The Four Reasons Companies Hire Consultants

When serving clients, few things are more valuable than understanding and internalizing what the client really, truly needs from you but is unable to articulate.

“What do you mean, ‘what they need from me’? It’s spelled out in the SOW plain as day!”

Oh, you sweet summer child.

Organizations lack self-awareness

While most individuals are on a path toward increasing self-awareness and self-actualization, this is dreadfully difficult for an organization to do as a collective.

As individuals increasingly become more self-aware, we start to focus on the things that truly matter to us — and ignore the things that don’t. You would think the same would be true for an organization, but it’s surprisingly uncommon. In a sense, organizations lack self-awareness.

The problems this creates are complex. One of the most common results is a lack of alignment across the organization. Staggering amounts of time are spent inside companies attempting to get everyone on the same page — whether it’s for alignment with a new company strategy or simply getting a project team to all have the same information at one time.

Thus, a perennial problem of every manager and executive is this: figuring out how to achieve alignment on common goals across the entire organization.

To answer that first means the goals need to be properly identified. And — as anyone who has spent time in a company of any significant size knows — politics and turf wars are common. Even if the executive team agrees on the strategy, it doesn’t mean their managers will universally agree on what it means.

And thus, cracks occur in the company, and consultants are hired to fix them.

The 4 reasons

In my experience, there are only four reasons an organization hires a consultant.

Before I get into them, a word of caution: It is supremely unlikely that anyone in the company will be able to state with any certainty why a consultant was hired.

Even if the organization had the incredible amount of self-awareness required to answer truthfully and trusted you enough to give you the honest answer, it’s still unlikely they would tell you because of what it says about the organization.

It will be up to you to ferret out which bucket your engagement falls into. But it will ultimately come down to one of the following four.

1. To help the organization do something it perceives as risky without specialist talent

This bucket is far-and-away the most enjoyable, fruitful, and worthwhile type of engagement you’ll be in. These types of engagements are often short-lived (i.e., measured in weeks or months), but they also tend to be the most profitable.

The client has hired you because you are an expert in the problem they have, and hiring you lowers their risk around said problem. There are two primary variants of this type of engagement.

The first variant is when the client doesn’t have the expertise in-house to handle the problem. This is the most straightforward kind of engagement and the most common when working with smaller clients. Success is simple: Just be the expert you are. The second variant is far more interesting from an engagement management perspective: when the client has the expertise in-house already.

Yes, that’s right: Hiring outside specialist expertise does not necessarily mean the client lacks the expertise. In fact, you may find yourself surrounded by very capable people who could solve the problem without your involvement at all.

So what the hell? Why are you here, then? Because you are both an expert and an outsider.

In some cases, an organization may not completely trust itself. This can range from an organization simply desiring some external oversight (e.g., financial and compliance auditors) to an organization simply not trusting its staff to do the job (a sure sign of a dysfunctional organization).

In the case where you’re providing external oversight, it’s important to keep your distance and maintain all perceptions of objectivity, as your perceived neutrality and objectiveness is the reason you’re there to begin with.

In the case where you’re essentially trampling on the toes of the existing team, you should come to terms with this fact as quickly as possible: the team probably hates you.

You are, after all, a pure manifestation of their managers’ lack of trust in them. You can of course work to attempt to win them over. But in my experience, it’s often an uphill battle and only sometimes turns things around. Success in this scenario comes from keeping above the fray as much as possible, making friends where you can, and highlighting the client team’s contributions where you can.

2. To augment its existing staff and talent

In this bucket, you’re no one special. The organization believes you are interchangeable and there are hundreds or thousands more just like you waiting in the wings. The vast majority of IT consulting services and software engineering services are in this bucket. This is standard staff augmentation.

This is the least valuable bucket to be in and it is nigh-impossible to switch from this bucket to another (ideally, to the specialist talent bucket!) thanks to the organization’s preconceived perception of you. You are essentially a more disposable employee and trying to convince them otherwise is a tall order. If you want to upgrade your perception, it’s best if you leave the organization and take a new engagement elsewhere.

