Is it worthwhile to measure the performance of Consulting Services? Many consulting firms will tell you that as long as customers continue to buy, there is no need to analyze performance further. Is that correct?
The receipt and inspection of purchased goods is a critical step in most procurement categories. When a product is damaged or does not meet the requirements, the clients will reject it. They will not renew the provider’s contract if the product is compliant but the quality is unsatisfactory. When a supplier is subject to a large number of claims, it is ousted from the panel. In the automotive industry, for example, it is the ultimate penalty.
Surprisingly, despite the large sums at stake, 57 percent of businesses lack a systematic Performance Evaluation system for the Consulting Category. Even consulting firms may not have a robust system for measuring customer satisfaction, as the cobbler’s son frequently has the worst shoes. When the account is lost, they realize the client was dissatisfied. Although this is a relatively accurate measure of satisfaction, we may be able to improve.
You can’t enhance something you can’t measure.
Consulting firms seek feedback to engage in a continuous improvement process and monitor their client relationships. And their customers expect them to listen to them and improve their processes. So, why aren’t these discussions taking place?
Executives frequently regard Consulting Services as a black box. Intangible Services, such as consulting, are challenging to manage, and measurement can be difficult. It appears impossible to quantify impact or trust. Companies, on the other hand, have learned that even intangible goals can be measured. Management by objectives has become a standard in General Management since Peter Drucker popularized it in the 1950s. SMART objectives are used throughout the organization to help employees understand their roles and responsibilities.
The same is true for Consulting Services. When you hire a Consulting Firm, you have certain expectations, such as the quality of deliverables, the ability to understand your business, or build trust with stakeholders, and so on.
Why not track how well these goals are met?
Without data, You are nothing more than another voice in the crowd
Consultants are kings when it comes to creating elaborate dashboards, KPIs, and management systems to track performance improvement. Surprisingly, they rarely get a taste of their own medicine. When it comes to measuring and proving its own impact, management consulting remains an unofficial business.
Implementing a systematic Performance Evaluation for Consulting Services is a critical component of Consulting Category management. The advantages can be seen over different time horizons.
Short Term
The implementation process can be difficult at first. However, paying close attention to feedback from the main departments or business lines that use consulting can assist procurement in identifying the Consulting Firm with performance issues and gathering the necessary information to build the right improvement plan.
Medium-Term
Longitudinal tracking of your providers’ performance is the only objective way to monitor, benchmark, and identify high and low performers: two essential elements for maintaining a fluid Preferred Supplier List. This analysis will also assist you in identifying capabilities that are underperforming. For instance, you can be very well equipped in Marketing while struggling in terms of innovation.
Long-Term
The goal of aligning your consulting spend with your strategy is to get the most bang for your buck. A year-long performance evaluation of the impact of your Consulting Projects will help you validate your decisions and ensure that your money was well spent with the expected impact.
Remember that performance can be assessed at any stage of a Consulting Assignment. On very large projects, mid-project assessments are a good practice. Otherwise, the term “post-mortem analysis” might be more apt.
What exactly do you need to measure?
You’ve previously built or used a Performance Evaluation System. It is not a difficult task. Keep the following common-sense suggestions in mind:
Determine what is most important to you.
The goal of an evaluation system is to ensure that Consulting Firms are meeting your expectations. But, what are your hopes? What are the most important success factors for a Consulting Project? Is it the delivery’s quality? What is the team’s level of expertise? What was the impact?
The importance of consistency cannot be overstated.
You can choose to have a separate evaluation for each project based on the key deliverables. However, if you want to use benchmarking, you must first determine the appropriate granularity in order to create a standardized evaluation. In order to create statistical relevance, you must also use it on a systematic basis. You may also want to use third-party performance measurement services.
Consider the human component.
Remember that the driving force behind the success of a Consulting Project is frequently the Partner or Project Manager in charge. You are evaluating his knowledge, expertise, and behavior for your project. You can choose to evaluate the performance of each consultant in the team – which is time-consuming and has little impact on you – all the way up to the performance of the company as a whole on the project – which makes sense for a small consulting firm but is more questionable for a big 4.
Don’t overlook the behavioral aspect.
When creating your questionnaire, don’t forget to include the soft aspects of a Consulting Project. Depending on the purpose of the project, you may want to consider the ability to build trust, create buy-in, or transfer knowledge, for example.
Request feedback.
Do not be afraid to solicit feedback on how the project went and what your company could have done better. Some businesses will be very clear in expressing their needs but will fall short of achieving internal alignment. Others may be unable to articulate their desires or will set unrealistic expectations (time or budget-wise). Capturing this feedback will assist you in gradually increasing your capacity to use and manage consultants.
Ensure the system will remain in place
One of the most important success factors is consistency over time. If you start measuring performance but stop after a few months or measure performance at random, it will be difficult to persuade your suppliers of the seriousness of the effort. Performance measurement must be integrated into your Procure to Pay processes (P2P) to avoid this unfortunate situation.
The distribution of the performance measurement survey should be mandatory before the project’s official closure and should be automated as part of the workflow when you open a new project. In addition, it can be linked as a required step before proceeding with the supplier’s final payment.
Similar to how you probably conduct yearly performance reviews with your teammates, you can begin to pencil in a few dates in your calendar to discuss your main providers’ performance over the last few projects. This broader conversation will focus on overall performance and serve as the improvement plan’s starting point.
A development strategy with your Consulting providers can take many forms. Depending on the circumstances, it may be related to:
- Staffing (displacing low-performing individuals or those with the least fit with your company’s culture),
- movement in and out of projects (staffing evolving too frequently, poaching of collaborators,…),
- perceived performance or impact issues (disconnect between costs and actual impact),
- lack of expertise on a given subject,
- respect for company processes and policies, or commercialism
Follow-up on the action plan can be done at the most appropriate frequency. The most common rhythm is quarterly.
A great way to proceed is to create an internal network of experts to gain support in your organization while also being more specific in your improvement actions. They could be functional experts or consultants who have left the company. They can assist you in reviewing the outcomes of key projects, receiving feedback on the various firms, and developing improvement plans that are more specific to the expertise of each consulting firm. They can also help you identify alternative consulting firms not previously on your radar by utilizing their personal network. To top it all off, you might be tempted to seek their expert advice in the future when working on a specific RFP.
Last but not least, the exercise must provide value to internal stakeholders because they will have to spend time filling out the surveys. Plan a debriefing with them about the performance of the panel’s key suppliers at least once a year. Take advantage of this meeting to discuss future needs and identify changes to be presented to the panel. Keep the stakeholders updated on the action plan with the consulting firms, and keep a line of communication open to receive direct feedback to supplement the surveys.
Closing Thoughts
Creating an appropriate performance measure is the first step in creating value through consulting and taking control of the consulting category while leaving decision-making and feedback to the project sponsors.
Engage in a conversation with your Consulting Providers to find out what kind of feedback they expect from you, and be open to receiving feedback in return. Would you do business with them again? Do you believe you would recommend their firm? Your net promoter score is very important to them—a compelling reason to take action based on the feedback.
