These common practices can prove costly and ineffective, even counter-productive, when hiring outside expertise.
By Stu Bloom
Sponsored by CU24
Organizations use consultants for a variety of reasons. Consultants can help develop sound business strategies, improve operating effectiveness, enhance brand awareness, assess vendors and alliance partners, and provide knowledgeable, valuable input on any number of issues facing today’s credit unions.
But there are some common misconceptions and occasional misuses of consultants that can prove costly and ineffective, even counter-productive. Here are my three big “don’ts” for effective consulting engagements:
- Don’t expect consultants to be gurus. Consultants aren’t all-knowing swamis offering mystical insights into business problems. The good consultant doesn’t offer opinions; he (or she) performs sound and thorough analysis leading to an understanding of a problem and valid suggestions. I’ve often said to clients, “You can have my advice for the price of a beer. We can sit at the bar, chat away and I’m glad to give you all kinds of advice.” But it wouldn’t be worth much. What’s worthwhile, and worth the fees, is the studied analysis of information; the search for real findings, careful analysis to formulate valid conclusions, and knowledgeable assessments to arrive at reasonable recommendations. That’s what consulting is about, not the spouting of opinions.
- Don’t ask a consultant to tell you the “best practices.” After decades of helping dozens of companies address a myriad of business problems, I can tell you that there are no effective “best practices.” Every credit union is different: Different size, different field of membership, different strategy, different management, different resources, different market, different culture, different mission, different labor pool, different member population. Successful operating practices must match the specific circumstances of your credit union. The “best practices” are those that work best for your credit union, and a good consultant can help you sort them out.
- Don’t pay your consultant a percentage of the “savings.” A consultant should be working in your interest, without conflict, evaluating information and offering recommendations solely based on the benefits to your credit union. Regardless of a consultant’s good intentions, when fees are based on how much he saves you, there is an inherent conflict of interest in how information is evaluated, how prospective vendors and partners are assessed. You don’t want a consultant’s fee dependent on the outcome of his evaluation. Often the answer that appears to save the most money may not be the best answer. It’s not just that the consultant’s view may be swayed by his own income opportunity, but that you want to take this dynamic out of the mix entirely. You want to avoid a conflict of interest–not just a conflict of action or result. Pay reasonable fees for professional work. A good consultant should provide real value with his analysis and recommendations that result in real benefits to the organization.
Stu Bloom is a long-time payments industry consultant and advisor to the CU24 network.
Read a recent Tech Time column about managing third-party vendor risk.
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