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Monday, May 22, 2006

Do You Pay Peanuts And Get Monkeys?

As the old saying goes if you pay peanuts you get monkey, or people who aren’t trained, aren’t professional and just muck around having tea parties all day.

I was speaking to someone last week who said they’d never employ a consultant.

Wise words...

Except, what if that consultant could put another quarter of a million on your bottom line? What if that consultant could speed your introduction into a new market by 6 months, giving you 6 months more profit, earlier? What if that consultant told you that you were wasting time, money and people on a pet project that no on else dares to tell you is a dud? Or what if they could move the marketing campaign you’ve been trying to get started for months?

What if they could get you more sales, or improve your whole organisation?

Wouldn’t that consultant have paid for themselves many times over?

There is absolutely no doubt that there are consultants who rake in vast quantities of cash for no output.

Is A Consultant’s Output The Key?

Yes, and no...

Wherever possible a consultant should be linked to an outputs performance based payment.

That means you provide the consultant with a base level amount of money and tie more payments to changes in output.

The reason I say changes is because you may employ a cost control consultant whose output is reduced costs. Therefore linking their payments to an increase in sales is not relevant and does not reward them for what they’vè done.

Equally you must be careful that the consultant doesn’t undo the work you’ve done in other areas to increase sales, customer satisfaction or delivery lead times.

For example they may reduce call centre costs. What if 2-3 months down the line the impact of customers not getting through is felt in lost sales?

Could You Reward A Consultant Only On Performance?

I was so sure sure that I could improve companies growth that I was more than happy to be paid for performance.

Consultancy is a two-way thing and requires the client to contribute as well...

I discovered being paid for performance took the onus off clients to deliver their time, material or resources when I requested them.

That meant I was continually waiting to help a client take the next step.

Plus during that time I was not getting paid.

There is no incentive for the client to focus on delivering a project. Even when they know and intellectually understand it’is going to move them upwards.

A Win-Win For You And The Consultant

If you are forever worried about consultants ripping you off paying them on the basis of performance is a great way of sorting the cowboys from the genuine article. Just remember even if you find ones that will work purely on pay for performance that you need to pay them anyway to give yourself the pain of cash drain until you pay attention and help the consultant deliver the project you know you need to grow.

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