap from corporate life to consulting (or worse yet, go from teaching to consulting), and then geometrically compound the difficulty by starting their own firms.
But there is hope. Given sufficient competence in the technical and the consulting legs of the success triangle, the would-be independent does not have to fail. The most easily mastered leg is the business management leg, and following a few simple precepts will compensate for a lack of many of the entrepreneurial traits mentioned earlier.
As a starting point, I will share some of my own and most ardently held commandments. These relate only to the small business management aspect of our particular business. I could cite other, different commandments were we discussing consulting success, technical success, or even success in other types of small businesses.
Thou Shalt Understand Asset Management
It is money that makes money. A corporation has a lower tax rate than an individual. Earn a profit, give the government a relatively small cut, and then put the profits to work earning more money. "Crafty Consultants, Inc." has built up $40,000 in retained earnings over the past few years. That money earns another $2-3,000 a year just sitting in a money market fund. These earnings, to the corporation, are no different than consulting billings, and Crafty is being conservative. Once the owners feel secure enough, they may consider stocks, real estate, or other opportunities. (For more on Asset Management, see the commandment dealing with overhead.)
Thou Shalt Understand Business
Check your bookcases: loaded with Mager and Knowles, right? Even a few how-to books on consulting you have never really read (probably wise). But how many books on small business management and entrepreneurship? How many on marketing or finance?
The independent should have a firm grasp on what makes corporations -- big and small -- go or not go: how else will she be able to speak the client's language? How else will he make intelligent decisions for his own firm? It is time to go back to school if your eyes glaze over at the mention of RONA (Return on Net Assets).
Some people, perhaps most, see their businesses as a means of practicing their craft. That is a very different perspective from seeing their technical specialty as a marketable commodity that provides the means to be in their own business. Cross over to the small business perspective (you do not have to stay there), and you will realize there is much to learn to be successful long term. Learn what you need to know, and then feel free to cross back over to either of the other two legs of the success triangle.
Thou Shalt Hide in the Closet When Thou Seest Overhead Coming
Overhead is the great seducer. The "lure of the bigger" is tough to resist, but resist you must. Experience a little success, and the average independent will sucker for a bigger office, or a bigger car, or a bigger staff, or a bigger typewriter. Forget it. Live like a monk the first few years, and then move up to Abbott's status later. Remember your asset management program: putting your assets into "bigger" rarely pays off the way people say it will. "I need a high-speed copier -- with enlargement and reduction capabilities -- because of all the copies I make." Well, take it to the near-by copy shop, or persuade your clients it makes more sense for them to make the copies at their place, or work at the small copier yourself until midnight; but do not spend that $5,000 until you can no-doubt afford it, and here is why: it will cost you a lot more than the $3,000 price tag.
Take Crafty Consultants, Inc., with gross billing last year of $100,000. After all expenses, including federal taxes, the company is left with a net profit of $10,000. Not a bad year. That is a net margin of 10%. Crafty is going for the $5,000 for the high-speed copier. Question: How much will Crafty have to bill, or have much did they have to bill, in order to buy it?
The answer is $50,000. The question is not whether the machine is worth $5,000C it probably is. The question is whether it is worth $50,000 of Crafty's billings, which it probably is not. Given Crafty's 10% margin, it takes $50,000 in billings to net out the $5,000 to pay for that high-speed copier. As Adam Smith pointed out in Chapter Five of The Wealth of Nations: "The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it."
And we have not even considered the bunny-rabbit nature of overhead: it multiplies before your very eyes. Crafty, Inc. will have to support that machine, which becomes just one more corporate mouth to feed: backup supplies, perhaps a specially trained operator, rearrangement of physical facilities, and the hidden costs of the time to learn to use the machine and the time taken up playing with it the first few months before it begins gathering dust. Overhead: run and hide.
Thou Shalt Diversify
This commandment is as axiomatic in the stock market as it is in eating, and it should be so in small business consulting as well. You take the $225,000 project with Megabusiness, Inc., and I will take five $40,000 projects from five different clients, and I will be in business long after you have sold off your high-speed copier.
You will cringe at recession headlines, lose sleep over client personnel changes, and eat up months of normally productive time planning and haggling over the work to be done, instead of getting it done. The entrepreneur takes risks, it is true, but putting all your billings into one basket is too risky, regardless of how closely you watch the basket. One other thing: you wanted independence. The surest way to lose it is to hang just one basket on one nail, and then give the hammer to your one client.
Thou Shalt Not Build: For a Long, Long Time
Maybe never. Traditionally, building means adding people, and though it feeds the ego, and might even be productive on isolated projects, long term it is generally a lose-lose for the S.T.C. (do you bill less than a half-million a year? Congratulations: you're a Small Time Consultant). First, the overhead. What will it cost you to put someone on staff at $35,000 a year? It will not cost $35,000; it will not cost $40,000; you might get away with $50,000 if you do a good Silas Marner impression. There are benefits, and then the bunny-rabbit overhead. Consider also all the hidden time of working with, training, supervising, lunching, discussing, explaining, and on and on.
And echoes of Robert Townsend: how much of what "made you great" will you stop doing? You are likely to do less of the work yourself, at least for a time, and is it not precisely for your own brand of work that clients are throwing money at you?
How do you find good people? More important, how do you hold on to them? If the person is as good as you think, why does she need you? If he is not so good, why do you want him? If they are not so good, but you see yourself as Professor Higgins and figure you can mentor or train them, are you able (i.e., time and money) to support that effort? And once they are performing well, how will you keep 'em in front of their PCs once they have seen the billings and the board rooms?
In short, you are running big risks when you add people: deteriorating quality of output; unaffordable commitments of time and capital; and potentially, developing your own future competitors. If you need or want additional people, wait until you can truly afford them (asset management), or work toward establishing contacts within the field a network of sorts. You can subcontract some work out, or hook up with others for larger projects, and you will avoid the risks that go with building your own staff in the early years.
After a time, when you have built up your assets, you might want to test out the old theorem that the real profits are made by the people who work for you. It works in law firms, it works in accounting firms, and it even works in large consulting firms. I wish you luck.
Thou Shalt Know Thy Limits
Bite off more than you can chew and even Dr. Heimlich will not be able to save you. Know when to call for help. Just as that applies to the technical and consulting sides of the business, so too does it apply to the business management side.
Work with your accountant, your attorney, your insurance agent. Talk with your "network" friends about how they are handling situations, and use their good and bad experiences to help create good ones for yourself. My advice on outside services is to challenge them. Do not believe that because "Georgia is a CPA," Georgia knows what is right every time. She cannot; no one can. You are, after all, likely to be a relatively small fish in your accountant's pond, and to avoid being fried, you will need to learn. You need not go nights for an accounting degree; just learn enough so you can bait your own hook occasionally to let Georgia know you are sufficiently knowledgeable and skeptical so that she will need to rise to your occasion.
Thou Shalt Ask Thyself Once Each Day...
"What do I have to do to make this business more profitable long term?" That is the most important question. Not, "How do I make the business grow?" Nor "What must I do to be more effective technically?" It is through answering the first question that you get to the others. It is the first question that should drive your decisions (e.g., "Long term, I'm going to need greater technical breadth to get into the hardware side of the business, which is in demand and growing. For the long-term success of the company, I'd better begin picking up that know-how.")
I have a friend who owns a small camera store in a small suburb. Along with all the accessories, film, and low-to-high-priced cameras, he also carries a camera line whose prices begin in the stratosphere. In the past five years he has sold but two of them. In other words, they contribute little profit (actually none, given the inventory-holding time, interest charges, shelf space taken up, etc.). I asked him why he bothered. He answered:
"Personally I love the camera. I enjoy just showing it to people, including the ones who'd never go for it. It's unprofitable for me, and that's why I didn't take it in for my first six years in business here. Now that I'm solvent, have a steady trade, make a consistent profit I can live with, I can afford to indulge myself a bit in what I carry. It doesn't help my bottom line, but it helps me emotionally."
You want to work on projects that are interesting but unprofitable? Fine. But wait until you can afford those luxuries. It is not necessarily the doing of unprofitable things that leads to failure, it is the doing of them at the wrong time.
Thou Shalt Be Liquid
The independent without at least four months' worth of expenses in very liquid assets is a Chapter 11 waiting to be written. Especially in such uncertain economic times as now, the independent must have solid financial backup, and four months of expenses is a minimum. Peter Drucker says it clearly in his book, Managing in Turbulent Times: "In turbulent times, liquidity is more important than earnings. A business can survive long periods of low earnings or low revenues if it has adequate cash flow and financial strength."
A Cadillac, a plush office, a high-speed copier, and five people on staff do not represent financial strength, cash flow, or a highly liquid position. The issue for small service businesses, is not merely one of being able to pay the bills during the lulls -- the emotional well-being of the owner, in my own experience, is more critical to the business' long-term survival. For most independents, paying the bills is manageable during a lull: you borrow a little here, you dump some personal money into the business there, you sell the Caddy, and you fire four people (I know, firing people is not quite as painless as it sounds). The real problem is the owner's emotional reaction. How would you react to managing a "distress sale" of your prized possessions? How poised, confident, and self-assured would you appear when a potential client does call? Would you be ready to capitalize on the opportunity, or would you come across as Don Knotts?
The legs of the success triangle are very much interdependent. Your company's financial strength will provide the security needed to help you function effectively in the consulting role; and a comfortable cash flow will enable you to work on the technical side without the distraction of creditor phone calls.
For me there is another issue as well: control. On the technical and consulting legs, we usually share control over decisions. On the business management leg, I have the greatest freedom to make the decisions affecting my own future, and that is the reason I went into my own business in the first place.

