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Three critical questions about consultants

Posted: November 15, 2013

You may use them, but you don't like them. They eat up your time, money and space. Even when you need them, their raison d'être appears anchored in finding new ways to remain on your payroll.

I am talking about external consultants. Given the problems confronting the Obama administration, perhaps it's time to discuss the pros and cons of contracting out.

Whether it's your company or the White House, three questions should be answered prior to any decision regarding contracting out services or product. First, does your organization have sufficient internal expertise to avoid the added cost of consultants? Remember, employees are already on the payroll.

Second, what is the integrity climate in your organization? If it is optimal, then consider doing the job yourself - if you have answered the first question accordingly. For the life of me, I cannot think of one objective reason why the Obama administration would contract out the development and launching of the software for the Affordable Care Act's website. The U.S. government has the best IT experts and equipment in the world. After all, they develop and implement software systems that permit spying on Middle East terrorists and eavesdropping on cell phone conversations of European leaders. Hence, a cost-conscious organization, like the White House, might well consider temporarily assigning some of its top-notch IT experts from, say, the National Security Agency, to the Department of Health & Human Services. The integrity climate would be optimal since these experts would want to "show off" and do the best job possible in that temporary workplace.

But the integrity climate in your business may require external consultants. Internal experts can become quite opinionated when it comes to implementing or assessing services or products that might lead to a reduction-in-force. A system-wide job analysis or compensation study may lead to manipulation of results. After all, who would want to document obsolete job descriptions of friends or underscore high-end salaries of all coworkers in comparison to competitive organizations?

A poor integrity climate may also be reflected in management's effort to manipulate results, and this is easier done through contracting out. But this, too, can backfire. I once consulted for an agency responsible for advertising, interviewing and hiring for all municipal and county job openings in a particular region. The CEO had a hidden agenda. She had just purchased a massive and expensive software system, in an effort to facilitate greater flow in job applicants, only to find the software had ongoing problems. These glitches required a multi-year on-site presence of external consultants from the company that produced the software. The initial cost of the system, coupled with the additional costs of the seemingly permanent external cadre, meant the easiest way out was a reduction in force. I was asked unofficially to go through the motions of a job analysis and to report the desired RIF. I accepted management's money - after all, I was a consultant - but I took my duties seriously as per my contract. To her chagrin, my findings determined the agency was dreadfully understaffed in critical areas. Her failure to manipulate the outcome presented additional external costs and led to a greater decline in the integrity climate.

The third question: If you must contract out, based on the two previous questions, do you have the organizational capacity to recognize consultant mistakes before too much damage is done? Your company should not be viewed as a simpleton wearing a straw hat. If you don't have capacity, insist on a "lemon" clause in the contract. Why would you purchase a product that requires repair before it works in the first place?

Now, if you think the only idiots are to be found in the public sector, think again. Your company may be next in line in making a poor decision when it comes to consultants and contracting out. It's one thing to know something about job descriptions, but it's another to keep up with software technology. Before you go forth, think objectively about the three questions. You may not have to worry about electoral consequences, like the White House or that personnel agency, but certainly you do have to worry about owners and stockholders. Regardless, you don't want end up on the evening news.

James D. Slack, Ph.D., is a professor and director of the Master of Public Administration Program in the Robertson School of Government at Regent University. He can be reached at jslack@regent.edu.

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