Government use of external consultants has come under the microscope – should HR follow their example?
In the run-up to the Federal election, the government’s use of external consultants has come under the microscope. Spending on consultants has surged with the Coalition entering into more than 8400 contracts worth almost $3.8 billion since July 2021.
Among the spending critics, former prime minister Malcolm Turnbull has described a ‘cult of the consultant’, saying that “the skills for doing so many things that are really core business are no longer in the public service”.
More widely – should HR professionals be concerned about an over reliance on external consultants to help them do their job? Mathew Paine, an HR senior executive with more than 20 years’ experience in the private and government sectors, thinks there are risks at play.
“If a business starts to rely on using external consultants by default rather than their in-house HR teams, it defeats the purpose of having an internal team. Consultancy services also add an extra layer of financial burden to an organisation,” says Paine.
Morale can also take a hit when the perception among staff is that consultants are being paid large amounts of money, may work less hours, have less responsibility, have a lack of knowledge of internal matters/politics or previous change management and may tell the company what they already know.
On the other hand, consultants can be particularly useful when an organisation is short staffed or finding it difficult to attract specialist talent, particularly post-Covid where many businesses face skill shortages and labour supply issues, says Paine. “Consultants offer employers more flexibility and can be used on short-, medium- or long-term projects without the obligations of paid leave and entitlements.”
The market for human resource consulting services, also referred to as human capital advisory or HRM consulting, is estimated to be worth $31 billion worldwide, representing approximately 10 per cent of the total global consulting market.
Human resource consultants are generally hired to provide advice to HR directors for improving the performance, management and delivery of an organisation’s human capital and the HR function.
Services can range from targeted projects such as the design and deployment of a compensation and benefits framework to large, organisational transformations.
Prior to engaging a consultant, internal teams should dedicate a significant amount of time to define the problem, articulate where they want to go, or be, and confirm the measures of success. “Consultants are not set and forget. They require a lot of internal stakeholder time to be successful,” says Paine. He recommends a comprehensive induction for the consultancy team and an ongoing internal key contact (reporting line) established with regular check-ins to answer questions and monitor progression.
“Particularly in relation to change management, ongoing communication, consultation, updates and progress reports with key stakeholders is critical, combined with what changes are coming, identifying the gaps, assessing how the the gaps will be closed and what is the change impact to individuals based on personas (for example, employee, line manager, executive, customer, applicants),” says Paine.
Transparency and communication with staff is also key to success. Joanne Alilovic, Director at 3D HR Legal, is sensitive to employee responses when consultants walk through the door.
Trust – that cornerstone to truly effective relationships – can be seriously damaged if consultants are brought into an organisation in a way that fosters suspicion and anxiety. This can be avoided through clear communication, says Alilovic.
“If you have strange consultants coming into the business for meetings and no explanation is given, then employees will make up their own minds about what the purpose may be. In those circumstances, it’s best to make sure meetings are held externally, and that any consultants calling the office have direct lines to contact rather than being passed through a third party. If it needs to be kept confidential – then keep it that way.”
But if the purpose of the consultant is not one that needs to be kept secret, then don’t, advises Alilovic.
“Often I go into a business to overhaul contracts of employment, policies and procedures, and then conduct workplace training to embed the change. The whole process is a lot easier where staff have been briefed that we have been engaged and why, what the process will look like, and how it will directly impact them – including at what points they will be directly engaged, and how they will be supported during the change process,” says Alilovic.
Paine has experienced the full spectrum of consultancy service.
“The best is where the consultant brings in expertise that is lacking internally (for example the implementation of a new HR software product), and provided a full change management plan, weekly update of progress, internal decision-making matrix and log, change risk assessment and led regular stakeholder engagement sessions.
“On the flip side, the worst experience has been poor quality of work, consultants regurgitating exactly the problem that was provided in the brief and telling me what I already knew. If there is no measurable return on investment, then the engagement of a consultant is simply a waste of time and money.”