About the Author
Harvey Bergholz is president of Jeslen Corporation, a consulting company he has headed for 25 years. His for profit clients range from small ($100 million) companies to multi-billion dollar global giants. His nonprofit clients include large health care, religious, and educational institutions. His practice centers on providing senior executives with counsel and assistance in shaping and implementing large-scale, high-impact initiatives. Harvey also numbers among his clients some of the world’s largest consulting firms.

Do More Than Fix My Company

Do More Than Fix My Company
Harvey Bergholz, Jeslen Corporation

A lightly edited version of this article appeared in the November 1999 issue of the Journal of Management Consulting.

Introduction
Some nerve . . . clients who expect more from consultants than that we fix their companies. They pay a fee, and expenses. That entitles them to a set of outcomes. These outcomes are usually tangible and often measurable. That should be enough, yes? . . . but . . . no . . . they want more.

Through my thirty years of management consulting, every client has had expectations on three levels. Collectively, these expectations typically sum to a whole lot more than delivering the deliverables.

I believe that client expectations exist in these three categories:
Technical Competence
Professional Contribution
Personal Style

Perhaps you’ve already learned that clients expect more than what the fee has been paid to deliver. If so, you’ve made those expectations a natural part of your work mode, your client management strategies, and your firm’s economics. Failure to do so will place you far behind the "full-value consultants" who do.

In the unconscious bargain with clients, you want to be the consultant who delivers on all three levels, Technical, Professional, and Personal. When you do, you’ll achieve a rare positioning: the consultant who "gets it done"; the consultant clients want to spend time with, and from whom they want their people to learn.

The full-value consultant generates sustainable competitive advantages and far higher retention and referral rates. This is a natural by-product of achieving that rare positioning. It results from meeting or exceeding the unexpressed client expectations in Technical Competence, Professional Contribution, and Personal Style.

In this article we explore typical client expectations and a few suggestions for exceeding them. I believe several common denominators exist, the first of which is this: clients have expectations in all three categories because that is their natural risk-management strategy. Most often, this risk-management strategy is unconscious, but it is there.
What risk?
The consultant’s shortcomings in any of the three areas puts the hiring executive, or direct client, in jeopardy.

