Wednesday, May 1, 2013

Money wasted - Consultants clueless on ROI meaning

I don't know about you, but I certainly have a hard time keeping a straight face when dealing with most consultants. It just seems as if we speak different languages.
As a member of various CEO groups in LinkedIn, I often receive e-mails from consulting firms seeking to establish a relationship. These emails usually offer a free link to one of their articles. Always looking for better professional insight, I like to scan these articles looking for something of value. Unfortunately, it doesn't take long to be disappointed. After a couple of sentences, the shallow nature of the information becomes evident. It is frustrating even when the information is free.
Case in point (yes, I am picking on these guys), I recently read the Watch out for these EmployeeMisbehaviors article. In a flash, the platitude meter spiked. The problem is that, in the world of business, performance is the only metric. Beautiful verbiage does nothing to turn information valuable. Even the best of intentions can't be monetized. Only execution has a chance to deliver the goods.
Launch Article
The article starts by establishing that managers deal with poor employees. Really? Then, it quickly describes generally-accepted reprimand techniques. Finally, it lists seven types of employee misbehavior, followed by corresponding explanations. Do you mean to tell me that a manager needs en explanation of what procrastination is? Incredible! The article seems to assume that managers were not previously aware that tardiness, temper tantrums, negative body language and others were types of employee misbehavior. Au contraire, a manager who hasn't already dealt with such misbehavior has a bigger problem than just a couple of bad employees. He or she has been sleeping all this time.
All employee problems starts with poor hiring. A good manager will immediately and clearly establish metrics and ambitious goals for the new hire from day one. Any deviation from the expected performance should be immediately addressed. As Reagan said, "trust, but verify". No surprises. In fact, trouble employees usually show their true nature fairly quickly as personal behavior tends to regress-to-the-mean.
But if consultants are such lightweights when it comes to delivering value, how is it that they stay in business? Well, because people like you or I spend too much on their services. But it must stop.
The article mentioned above made me remember one occasion at a trade show when a consultant attempted to sell me on the many services they offered. Within his pitch, he used the ROI acronym at least a dozen times. So, I stopped him. I asked him to explain what Return on Investment (ROI) meant to him. Nervously, as if I was the first person to ask ever, he fumbled as he tried to describe cost savings. To this, I asked why would he assume that I would spend any money? "If I spend nothing", I said, "there are no savings". Talk about hitting a concrete wall; the guy looked horrified. It was clear that they would not be able to bring value to us.
Perhaps the problem begins with the fact that consultants face zero accountability. All they have to do is make a beautifully bound presentation of their opinion. Anything beyond an opinion will depend on you or I. So you end up exchanging money for a custom made book. That is it; execution and performance are not part of the deal.
Don't settle for just an opinion. Demand Performance instead. Any service (or opinion) that can't pay for itself should be discarded. Often, you will even hear the common adage "in order to make money you have to spend money". I suggest you throw a yellow flag. You too can ask: "how about spending less money to make more money? Have you heard of that?" By the way, even your own employees may fall for such falsehoods. These types of phrases tend to make people who can't manage their own checkbooks at home sound capable of making investment decisions for you. As you can tell, I do not buy any of it. You shouldn't either. Demand real quantifiable ROI's, not just the marketing types. If you find consultants who can both project and deliver real returns, keep them. They are rare!

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