On the other hand, if you’re happy with the arrangement, success is generally measured on getting your work done, being affordable compared to their best alternative, and costing very little to manage. In other words, do good work and keep your head down. These engagements are often measured in months or years. Some consultants make an entire career out of moving from one long-term contract to another and my hats off to them for it.

Personally, though, I’d recommend not taking these engagements to begin with. How to spot them ahead of time is an entire article on its own, as they often masquerade as providing specialist expertise.

3. To deliver a message from one part of the organization to another

This reason is particularly common at very large companies with heavily-siloed operations where it can be difficult to get something prioritized in a business unit or reporting chain you’re not in. This sounds more Machiavellian than it actually is.

For example, say VP #1 wants to migrate from one core service provider to another and has good reasons for doing so. They are the owner of that provider’s services inside the organization, but the most important stakeholders reside under VP #2, who doesn’t quite agree with the decision.

It’s not that VP #2 disagrees necessarily, just that they may not agree about variables like timing, priority, and importance.

To help facilitate the matter moving forward, VP #1 brings in an outside trusted third party to do an assessment and make an objective recommendation. VP #1 can generally make an educated guess that the recommendation will back up their perspective. But they’re not going to hurt if the third-party recommends against it either.

These scenarios can often appear as either providing specialist expertise (in a way, they are) or as being a scapegoat for a decision that’s already been made. But this category is distinctly different.

As VP #1 doesn’t need cover for the decision since the decision itself isn’t really in question, the most important part of the engagement is who the recommendation is being made to.

In my experience, I’ve often only realized an engagement fell into this bucket when I presented the final report/presentation and found myself in a room full of people with high-level titles I was previously unaware of.

That’s a surefire sign that the assessment you just put so much work into wasn’t really the most important part. The resulting message was.

4. To provide cover for a decision

Sometimes, someone in the organization simply needs cover to make a decision they expect may blow back on them. Working with a consultant — particularly a well-known and trusted one — provides the cover necessary for the executive’s self-preservation.

This isn’t actually as wild and far-fetched as it sounds. In fact, it’s surprisingly common; you need only to look at Gartner.

There’s a reason companies pays hundreds of thousands or even millions of dollars a year to Gartner: The research and advisory firm always recommends the safe choice — which isn’t necessarily the best choice and is never the most innovative choice. You work with Gartner when the most important part of the decision is not being wrong (but not necessarily making huge strides forward, either).

If an executive gets a briefing from Gartner on, say, what ERP to deploy, and then chooses Gartner’s #1 pick, they’re politically-covered. If the integration fails for whatever reason, the executive can deny any fault for the decision — after all, they went with the trusted advisor’s recommendation. And Gartner is all too happy to take the fall.

Over the years, there have been mantras that echo throughout the tech industry. No one got fired for buying IBM. No one got fired for buying Cisco. Among the executive ranks, another common belief: No one got fired for following Gartner’s advice.

Identifying when you’re about to walk into one of these scenarios can be incredibly difficult. You’ll need to spend a large amount of your time listening for warning signs that someone might have already made a decision despite hiring you to help them determine the best path forward. Listening for motivations around why you’re being brought in is crucial.

If you find yourself in this scenario, charge accordingly, as it will often be your first and last engagement with the company. The expectations for you are simple. Under no circumstances should you:

Make it known that you know what game is being played, or Make a recommendation counter to what they’re paying you to say — which may have non-trivial ethical implications depending on the project.

While you’ve likely lost the company as a client after one of these projects, you’re in luck: an executive hiring a scapegoat won’t generally forget the solid you did them. And you can cash in those chips at their next company or with a few strong referrals to new clients.

Personally, I’ve always hated these sorts of engagements and have gone to great effort to avoid being in them. But I know some consultants who make their entire living off taking the fall for their clients on questionable decisions.

Know your role

Knowing the true role you’re playing in an engagement allows you to get a better handle on what your client really needs from you and direct your energy toward serving that need.

Misunderstanding your role (e.g., thinking you’re there to provide specialist expertise when you’re really there to give cover on an already-made decision) can result in your engagement going sideways with blinding speed.

After some practice and paying attention in your next few engagements, I have no doubt you’ll start to pick up the telltale signs of what you’ve actually been hired for — which should help you fulfill your contract more effectively, making it that much easier to get the next one, and the one after that.