Your direct client has (a) spent money; (b) endorsed a performer unknown to others (you); (c) committed to delivering an end result by a deadline; and (d) dropped an interloper into the corporate cultural mix (you again). Together, these four elements create anxiety – in the direct client and in the people watching him/her, and in those who will be affected by the consultant.

Anxiety, in turn, triggers self-protective behaviors by the client’s peers, subordinates, and superiors. If you’ve consulted even a year, you’ve experienced these behaviors. They can be harmful to you and your efforts; they can be deadly to your client – and the client knows it.

These behaviors (lack of cooperation, information hiding, delays, unavailability, expressed cynicism about the engagement or the consultant) may be harmful to the client’s career health.
Ergo . . . your direct client is at risk when inviting in a consultant. Ironically, the risks do not diminish solely by the consultant’s performance in the Technical Competence arena. In fact, sound performance there is easily undercut by failure to meet expectations in the other two areas: Professional Contribution and Personal Style. Effective consultants manage the three areas consciously and smoothly, and reap dividends as a result.

Technical Competence
The simplest of the three value categories, Technical Competence means delivering what we promised in return for the fee. The dry cleaner takes your $2.00 and promises to deliver a clean, pressed shirt by a certain date. Simple. Integrate two newly merged departments; facilitate a strategic planning retreat; design an incentive plan; execute a search; develop a training workshop. This basic quid pro quo doesn’t require much discussion. This is the business – on the surface. This is what is visible and measurable. This is what the client pays for, right? Well, not quite.

For many consultants, life is grand when the engagement is that straightforward: "Give me the deliverables on time and I give you money and you leave town." Alas, the other two dimensions are usually present, though under the surface.

Professional Contribution
As consultants, we bring a wide range of professional skills and experiences that reach far beyond technical task accomplishment. Clients expect us to contribute these skills unselfishly, proactively, and at no added cost as we execute the engagement.

This is a reasonable expectation. We all have such expectations around the "professional behavior" of service workers. When you bring the car in for repair, you expect the Technical Competence to do the repairs; but you also likely expect the service people to return the car clean, on time, and at the promised price. You may expect them to teach you something in the process too, or you may expect some priority treatment if you’re a regular, long-time customer.
Expectations of "Professional Contributions," layered on top of Technical Competence, are natural in every field. Do we understand what they are in the typical consulting engagement?

Below are the expectations for Professional Contributions I’ve encountered most often. When I place myself inside the client’s mind – to empathize – these are things they want to say:
"with me personally"
Coach me: help me succeed internally. I know you have knowledge I don’t have. I may not want to ask for it directly, but you can find ways to give it to me without slicing and dicing my self-esteem. Your feedback could be helpful; I’m counting on you to find effective ways to give it to me, yet still preserve the working relationship we’re supposed to have (i.e., I employ you; not the reverse).

Whack that guy over there for me, would you? You’re my hired gun, right? That guy gives me nothing but trouble. During the course of this engagement, I’m counting on you to put him through a vegematic. I’m clean, but he gets pureed, thanks to you.

When we hit Main Street in Dodge City, I expect you to be my Bat Masterson: back my play regardless of what it is. After all, your first loyalty is to me, isn't it? Without me you wouldn’t have this engagement. So let’s not get into those war rooms and have you assessing the odds and the politics and then trying to choose a winning side. You’re with me all the way, eh? [By the way, we should never have to back a bad play on Main Street. If we’re sufficiently savvy, we’re able to prepare, rehearse, or stop the client before he "hurts himself."]

Build me up: to peers, to subordinates, to superiors in particular. I don’t want to hear later that you were grabbing all the credit, or spewing negatives about my dearth of contributions and low value to this project. Just the reverse, please. Be proactive, without seeming artificial, about vocalizing my praises to others. You don’t have to invent something. I have good qualities. Share some limelight. I was smart enough to hire you, after all.
"with my team"
Transfer some of your competencies please. Pull back the Wizard of Oz curtain once in a while. Don’t make us forever dependent upon you. Execute with my team members and, in the process, raise their knowledge and skill levels. [Long-term, it will help your relationship with me, though it might cost you a project here and there when we get cocky. You know we’re not likely to do it well, and we’ll call for the cavalry – you – but that’s a more likely call if you’ve shared unselfishly in trying to build our team’s capabilities. ] Give a person a fish, she eats for a day; teach her to fish, and she eats for a lifetime." Teach us to fish.

[A client pursuing a growth-by-acquisitions strategy wanted help. We conducted as much of our work as we could on-site, with their people, to make our processes and thinking visible – to pull back the curtain. As the series of small acquisitions developed, they took on more of the direct process step responsibilities. Did it cost us some days with each succeeding one? Yes, but a dozen years later, they remain a steady client, with engagements in multiple areas, without us having to solicit more business. And in every acquisition event, we’re still at the table]
And while you’re at this competency-transfer stuff, get my people to feel good about what they’re learning. Don’t talk down to them; no patronizing; no trying to "pull rank" because you work directly with me. They should see you as a valuable, but easy-to-go-to source of learning. Can you do that?

Help build the team; don’t tear it down. There’s enough conflict inside this organization already: don’t be the source of more by creating frictions I’ll have to grease after you’re gone. Try to be the means of bringing people together around goals, challenges, and tasks; don’t use those things to divide us up into warring factions so that you’re the rallying point. No "divide-to-conquer" here please. Yes, when we’re cohesive it means the consultant’s seat is a bit hotter, with the accountability a bit higher. But sooner, rather than later, if you’re creating divisions among us, we’ll recognize that you are and we won’t appreciate it.

