An Inside Job or Outside Advisor?

Many thanks to member and Board Member Gilles Levasseur for his insights and ideas.

From global strategy firms, to major professional services companies, to sole practitioners - external consultants at all levels make up the greatest portion of our industry. However, at CMC-Canada we’re finding that a growing number of management consultants are working as internal consultants for enterprises as employees.

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As well as helping clients address their problems and improve results, consultants have a passion for the wisdom and expertise they bring to the organization and have the ability to galvanize clients into action. Where opinions diverge about deploying inside vs. outside consultants inevitably starts with establishing and maintaining independence and objectivity as the basis for advice.

Using this as a starting point, external consultants provide their expertise to many different organizations on a temporary basis, usually for a fee while their internal counterparts operate within an organization, available to be consulted on their areas of specialization throughout the organization.

Why Should I Listen to You?

How do consultants effect change in the absence of formal authority associated with their position in an organization? Internal consultants can lead and exercise power through position and character; external consultants through competence and personality.

Trust is the most difficult authority of character to establish but the most powerful reason for someone to listen to what you have to say. A simple way to visualize trust is to consider someone’s credit rating with other people, based on integrity, reliability, honesty, loyalty, sincerity, personal morals and ethics. Consultants leave a trail of promises kept or broken, expectations fulfilled or forgotten, and statements corroborated or disproven.

The authority of character is cultivated over time based on a track record. Internal consultants are better positioned to establish great authority of character while external consultants tend to have a tougher time - marketing and selling, for example, evokes suspicions of self-interest.

Defining the Role of an Internal Consultant

Internal consulting involves assignments performed for an organization by a consultant who is an employee of that organization.

More specifically, it refers to consulting activities performed by individuals who:

• are in an employer-employee relationship, either performing in a full-time or part-time work schedule for the organization with a minimum of 20 hours of work activity per week
• make use of tools, are accommodated, and make use of infrastructure that is provided by the employer
• are subject to supervision or direct control from a superior
• receive payment for execution of the work in the form of a salary, a per diem based compensation or to a fixed amount for a defined service provided
• may work for a term of employment that may vary in accordance with the work requirements.

Adding Value is Situation-Based

Why use an external consultant? There are three good reasons: higher levels of expertise and experience and credibility, especially if he or she is published, credentialed, and well known. The consequence is more influence and buy-in from senior level executives who may prefer to hear from outsiders. Paying for services also implies the output is better or more valued. In addition to these perceived advantages, external consultants are frequently more up-to-date on the latest trends, methods and practices based on a broader base of experience. With this broader experience, the external consultant can provide benchmarking and best practices as well as insights into potential pitfalls learned from other clients. This value is punctuated by objectivity and an ability to give tough feedback or to ask the difficult questions.

Internal consultants are often under-valued within their organizations. Regardless, they provide in-depth knowledge of the business, the organization and management. This makes them particularly valuable on sensitive implementation of strategic change projects or culture transformation initiatives, managing processes or projects, and integrating or leveraging initiatives across the organization.

The range of work performed by internal teams and their role inside any organization that has made the investment is dependent upon the staffing strategies of the host organization. For example, a firm may build an internal team of relatively inexperienced staff with high management potential, and then routinely task them with analytical projects.  More conceptual or complex engagements might be staffed by more experienced external consultants.

It is not unusual to create hybrid teams that blend both internal and external consultants, making use of the respective strengths and advantages of the two modes of consulting.

The Internal Consultant in Practice

The consultant’s role is to provide expertise in the form of knowledge, experience, processes, models, technologies or other assets. Successful involvement in consulting projects is increased by appropriately choosing whether internal or external consulting resources will contribute the most value.

Both internal and external consultants perform these duties. However, with an understanding of the sources of authority available to internal consultants, an internal consulting engagement can be evaluated using the following set of criteria:

1. Existence of a client-consultant relationship between the internal consultants & their employer identified as clients

• Were the consultant and client roles clearly defined?
• Did an engagement, work plan or contract exist between the consultant and client?
• Did the consultant provide independent and objective management advice to the client in areas such as strategy, change management or other related managements solutions?
• Did the consultant complete engagements for a variety of internal departments?
• Did the consultant use fundamental consulting skills, from interviewing, analysis, report writing, in completion of each engagement?

2. Nature of the work was project-based (not operational)

• Did each engagement have a defined beginning and completion?
• Was a charter, plan, and level of effort estimate associated with each engagement?
• Did each engagement proceed through a defined consulting process with a set of deliverables associated with each stage?

• Was a Code of Conduct or ethics relating to management consultancy followed by the internal consultant?
• How much interference was expressed by the employer during the execution of the tasks by the internal consultant?
• Were the recommendations and conclusions presented by the internal consultant independent from influence or pressures and not subject to reprisal, coercion or undue influence?
• Are the recommendations and conclusions consistent with the expectations of a professional exercising its activities in a manner similar to a hired consultant?

Ultimately, internal consultants probably should not be treated differently in how they’re evaluated than those from more traditional external consultancies, with the exception of any adaptations to their unique work environment conditions. They should be assessed based on the tasks they have been asked to undertake, and the competencies and knowledge they possess.

Internal consulting assignments should logically carry equal weight and value as consulting for hire engagements – and the end result should be to provide adequate and professional recommendations to a problem with appropriate management solutions, applying the professional consultancy norms utilized by CMCs.