Outside consultants can offer excellent value to savvy social enterprises that prepare carefully and judiciously buy their services. Social enterprises are more likely to pay for expert advice than the average nonprofit – and the experts they call are typically used to working for for-profit businesses. Because nonprofit agencies often fill the role of advisors with their Board of Directors, social enterprises also have the additional job of defining the organizational role of consultants who may be perceived as “outsiders.” Social enterprises must learn when to call an outside consultant, how to work most effectively with them, and how to get services at the best price.
It is critical to remember that using an outside consultant represents an excellent strategy for building the internal capacity of the social enterprise. However, keep in mind that one cannot outsource capacity building! If you contract with a consultant, make sure you engage them in “knowledge transfer” to improve your own organization’s skills and ability to manage your venture. Do not work with any consultant who is only interested in taking on your project, writing up a report, submitting their report and then departing. Use this as an opportunity to engage individuals with particular expertise in assisting you or your staff in learning more about how to manage your venture.
However, simply bringing in an outside private sector “expert” in no way guarantees the results you want. Carefully defining the goals of the project, selecting the right consultant, negotiating a specific work plan and timeline for deliverables and managing the project attentively all help ensure the consultant’s work will be effective. The social enterprise must first define and then communicate the outcome that is needed (a decision, the specifications of a new system, gaining industry knowledge, etc.) and give them a budget for the project. Then, both the potential consultants and the organization must understand their respective roles and the resources, and agree and sign-off on the terms of the engagement in writing.
Factors To Consider
At least three factors should be considered when selecting a consultant.
- The consultant must truly grasp what the social enterprise needs them to deliver
- The consultant must understand and accept any budget constraints of the social enterprise.
- Finally, because the organizational cultures of social enterprises are often different from those of their for-profit counterparts, it is important to consider the fit between the personalities of the consultant team and the internal team members
To manage a consultant engagement constructively, at a minimum you need an internal point person who is responsible for coordinating the consultants, accessing internal information, ensuring internal buy-in as the project advances and for implementing the recommendations. To get maximum value from the consultant, that person should understand enough about the topic to give the consultant clear direction and ensure their output meets the organization’s needs. That basic internal understanding of the topic gives the organization the basis for making an informed decision that takes into account the consultant’s recommendations. Social enterprises should treat the “experts” with as much skepticism as faith and should take into consideration the specific features of their business model or culture before blindly following their advice.
It should also be remembered that there are a host of different types of consultants, with various skills, experience and focus. Some consultants are more generalists and others have very specific expertise in a given industry. Furthermore, recent years have seen an inflow of “new” consultants into the field. Some individuals who used to engage in organizational development consulting or general nonprofit management are now marketing themselves as “social entrepreneur” or social business development consultants – buyer beware! Check references carefully, make sure candidates have a demonstrated track record of success and include “exit points” in your contract in case you realize after the first month that you are not getting what you wanted and need to terminate the relationship.
With these thoughts in mind, although expensive at first glance, consultants may accomplish a task more cheaply and quickly than if a person without the specific mix of skills and experience were hired to do it in-house. At the same time, the high price of a consultant’s time may prompt management to define the project’s goals and scope more carefully up-front and to actually implement the results. While some consultants will work as volunteers, it is usually best to pay for services. This ensures your project is given priority and quality service. In addition, seeking free services limits your choices since the best consultants often have limited time to give. However, social enterprises may still be able to get a discount rate or superior service, reflecting a consultant’s interest in the social mission. Working with a nonprofit is often also a good business opportunity for industry consultants because it exposes them to a new sector and allows them to network with a new field of potential customers.