"with the organization"
Identify positive opportunities that have thus far gone unnoticed. Regardless of what you’re actually assigned to, you are a trained professional, a skilled observer. This means to me that you will see things we haven’t. You’re supposed to bring a broad view, with wide experience. You’re in and out of dozens of companies, perhaps even crossing dozens of industries. Will you point out the opportunities even if there’s no follow-on engagement in it for you? You will see opportunities for sales growth, or process improvements, or people/role fits, or productivity gains, or new technology applications, or . . . or . . . or. Will you point them out readily? Will you bring to your role the professionalism to help us succeed in ways that may be beyond your charter? This is real value added.

Help us stay current, and let us in on "secret stuff." You’re all over the industry landscape. You find out things. Share them with us. No, nothing unethical or illegal – though if you slipped about something now and then, we won’t tell; but more importantly, help us check that we’re up-to-date with what’s going on in the external environment.

If these are some of the common expectations and desires clients have around Professional Contributions, then the question is How? How to deliver on these.
Here are a few ideas to consider . . .
Offer to conduct an "anatomy of" session. Do this at the end of an engagement, or at major milestones within an engagement. The intent: to look back at what has been accomplished, how, and with what resources, to learn – about process, roles, outcomes, etc.
Answer the question, "What should we do differently going forward (or in the next engagement)?" This is about positioning yourself as a coach, a guide, someone to look to with trust. You will also learn something in the process: how have you been perceived, and how to be more effective with this group next time.
When I lead these learning sessions, I do it at no additional cost; it is part of the project, and, of course, it’s optional (no fee reduction if the client chooses not to do it). Some clients – in fact most – don’t want to do it, but the offer makes an impact. This one powerful tool can address many of the expectations described above: being a coach, helping the client team learn, sharing your own knowledge, and transferring competencies.

Schedule regular de-briefs with the client and put some of these "hidden expectations" on the table. Make them visible. Ask the client outright, "How is your team responding through this project? Anything I can do to help foster their learning, or a more positive climate?" Or try, "Could we spend a few minutes on our relationship . . . are you getting from me what you wanted and expected – beyond task accomplishment – say in terms of support, feedback, knowledge sharing, and so on?" You may get nothing at first – maybe even a blank stare, but you will have opened the door, and I guarantee you will have stepped a notch above the norm.
The add-on value services described above come "free," or should. You won’t find them listed in the engagement letter or a contract. They are generally unstated, embedded in the client’s expectations, which makes them even more powerful. Your ability to deliver these – effortlessly, seamlessly, transparently – yet still ensure the client knows you’ve done them is one valid test of a professional consultant.

Personal Style
Most clients are pragmatic: their consultant selection process rests primarily upon the Technical Competence question. Clients have too much at risk to do anything else. Now, if a relationship already exists from earlier engagements, then Professional Contribution comes into play as well. It becomes the next branch in the decision tree. However, these things being equal, Personal Style will carry the day.

I believe Personal Style becomes the equal of Technical Competence and Professional Contributions once the engagement is underway. This is because the client comes to see Technical and Professional contributions as natural and expected. This is akin to Herzberg’s "Hygiene Factors," like compensation or supervision, in his study of what motivates high performers. If these work just right, all they do is help maintain average performance. They’re neutral. People expect reasonable pay and quality supervision. Providing them is not, then, a source of true motivation; but failure to provide them is certainly de-motivating. The real bang comes from the true motivating factors, like achievement, recognition, and the nature of the work itself.

Similarly, clients expect to see Technical Competence and Professional Contributions. Meeting those expectations may satisfy the clients "hygiene needs," but they are not sufficiently motivating to sustain long-term relationships. The differential versus other consultants may well rest in the Personal Style arena.

Again, clients hold a set of expectations in this arena. Usually unspoken, these expectations work like a report card. The client fills out the little sections mentally with each interaction; only you don’t get to see it. The secret entries contribute mightily to the potential for follow-on work. Where clients will discuss with you issues related to the Technical and Professional arenas, here they do not. Personal Style embodies too much that is, well, personal. So as with that blind date that went sour, you’ll find after the first engagement a series of ignored phone calls, or a few too many "No, we’re going a different direction this time" comments. How many sour dates have you told directly, "I’m afraid the personal chemistry just doesn’t work"?

What can you do? Well, beyond understanding the typical client expectations in this arena, perhaps not much. We can all make some adjustments, but Personal Style has far more to do with embedded personality and far less to do with learned behaviors. Popeye put it well when he said to Olive, "I am what I am, and dat’s what I am!"

But before we just give up on this issue, let’s try to understand the most common expectations and desires our clients hold:
Will you let me lay on your couch, vent, release, maybe even get some absolution or advice? It’s just for a few minutes now and then, and I certainly don’t want a bill for it. Just show me you know how to listen, how to empathize, and that you can actually provide some counsel now and then that has value. Are you the type of person who can do that? Without getting judgmental? Without making me feel small?

Can you fit in appropriately? Can you speak to us in our language and relate to my people? Will you try to look the part, at the right level: don’t make me apologize for a $16 bargain dress shirt, or at the other extreme, for your $2,000 suit.

Read the environment. Read the people. Know how to position yourself. Make people feel comfortable at the personal level. We have enough natural tension around here as it is. Bring a personal style that reduces it, not intensifies it. I’ve brought you into "my house." Find a way for my "family members" – at least most of them – to feel comfortable around you.

Be enjoyable to spend time with. We’re going to be in "planes, trains, and automobiles" together. Don’t force me to lie to you about "all those voice and e-mails I have to return tonight in the hotel room so I won’t be able to meet you for dinner." I’d rather look forward to sitting across from you for dinner. Be engaging. Make the time together enjoyable, not just productive. Do you have any good stories? Can you make me laugh? Can I learn something from you?
Can I trust you? Your occupational colleagues rank near the bottom in terms of "selfless devotion to client’s interest first" (see Insurance and Auto Salespeople for worst-case examples). Be the exception. Be the person with personal ethics, integrity, a respectable value system. Though I might not want to myself, I’d like to know you’re someone we could engage as a real business partner. Or are you just here to generate more partner income for your firm?
Simple, huh? These are the common line items on the report card under the Personal Style heading. How much of who we really are can we change? Probably not a lot; but we can be aware that these things really do matter to the clients at the personal level. They aren’t the deciding factors at the front end of the selection process; but they fast become future knock-out factors once the engagement is underway.

