Consultants: advisors or advocates? (An Advertising Supplement to the Los Angeles Business Journal: Education).

CEOs and other top executives hire consultants for a wide variety of reasons. In some cases, they are needed to solve problems, provide new insight or a fresh perspective or simply to serve as additional manpower to perform needed tasks and functions. Generally, consultants are retained because of their expertise and knowledge; however, academic and business credentials are not the only selection criteria. Regardless of what the business need is, it's important for those who hire consultants to look beyond experience and qualification to personal and professional ethics -- namely, are the consultants objective, impartial and independent? Why? The answer is rooted in a changing business environment where the traditional distinction between impartial advice and biased advocacy is being eroded to the detriment of consultants and the clients they serve.

When Is a Consultant Not a Consultant?

A consultant is not really a consultant if his or her purpose has a hidden (or not so hidden) agenda. For example, consider the transaction that takes place when consumers buy cars. Automobile salespeople and service writers are now referred to as "consultants", which is a misnomer. The goal of the car salesperson/consultant is to persuade prospective buyers to purchase automobiles. Those engaged in this occupation are compensated based on the products and services they sell. Since selling is an important role in our culture, competent salespeople are generally well paid for their work. But why confuse advice and persuasion just to give legitimacy to this particular sales process?

Unfortunately this phenomenon is not unique to the automotive industry. It has spilled over into other areas and affected both buyers of consulting services and consultants themselves. Similar to the example of the automobile sales consultant, the distinctions have blurred between advice and advocacy, impartiality and bias, independence and dependence. The title of consultant, which traditionally implied impartial information and recommendations based on the needs and requirements of clients, is becoming increasingly compromised.

The Changing Industry

Beware: the consulting industry is changing, like the culture at large. Unfortunately some of these changes are eroding the management consultant's traditional role. Two changes worthy of mentioning in the consulting environment are the following: product/service affiliation and promotion of trendy advice.

Product or service affiliation occurs in three different situations involving "finders fees," reseller arrangements and formal ownership ties between consultants and businesses, which use consultants as a vehicle to sell or promote their separate products and services. In the first and second cases, consultants are compensated either directly or indirectly for purchases that result from their recommendations. In the third case, consultants are allied with separate product or service organizations that can benefit from their recommendations.

The first circumstance has been around for a long time. Consultants are frequently offered finders fees. One firm may handle this matter differently from another. In terms of independence, the fees can be disclosed to the client, given directly to the client or declined. The second situation works in two ways: Consultants may resell other products or services and resellers frequently advertise themselves as consultants, similar to the salesperson example above.

The newest situation is the last case where product companies invest in or purchase significant interests in separate consulting organizations. As product margins narrow, some companies look at consulting as a high-margin profit center to compensate for low-margin commodity products. While the motivation is understandable, what happens to the consultants and the consulting industry in this environment? Somewhere along the line impartiality and trust become tarnished.

Another disturbing situation is the tendency of consultants to become advocates of trends and fads. The best recent example is probably the Internet, which is rapidly changing business and society. What was so bothersome was the outrageous advice consultants offered their clients during the recent Internet bubble. It felt like "gold rush fever." The best hyperbole was the new phrase, "being Barnes-and-Nobled." Its meaning referred to being outmaneuvered by an Internet upstart. The phrase referred to Amazon.com's success, which appeared at one point to threaten Barnes and Noble. Since the phrase was born, many Internet businesses went bust; Barnes and Noble developed a thriving Internet business, maintained its "bricks and mortar" stores and Amazon.com continues to be unprofitable.

The problem comes with the tendency for consultants to get caught up in the latest fashion and the impact these fashions can have on businesses. The motivation is understandable; consultants want to present the latest thinking and approaches to their clients. One would hope that consultants would represent the voice of reason. Yes, there are times to charge ahead, but there are also times to plan and execute wisely avoiding the pitfalls of trends and fads that fade, some quickly, some more slowly.

Avoid Misunderstandings

For CEOs or others who are responsible for hiring management consultants, consider these suggestions in order to avoid any misunderstandings.

Clearly establish with all consultants the nature of any and all formal and informal business alliances and relationships that may adversely affect their objectivity, impartiality and independence. This includes relationships involving individual consultants and corporate alliances. Know about these relationships and alliances in advance as they may impact the consultant's advice directly or indirectly or create the appearance of conflicts of interest.

Reconfirm these understandings prior to acting upon significant recommendations. These relationships change frequently.

Evaluate how consultants handle newly emerging issues and trends, especially when they are trying to resolve previously unsolvable problems.

* What makes the approach different?

* Has the approach stood the test of time?

* Does the approach make common sense?

* What problems will the new solution create?

Nearly every solution creates a new set of problems that need to be addressed. Try to get a step ahead and solve not only the current problems but also the anticipated problems created by the solutions. This is key to success.

Insist that consultants adequately understand the business situation and thoroughly design their solutions accordingly. Quick answers are typically wrong. Encourage wisdom and thoughtfulness; discourage flashy solutions. Yes, there are times for quick action, but as the public service announcement says "speed kills," or as a colleague often said, "haste doesn't make waste; haste makes mistakes."

In an ideal world, management consultants are still considered impartial advisors, experts and facilitators who assist their clients with minimum partiality. They still strive to understand the goals and objectives of their clients and work to accomplish them. Even if their recommendations are unpopular or depart from traditional policies and practices, they are at least based on objective, unbiased assessments.

When companies insist on objectivity, impartiality and independence from the consultants they hire, the consulting engagement is more likely to result in a win-win relationship and produce the outcomes a company desires. It is in this way that consultants truly serve the best interests of their clients.

Jerald Savin is the President and Chief Executive Officer of the Cambridge Technology Consulting Group, Inc. located in Santa Monica, California. Mr. Savin has over twenty years of management consulting experience, including six years with the management consulting division of KPMC Peat Marwick. Mr. Savin is a Fellow of the Institute of Management Consultants, a Certified Management Consultant, a Certified Public Accountant and a Certified In formation Technology Professional. His practice area is information technology planning and management and systems design. For more information, please call [phone] or send email to [e-mail]