If You’re Hesitant to Invest in a Consultant - Read This
The decision to hire consultants has been compared to giving someone your watch so you can pay them to tell you the time!
Hesitancy about hiring consultants vs. employees is understandable. There is a question about whether you should bring in a third party to understand your operations and then advise how to improve what you are doing already. Would it not be done better by employees who already know your business?
There are times when internal resources will be better, but let’s consider when an outside expert would be the wiser option.
Hire Consultants Rather Than Employees to Deal with Biases
Biases are useful for quick decisions. They help us simplify and filter out some of the information bombarding us. The problem is that most biases are unconscious – we have no idea we have them. So, we think we are making logical, objective judgments and decisions, but biases may trip us up.
For example, confirmation bias or congruence bias is our tendency to notice things related to what is already loaded into our memories. Or we are drawn to information that confirms our existing beliefs. Unfortunately, critical information may be filtered out.
Employees often resist change because of status quo bias and loss aversion. They tend to stick with the current option even if it leads to suboptimal results or has no rational basis. There are several reasons for this:·
- People give higher weight to what they already have, and fear of loss is greater than hope for gains. For example, behavioral economists show that fear of losing $100 counts more than winning $100.
- They may dislike uncertainty and be risk-averse. So, they will rather stay with what is familiar or the devil they know.
- The more choices there are, the more likely people are to revert to what they know. How often do we order the same item on a menu, despite the options available? We prefer what we know tastes good rather than risk being disappointed.
- Loyalty to your team (or idea) is seen as a sign of reliability. So people don’t want to abandon a brand or an old plan.
Thus, companies continue with inefficient or unnecessary activities because of the way things have always been done. They miss out on the potential benefits of doing things differently.
When you hire consultants, they are not afraid to question the status quo and ask questions about the thinking behind established practices. They have less fear of new approaches as they have seen them in action elsewhere or have introduced them to other companies.
They are also less likely to display a sunk cost bias. Companies sometimes decide to continue with a product or operation because time, effort or money has already been invested in it.
Outsiders Provide Objectivity and External Perspective
Sometimes insiders are too close to problems to be objective about them. They might even be blind to mistakes that are obvious to an outsider. Small companies and those run by their founders are particularly susceptible. In addition, decisions are skewed by office politics and hierarchical biases, where we confuse position with expertise.
The decision to hire consultants vs. employees does not mean employees are less competent than consultants. Many are smarter and more qualified. However, objectivity and new perspectives change the process of decision-making and lead to better outcomes.
A McKinsey survey found that decisions with the worst financial results were initiated and approved by the same person. Companies lacking rigor in decision-making were twice as likely to have extremely poor results as extremely good ones – generating up to 75% less revenue than expected. Consultants have a significant role as sounding boards for executives and managers, who may know what is required but need external validation. Sometimes potential investors or bankers require an outside expert opinion or proof-test of a business plan.
Consultants do the dirty work when difficult decisions are required – such as people being laid off or entire departments shut down. Managers are perceived to be slightly removed and do not become the scapegoats for employee unhappiness.
Independent Experts Supplement Staff and Add Skills
In a previous article, we looked at the trend towards hiring on-demand talent. Consultants are a category of such talent, and the reasons for hiring them are similar:
Digital business agility is the new status quo
Businesses – and employees – may be stuck in the old way of doing things. They view the past as the status quo. The reality, of course, is that the status quo keeps changing – it is a reflection of the present.
And leadership guru John Maxwell believes the role of leaders is to predict and act on the future status quo: “As leaders, we need to stay ahead, we need to see more than others, and we need to see before others.” He adds, “The more nimble, adaptable, and flexible we are, the more quickly we can move and change.”
Three things seem certain about the future. Businesses will have to be agile and flexible. Employment models will be a hybrid of permanent, contract, and independent employees. And the mode of operation will be digital.
Preparing for that future is at the forefront of C-Suite minds. And external expertise in the form of management and digital consultants is part of the solution. Only the largest corporations are likely to have internal staff with the wide range of skills required for digitalization. Luckily, the online consulting marketplace makes these skills available. Consultport, for example, provides access to the best digital experts through one platform. Some of the areas of specialty include the following:
- Cloud services
- Digital marketing and sales
- Emerging technologies
- Digital analytics
- Digital transformation
- Business automation
- Enterprise resource planning
Today’s companies require digital business agility – and it can only come from dumping outdated practices. Sometimes hiring an independent outsider is the best way to help you do this.
Hiring consultants vs. employees – what’s the evidence?
Sometimes employees are your best resource. At other times it is better to hire consultants. Some reasons are self-evident: You need resources unavailable internally or required only for a limited time. Bringing in external experts exposes your staff to the latest technologies, and you don’t incur employment overheads.
Not so obvious are the benefits of avoiding biases and improving decision-making. No matter how competent a company's management is, external perspectives and challenges to the status quo lead to better outcomes.
And as digital business agility has become imperative, online platforms hosting skilled digital experts have become part of the solution.