Technical Competence, Professional Contribution, and Personal Style: none of the three alone is sufficient for building a sustainable, independent consulting practice. But mastering all three will yield significant competitive advantages. The large firms try to stock their work teams with elements of each; but we independents have to bring it all.

About the Author
Harvey Bergholz is president of Jeslen Corporation, a consulting company he has headed for 25 years. His for profit clients range from small ($100 million) companies to multi-billion dollar global giants. His nonprofit clients include large health care, religious, and educational institutions. His practice centers on providing senior executives with counsel and assistance in shaping and implementing large-scale, high-impact initiatives. Harvey also numbers among his clients some of the world’s largest consulting firms.

Not for Profit Consulting

Not for Profit Consulting
Harvey Bergholz, Jeslen Corporation

This article appeared in the May 1999 issue of The Journal of Management Consulting

No, the title is not an oxymoron: consulting to Not-For-Profit’s (NFP’s) can be profitable, both psychically and financially. However, the crossover, from For-Profit’s (FP’s) to NFP’s and back again, requires a resilience few consultants possess. This might account for the specialization that is common. Some consultants fish only one stream and that is probably more sensible. I prefer to vary the adventure. Trout one day, bass the next, and shark the day after. I have observed several critical differences between the NFP’s and the FP’s that can make or break a consulting engagement. This article identifies these differences and approaches to managing them; but we begin with a few similarities.

Note: It will be helpful in reading this article to keep in mind that the author works primarily with very large and very visible not-for-profits. Some of his comments, then, will not be a good fit with the thousands of very small not-for-profits.

Similarities
The similarities between Not-For-Profit’s and For-Profit’s are few but worth noting. First, the consulting roles don’t change very much. We are called upon to facilitate, to problem-solve, to manage projects, to advise and counsel, to teach, to research, and so on. The many different hats a consultant might wear in the FP arena fit just as well in the NFP arena. It’s in the execution of the role and the selection of processes and methodologies that the differences are important – as we’ll explain later. Essentially, then, a consultant might perform all the same functions for NFP’s as for FP’s – but how those functions are performed will likely be different.

The second similarity is simple: both types of organizations are trying to accomplish goals through an organized approach to grouping people and performing tasks. In the end, the consultant confronts a similar mix of variables – maybe a classic 80/20 Pareto match – that includes (a) people working together (b) across different functions (c) in some organized fashion (d) through a set of processes (e) to accomplish goals. But these five, which might be the 80% match with the For-Profit’s environment, are not sufficient for the consultant to succeed. It’s the other 20% we need to understand and adapt to.

The Differences
My focus in this article is on the differences between NFP’s and FP’s that directly affect the consultant. Though we might be able to list a dozen important differences between the two arenas, I am interested here in just three issues I believe a consultant must take into account in executing an engagement. These three are 1) Governance, 2) Passion, and 3) Money.
After a brief description of each difference, I’ll suggest approaches to managing engagements with Not-For-Profit organizations.

Governance
Board level influence in the NFP is far greater than in the FP. Board members typically drive decisions and behaviors at far deeper levels in the Not-For-Profit’s. There are several reasons for this:
Trustees are usually not hand-picked by or personally loyal to the CEO. I find board members in NFP’s highly independent. They tend to be driven by their own passion for the organization’s mission and their own personal view of "what’s right" – and far less by a feeling of needing to support the executive team.

Board trustees have real, tangible clout. Many are independently wealthy and can directly affect the fundraising efforts of the organization. Some are large contributors themselves; others provide access and influence to large contributors. These members, then, directly affect the financial health of the NFP organization – and all its employees know this.

Organizational sensitivity to the board. Employees at all levels understand that real power resides at the board level (in contrast to most For-Profit organizations). In some cases, it’s the wealth factor; in others, it’s because the board member comes from the For-Profit world and is, therefore, anointed with some magical knowledge-dust about the right way to do things. "He’s from the real world; they know this stuff cold," one department manager said to me when I asked why he was so concerned about what a particular board member would think of his project plan.

Board orientation toward the organization’s leadership is parental. Many board members, notably those from the FP world, see the NFP world as the "minor leagues; they’re playing the ‘home version’ of our real game, and so they need a lot more operational and strategic guidance than corporations do," as one trustee described it to me. Another explained, "if you leave them to their own devices, they lack discipline. They’ll overspend on too many low-value projects. They just don’t have the profit-driver as a controlling force, so we have to be the force."

Regarding a board, the dilemma for a Not-For-Profit is this: they want members who are objective, knowledgeable, and don’t have narrow personal interests; but they also need people who are passionate advocates for the organization’s mission and goals and who, out of a narrow personal interest, are willing to invest their time and efforts. This is a conundrum not faced by the For-Profit’s, who do not invite board members based upon their passion for the organization’s mission and goals.

In my engagements with NFP’s, I regularly see a slowness in forward movement, if not outright paralysis due to the board. This comes in the form of multiple revisits and debates over many months as individual board members cling to their personal interests and passions. Most, after all, have joined the board out of some deeply held personal commitment to the mission and goals of this hospital, university, community group, or church. They do not surrender those personal beliefs easily. Again, we’ll discuss implications for consulting in a summary section at the end.

Passion
The passion we find among board members goes double for the institution’s employees. The level of dedication, passion, and commitment across the employee base leads to decisions that we who reside mostly in the For-Profit world must take time to understand. Programs are run and projects are undertaken that offer no financial return. Some performers might be a poor fit with the job requirements but have the passion for "the cause" and so are kept in place. Why? "This is the right thing to do: it fits our mission" is a response you can expect.

