No magic solution

Companies have embraced consultants with almost indecent haste. But, says
Calvert Markham, HR departments should tread cautiously when going down the
outsourcing route

Had you visited the Ford manufacturing plant at Dearborn, Michigan, 80 years
ago you would have seen coal and iron ore going in one end and cars appearing
at the other. Today, much of that plant lies unused, and Ford’s involvement in
manufacturing is likely to become even smaller, according to The Economist. In
a recent article, it reported that "today’s metal bashers will disappear.
In their place will be vehicle brand owners [which] will do only the core tasks
of designing, engineering and marketing vehicles."1

This is just one example of how the strategic fashion has shifted from
‘make’ to ‘buy’ – and not just in manufacturing. When I started my career (with
ICI), security, cleaning, the canteen and other services were all run
internally. Nowadays it would be an unusual company that did not contract them
out – IT services and now complete functions are outsourced. And HR is no
stranger to this, with companies such as Exult and Xchanging offering to take
on much of the routine work.

All this is great news for consultancies and other professional service
providers. Quite apart from outsourcing, as organisations have slimmed down
they have less capacity to take on significant projects, and so call on
consultancies to support them. And consultancies have boomed as a consequence.
At this point I must declare a personal interest: I am an HR consultant, and my
firm trains consultants (among other things). But having made that confession,
you may be surprised that I propose to question whether the use of consultants
is an unalloyed benefit.

My advice is: think twice before engaging consultants. There is more to a
consultant engagement than simply outsourcing work. Why the caution? Below is a
list of potential problems outsourcing can bring:

– Knowledge leakage: much of the know-how capital of an enterprise lies in
the heads of its people, and one of the jobs of the HR department is to nurture
and grow that capital. Ground-breaking work allocated to outsiders means they
get the benefits of the learning.

Ask yourself: is the journey as important as the destination?

– Demotivating your staff: when you eventually become an independent HR
consultant, do this: ask the people at the bottom of your client organisation
what they think, and tell the top management what they said. They are always

Robert Townsend originally accused consultants of borrowing your watch to
tell you the time, but that is often because the top of the organisation
doesn’t listen to the bottom.

Ask yourself: do our people already know what to do?

Blame shifting: of course, you may have political reasons for getting
consultants to do what your own people can do. But remember – there is no such
thing as a consultancy project – they are simply client projects in which
consultants are engaged to help.

Ask yourself: am I subcontracting work – or just risk?

One of the perennial features of consultancy, however, is that if things go
well, the client takes the credit; if they go wrong, the consultant takes the
blame. (They say that if you rearrange the letters of ‘consultant’ you get

Enron? No surprises

While on this topic, I should mention Enron. It was probably only the press
that was surprised with this affair. Everybody knows that:

– auditing firms get a lot of other work from their clients

– it is a fiction that shareholders appoint the firm that audits the company
on their behalf – they mostly rubberstamp management’s decision at the AGM

– sooner or later, something like Enron would happen. In June 2001, Harvard
Business Review presciently commented: "As for accounting firms, if they
help a company meet its numbers – sometimes by ignoring, or even suggesting,
some pretty dubious bookkeeping legerdemain – then they can usually count on
retaining the company’s lucrative auditing business and maybe pick up a
consulting contract as well."2

So, no surprises there. What would have been surprising would have been
someone holding up their hand and taking responsibility.

A banner for HR

Mother Teresa was once asked to take part in a march against the war in
Vietnam – she refused, saying that she only marched for things, not against

So what should HR be marching for? Consider caution.

Preserve social capital: The Roman scribe Petronius Arbiter famously said:
"We trained hard, but it seemed every time we were beginning to form a
team we would be reorganised…We tend to meet every situation by reorganising
and a wonderful method it can be for creating the illusion of progress, while
producing confusion, inefficiency and demoralisation."3

The informal systems of trust, norms and networks is known as social
capital. Change frequently destroys social capital as many downsized
organisations have found to their cost. A simple way of destroying social
capital with your customers is to make sure you frequently change the sales
people serving them.

Recent research has shown that social capital contributes not only to the
quality of life, but also to the economic well being of society.4

So, start deploying the virtues of the informal organisation

– Enable people’s learning: providing mentoring and coaching is a corporate
responsibility. With de-layered and slimmed down organisation structures, it is
often difficult to provide the level of support required. So individuals
themselves have to take responsibility for their own learning.5

But rarely are they equipped to do so. In the past couple of years, my firm
has been running courses for clients that we privately call "the
consultant’s survival kit". An important module in these courses is
personal development – identifying performance development needs and how they
might be best met.

So, help people help themselves

– Develop consultant competencies: a simple distinction is that whereas management
is about maintaining continuity through processes, consultancy is about
influencing discontinuity through projects. But the reality is that much of
management effort nowadays is directed to change – discontinuity – through
projects, often working in multi-functional teams exercising influence, rather
than command and control. So managers – in this aspect of their role – have to
use the same skills as a consultant.

And, of course, HR specialists operate for much of their work as internal
consultants. Indeed, with much of their work now outsourced, their job too
becomes more about the management of discontinuity.

So, acquire a consultant’s competence.

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