How does a consultant add value to an organization?

In today’s business arena, ‘adding value’ to an organization in terms of numbers is vital. This is where Consultants come into the picture. Besides the ‘numbers’ growth, business consultants also add a subjective value to the business they are hired in.

A consultant adds value by providing the organization the solution for the pain area that they are hired to fix. They do this with the help of specialized knowledge and experience they possess regarding a specific aspect of the business such as marketing, technology, recruitment, finance, operations, etc. Their objective viewpoint and expert solution contribute to an out-of-the-box resolution of the business problem.

Choosing a consultant that satisfies all the needs and delivers a highly beneficial outcome can be a treacherous task. There are a lot of consultants out there with their various levels of expertise in a specific domain. Now, there are some distinct advantages to engaging business consultants. These advantages bring incremental changes in the firm’s desired outcomes and overall profit. 

How does a consultant go about adding value to the business with their services? 

These are some ways that a consultant benefits an organization: 

● Solves the problem:

They are hired to solve a critical problem that warranted external help to be sought. This is the most important way for a consultant to get counted. The client places their expectation and to an extent their trust in the business consultant regarding a problem that seems unsolvable by themselves. If the problem is solved, value is added to the equation, it’s that simple. There are multiple layers to this matter, and that is a subject of a separate discussion.

 ● Brings in knowledge and experience: 

Business consultants bring specialized skills and expertise that are higher than the skills of existing staff members. Such executives provide a time-bound, often measurable outcome. A Forbes Insight Study showed that 92% of surveyed executives reported successful and favorable project completion. Of these, 62% said they met the project objectives, and 30% said they exceeded them.

●  Educates the company:

A genuine consultant helps organizations by educating employees with a broader and deeper view about the aspects they’re lacking in. Because the more educated one is about the products or services, the better they’ll utilize the knowledge for the bigger picture. He adds knowledge value to the client company, not just to his report card and bank balance. Such faithful helpers are often re-engaged as consultants as they are not solely interested in lining their pockets but are interested in the overall growth of the client business.

●  Adds a fresh perspective:  

They bring a much-needed fresh perspective to an existing structure which eventually helps the organization reach out and grab new opportunities and make them work. An unbiased opinion can often clear the haze of an office environment clouded by confusion, emotion, and politics. They provide insights that are not marred by the insecurities of inside players.

●  Manages risk better: 

By clarifying the issues with existing processes, consultants help the clients assess and manage risks better. 

●  Consistent high-level service: 

Consultants help differentiate the informational and decisional roles, which is critical for the organization to grow successfully. As a result, consultants can deliver on their commitments by providing a higher level of service and being more consistent due to their laser focus and expertise on the subject matter. 

●  No long-term committment:

A consultant can be bid adieu once their target has been met. Hence there is no obligation of long-term employment and payouts and commitments compared with a permanent employee.

●  Lower resolution cost:

The overall cost for solving a problem is significantly lower. This is because the consultancy fee (expense) is done and over with once the problem is solved. This is a tremendous advantage and value-add when viewed from a business owner’s perspective.

Measuring the Value Added:

The value that consultants add can also be measured objectively from a client’s point of view. Over a period of time, the following metrics have been designated as a more or less competent way of measuring their performance:

1. Resolution Numbers (ROI): 

This is the direct outcome of engaging the consultant. When hired, a consultant is told the problem they are being hired to solve. Upon completion of the project, the outcome is analyzed, and if found to be resolved, or if found to be giving the desired outcome in numbers, it is the most direct way of assessing the value they bring to the project. It is traditionally called the ‘Return on Investment’ (ROI). Consultants often add subjective and qualitative value to a client’s business that one cannot measure statistically. Good management can identify that value and decide to rehire the consultant or employ their services for a longer duration during the subsequent project.

The above metric has an effect on two other factors regarding hiring a consultant to add value. These two are as below:

2. Utilization Rate: 

It is the time of a consultant that the client uses compared to the consultant’s total time availability. Let’s say the consultant is available for 8 hours per day, 5 days a week. This means 176 hours in a month on average. If the client has used their services for about 125 hours per month, i.e., the consultant could bill the client for 125 hours, their utilization rate is (125/176)*100 = 71%. The higher the rate, the higher the efficiency of the consultant. This metric is a good indicator of the consultant’s competence. The owner would hire the consultant more if they bring more value to the table for their client.

3. Repeat Business Rate:

This metric is a good representation of a consultant’s performance and value addition. If a consultant has been hired again for another project after completing the previous one, it is a good indicator of their previous performance and value addition capability. It is calculated by comparing the repeat client numbers by the total client base. If a firm has 10 clients and 6 rehire consultants, then the rate stands at 60%. The higher the number, the better the proof of value addition by the consultants.

The above three metrics indicate to what degree some value-addition was done to the business when it brought in a consultant for a particular project/problem. We recommend that you read about the Business Consulting Services that we offer here.