In the best of Not-For-Profit’s we find a passion for "the cause" that surpasses a commitment to a discipline (i.e. Information Systems, Finance, Marketing), to a process, or to financial goals. This is their greatest strength and their greatest weakness. To business people, many things inside a NFP organization are simply not logical. However, we cannot consult effectively if we are intent on altering this dynamic. Instead, we will need methodologies for succeeding within it.

Money
"The rich are different from you and me." The quote is quite right when applied to the FP corporations compared to the NFP’s. For-profit corporations pay great attention these days to cost structure and spending patterns; but, in this area, they are the amateurs.
The influence of cost in the decision-making process is far greater in the NFP world. When a For-Profit sees a high-value payoff down the road, it will take on debt, sell stock, or move large sums of money and other resources from one division to another with ease. The NFP does not consider financial "payoff, or return" as the driver – and so the cost itself stands nearly alone as the major driver for a "go/no-go" decision.

This is not surprising. NFP funds typically have been hard-won and, consequently, they are well guarded. Anyone who wants to pry loose some of that treasure must present truly compelling evidence of hardship, or significant enhancement to the execution of the mission.
In the day-to-day operating environment, stoicism and a poor-man’s-martyrdom are the personae of choice. People wear as a badge of courage their ability to perform without the appropriate resources. The consultant might be expected to do the same. Manual processes, PC’s dating back to 1992, and three people doing the work of five – these are not unusual circumstances.

One NFP client said, "We suggest you fly in and out of Milwaukee and then drive to Chicago, rather than flying directly into Chicago. Our people do this all the time and it saves us a lot of money." Typically NFP clients will pay closer attention to the consultant’s time and expenses. It fits with the culture.

There is a paradox here: the "big project." Those same frugal NFP’s who won’t invest in process development, systems, and manpower will let loose of millions of dollars at a clip for the "big project." The grand event, which "directly supports our mission," will go forward with relative ease. It might be an arts center, a new specialty wing of the hospital, or a field house for the university. Whatever form it takes, you can be sure it has strong support among a few high-influence, high net-worth board members. Operational issues generally don’t – they’re not "sexy," nor are they visibly mission-connected.

Is this different from the For-Profit corporations? I think so. Being so profit oriented, the FP’s recognize the short and long-term value of operational efficiencies. Lean processes, appropriate head counts, and first-rate systems generate greater long-term profits and sustainable competitive advantages. Conversely, the big, sexy event (new buildings, acquisitions, new product line launches, etc.) presents a higher risk/reward ratio, and so is approached with great caution and skepticism.

Implications and Approaches
As you’ve been reading, you might have already identified these implications for the management consultant assisting Not-For-Profits:

1. Whatever you plan to do, plan on it taking 30-50% longer than it would in a FP environment. Generally, you’ll need to get greater advance buy-in and consensus than you might be used to. This simply takes legwork, one-to-one conferences, and recycling efforts.
The decision-making process is slower. Even with advance work done, getting decisions made will take longer. This is most often because of the greater involvement of the board, either in total, or selective members who seem to be particularly visible around the decision process.

2. Whichever methodology you might choose for an engagement, ensure it allows for the influence of history, emotions, and relationship-maintenance "dances." These might be time consuming and distracting from your critical path, but they are essential to the engagement’s success.

Relationships are important in any organization, but nowhere more so than in the NFP. People seem to have stronger bonds due to the passion-for-mission dynamic. The consultant, in his/her zeal to move along the critical path to "the solution," must take care to help preserve the positive relationships, if not enhance them, as a byproduct of the engagement. At a minimum, as with the physician, the consultant should "do no harm."

It might be just a coincidence, but most of the NFP’s with which I’ve worked have very long, storied histories. In NFP project planning and project management, it’s important to understand this history of relationships and events. We need to know which closets hold skeletons and which cows are sacred. This means additional up-front time for interviews and study but it pays off big when you’re able to side-step land mines later on.

3. Do your homework. Yes, good consultants always do their homework; but in the NFP arena one element of preparation is often unnecessary in the FP world: persuasive arguments for use with people of passion. A reliance on logic and numbers will often be inadequate to make your case. Invest time to truly understand the mission, the goals, the passions, the history, and the relationships. Use this knowledge to shape your persuasive arguments.

4. Embrace frustration. Okay, learn to live with it. If most of your time is spent in the FP world, the NFP world will present higher frustration levels. In some engagements it’s the heat of the passions, in others it’s the slowness of action, and in others it’s ill-formed processes and systems that make it difficult to get things done. These do not prevent a consultant from succeeding; but they do extend the time and heighten the frustration of the journey.
Conclusion

By far (i.e. 80/20), Not-For-Profit organizations are like their For-Profit counterparts: an organized group of people managing their available resources in the pursuit of identifiable goals. For a consultant called upon to help in that pursuit, there are a few noteworthy differences in the NFP world that will affect what you do and how you do it. In my experience, the role of the board and its members is paramount. This tends to be the single greatest influence on the shape and execution of consulting engagement processes.

The second is the level of passion, or emotion, that participants bring to the problem solving and decision-making processes. Your logic, quantitative analyses, and color charts should not be your first line of defense or offense. Instead, know the history, the people, and the emotional triggers, and use those to drive progress.

The third differentiator is the orientation toward—and the role of—money. In many large corporations, project cost might rank toward the bottom of the top five in influencing decisions; those five being marketplace positioning, growth imperatives, Wall Street’s reaction, personal agendas, and competitive activities. All these might have greater import than "project cost" in a for-profit, but in NFP’s cost is usually #1 or 2 in the decision criteria hierarchy.

Finally, there is a decided psychological dynamic I’ve found in working with Not-For-Profit’s: you are clearly an interloper, an outsider who is there to get something done and get out of their midst before you "taint the culture or warp the processes" with too much pragmatism, capitalism, and cynicism. This might sound harsh, but I believe it.

It’s not unusual for consultants to form long-lasting relationships with FP corporations; it’s less common in the NFP arena. Why? The outside consultant simply doesn’t have the emotional intensity for "the cause," and the client knows it. The consultant might be seen as "passion-less." In the corporate world, this rarely matters because the majority of employees inside the corporation have no such intensity either. In the NFP environment, this matters – as it should – but it does make the psychology of helping a bit more complex.

For me, I focus on getting the task accomplished within the framework of the NFP’s culture, style, and processes, and on drawing out my own high-value feelings of having contributed to the worthy mission. I also plan to move on. Though I am open to follow-on engagements, I do not aggressively pursue an ongoing relationship the way I ordinarily would with an enjoyable For-Profit corporation. The best NFP’s I’ve encountered succeed with minimal outside interference to their well-developed ecosystems and, consciously or unconsciously, they know this too.

About the Author
Harvey Bergholz is president of Jeslen Corporation, a consulting company he has headed for 25 years. His for profit clients range from small ($100 million) companies to multi-billion dollar global giants. His nonprofit clients include large health care, religious, and educational institutions. His practice centers on providing senior executives with counsel and assistance in shaping and implementing large-scale, high-impact initiatives. Harvey also numbers among his clients some of the world’s largest consulting firms.

Source: http://home.att.net/~nickols/NFPConsulting.htm

Credo From Nickols for Knowledge Worker

Credo From Nickols for Knowledge Worker

I copy this from Fred Nickol's site. It's good advise for me and you..take a look!

Back in the 1980s, when I first began trying to interest my clients in the shift to knowledge work and some of its implications for managers and the practice of management, I put together a short presentation that included my personal credo as a knowledge worker. I have been meaning for some time now to add it to the knowledge management section of my web site. After digging it out and looking it over, I can see why some clients were less than thrilled to read it. On the other hand, it is still true. So, here it is.

I seek out and I set direction.
I resist supervision; I welcome support.
I work at my own pace within the constraints posed by the situation.
I put my name on what I do -- and the names of those who contribute in any way to any endeavor for which I am accountable.
I promote, praise, recognize and reward accomplishment and service.
I contribute more than I consume.
I seek control over myself and influence over events about me.
I care about my work -- it is a reflection of me.

A lot has transpired since I first drafted the credo above. That said, I would not retract a word of it. However, I would add to it.

To wit:
I care about the enterprise of which I am a part and I will do my best to protect it against all threats -- whether they are external or internal.
I care about the people with whom I work; they are not just co-workers or colleagues -- they are also friends, allies and comrades.
I refuse to simply "obey orders" and "go along with the program."
I will hold my superiors as accountable for their actions as they hold me accountable for mine.
I will not turn a "blind eye" or a "deaf ear" to wrongdoing at any level of any organization of which I am a part.
I will do my best to share what I know with those who are interested in learning from me and I will do my best to learn from those who are skilled, knowledgeable or competent in areas I am not.
I will at all times strive to advance and improve the knowledge base that undergirds my skills, abilities and accomplishments.
I will happily entertain additions to this credo from other knowledge workers.

Building Your Business through Referrals

Building Your Business through Referrals
Harvey Bergholz, Jeslen Corporation

For the Independent Consultant, or small group, the magic growth elixir is the referral. You grow through solicitation, I’ll grow through referrals, and I’ll be on the golf course a’fore ya’.

The referral is the most valuable of all business generators for four distinct reasons:
1. The act of referring you to others is validation of your value
2. At the point you walk in to meet the potential client, the relationship is half-formed and the engagement is half-sold
3. Referrals are your highest ROI marketing strategy: there is no cost attached to this type of marketing
4. Referrals generate the highest-quality clients and engagements

In twenty-three years as an Independent, through more than seventy clients and four hundred engagements, we have never done any marketing or solicitation. One hundred percent of the business has come from three sources: (1) Referrals, (2) Repeat business, and (3) Client personnel moving to other companies and calling upon you again (repeat after me: "turnover in high places is your friend").

In this article, I'll focus on referrals as a means to build a long-term business with high profitability and predictability. We’ll look at the four facts above and specific techniques to generate referrals.

Validation of Value
Confidence is paramount in this business, where you are terminated with every engagement. This is especially true for people newer to the consulting arena. Insecurity runs high, and clients can smell insecurity from the reception area where you’re biting your cuticles in anticipation of the encounter.

You need confidence, and few things will build that confidence faster or higher than hearing, "I gave your name to Sandy Mohr at Exetrix. We were talking, and Sandy has some similar issues. I described how you’ve really helped us, and Sandy will probably call you next week. No guarantees, but . . .."

Referrals, then, are high value because of the impact they can have on your psyche. The confidence-building factor alone makes them worthwhile. Self-confidence improves performance, which, in turn, generates more referrals. Start this cycle as soon as you can.

The Sale is Half-Sold
Have you referred someone to a professional -- a dentist, a carpenter, a doctor, an electrician? You didn’t stop with a name and phone number, did you? You "sold" the referral to your friend. It’s natural. We want our friends to know our own decision to employ the professional was a good one, and they, too, should have confidence in him/her.

Your client will do the same for you – it’s natural. At the point you meet the new client, that person has been pre-sold. They are predisposed to want you due to the abbreviated public relations campaign waged by the referring client. In sports, this situation would be described as, "it’s yours to lose." In other words, simply play your game, play within yourself, and the new client will be yours.

High ROI Marketing
Simple: referrals don’t cost money. Business generated through referrals is therefore your highest ROI business in terms of a Return on Marketing Investments. Beyond all the other good reasons to build referral-generating skills is this one: it’s a financially superior business strategy.

High Quality Clients and Engagements
Reverse roles for a moment: when have you sought a referral? The circumstances were probably serious rather than trivial. We don’t seek referrals for hangnails; we seek them for surgery. We don’t seek them to change a fuse; we seek them to re-wire the house.

Similarly in business.
The nature of engagements that come to you through referrals is likely to be high-value, serious, and high-margin. In my own work, clients seek referrals when they’re facing downsizing, strategic crossroads, acquisition integration, divestiture planning, etc.; they’re less likely to seek referrals to assist in reorganizing one internal division, or to cut a group of ten people, or to set the tactics in support of an existing strategic plan.

The result: the most interesting, rewarding engagements are the ones that come from referrals. The same is true for the clients themselves. High-quality managements recognize the value of a good referral, as opposed to checking the Yellow Pages, or picking a consultant based upon a speaking engagement or even a fad bestseller book.

They ask people whose opinions they trust. The result: the most interesting, rewarding clients are the ones that come from referrals.
"Great," you say, "so how do I get these referrals going?" Whoa, cowboy . . . a few basic building blocks first.

What’s Your Marketing Message?

You must have one. What will you suggest clients answer to potential referrals when they ask your clients, "and what particular strengths does this consultant bring to the table?"
If you hope to generate referrals, be clear about the roles in the "sales cycle" at work here: you must "train" or "equip" your clients to deliver the "marketing message" for you. The clients are your agents or "reps." The first contact with a potential client on your behalf is not in your hands, but you can shape the event.

You need a message. That message needn’t be lengthy or complex. Your intent is to be referred with enough interest that a potential client invites you in for an exploratory interview, or even better, to discuss a specific engagement in the offing.
What is a focused marketing message? What does one sound like?
"Chris is an unusual consultant in that he was right out front through the implementation stage of the project."
"Pat’s talent is the combination of her objectivity and her insight. She flat out sees things others don’t – the subtleties among strategic choices, for example – that we would have missed."
"Kim brought a wealth of cross-industry experience that was really enlightening. None of us had much experience outside our own industry."
"Jan is a pragmatic problem solver. When others are stumbling, Jan just drives the project forward to a positive conclusion. Jan doesn’t miss deadlines or budgets."
Which are you? Or are you one of a dozen others we could describe? Do you know? If you don’t, your clients probably don’t either. That makes their "task" tougher in responding to their friends who ask, "and what’s this consultant’s claim to fame?"

In our sample referral comments above, these would be the focused marketing messages:
Chris is an implementer, carrying things through to completion
Pat: objectivity and insightfulness
Kim: cross-industry experiences
Jan: problem solving and project management

In marketing terms, these messages are "positioning" messages. In each case, the message positions the consultant in a distinctive way – differentiated from "other consultants you may have tried."

Note that none of these examples cites a particular technical discipline (e.g. Systems Implementation; Sales Training Design and Delivery; Organization Design; etc.). Why? Because those are easy. If you have some distinctive technical competencies – truly distinctive – your name will be mentioned when the need for that particular discipline arises in conversation ("Oh, you need expertise in Relativity Theory, well, I know this fellow Albert . . . Albert . . .). Those are the easy referrals, but they'’re limited, and far less likely to get you cross-industry experiences (which we prize).

Frankly, I’ve worked hard to develop personal and company positioning of the types used in the examples above. Why? Broader application, wider appeal, speaks more to personal attributes, and to professional qualities as a consultant.

In most circumstances, clients are more influenced to choose a consultant based upon these types of qualities, believing that the technical discipline is a given and probably relatively equal across individual consultants.

In the end, many of the Independents who fail do so along these dimensions: pragmatic problem solving skills, meeting deadlines and budgets, project management skills, wide experience to draw upon, lack of objectivity, lack of insights, and discomfort in the implementation stages of an engagement.

Most Independents do not fail because their technical skills are weak. They do fail often due to competency gaps in these "softer" skill sets. Clients have experienced those shortcomings in other consultants, and don’t want to experience them again. This is why referrals based in these dimensions are powerful positioning messages that have you half-sold before you hit their driveway.

Ask for The Order
If you’ve done good work, fear not: ask for the order! In golf, they say you don’t have any chance when you leave a putt short – you must at least reach the hole. The same here: you must at least let your clients know you want referrals when the opportunities arise. "If you enjoyed the show, please tell your friends" is the basic message. Now, how to put that without sounding as though you’re in need, remember that "in need" is "in trouble".

How about these . . .
"You know, I’m working toward building a real specialty in Strategic Planning. As your colleagues from other companies recite their woes in this area, you might offer them my phone number. They and I both would appreciate it."
"I’m happy you’re satisfied with this engagement; it was certainly an enjoyable one for me. Should you encounter colleagues considering outside assistance, can I count on a referral and endorsement from you?"
"Carol, should you know of others who could benefit from my kind of services, I’m sure they and I both would be happy to have you arrange an introduction."
"Referrals are very important to me, Mike. I believe the best kind of consulting business comes from that route, just as you did. Maybe you could do a similar favor for someone else? Can you think of anyone specific who could benefit from the kind of Training and Development work I'’ve completed here?"

If your work is good, you have nothing to fear and everything to gain; if your work is not so good, well, don’t waste your time reading articles like this one – improve your outputs first.
When you're ready, and deserving, to seek referrals, make it easy for your clients to understand what you’re looking for. Be direct and be confident. Don’t let them wonder whether you’re desperate for your next engagement, or so booked that a referral at this time would only be a bother.

The message should be clear: (1) you build your business through referrals, and if they’re inclined to help, it will be appreciated; (2) you have specific talents other companies should know about, and the client is in a position to pass on that information (i.e. "it’s a responsible, helpful thing to do" is the implied message).

And then . . . ask . . . "Is there anything I could do that would make it easier for you to refer us to others?" For example, should you drop-ship 5,000 of your company brochures at the client’s home? Or host a party at the local Ritz for his entire Rolodex inhabitants?

Seriously, ask. You may be surprised how often you’ll hear this response: "Well, actually, what other kinds of projects are you involved in? What else do you specialize in?" And, just as often, the current client turns into the next client as well. A double off the wall in left!

You have probably been so busy working on your current engagement, you’ve neglected both the subtle and direct marketing of your full array of assets. Executing the referral strategy toward the end of an engagement gives you the ideal opportunity to do that. Never pass it by.