The question often arises as to whether to develop your pay programs in-house, or spend the money to hire a compensation consultant. Below are five significant reasons to consider engaging a compensation consulting firm:
- Time Factor – A consultant can focus on your issues, without needing to put out fires, such as the ones you are constantly facing. The consultant can also focus on completing the project to meet your deadline, without any distractions.
- Experience – A consultant possesses breadth and depth of experience gained from handling similar issues with a broad group of clients and can, therefore, quickly respond to your needs without having to “reinvent the wheel” or “learn as they go.”
- Objectivity – A consultant will provide unbiased solutions to your issues and provide alternatives that best meet your needs and administrative capabilities, not those that benefit the consultant. Be cautious of “one size fits all” solutions; templates should not be the tool of an effective consultant.
- Cost/Benefit – Companies have tried working out the solutions themselves, and sometimes they succeed. However, the cost of failure can be significant, since it includes the value of lost opportunities, wasted management and damaged credibility with employees. A consultant can focus on the problem and quickly and efficiently develop sound solutions.
- Availability – Even highly-qualified professionals need help occasionally, which is why a consultant is important. The consultants have the time, resources, and specialized experience to supplement a company’s in-house talent.
SIX QUESTIONS TO ASK WHEN HIRING A CONSULTANT
When you have made the decision to engage an outside compensation consultant, there are a number of important questions you must address:
- Responsiveness – Did a consultant return your call quickly? How long did they take to prepare the proposal? Remember: If they don’t react quickly when you call before the contract is signed, they probably won’t be any quicker once they are working on your project.
- Experience – Do they have specific experience in your industry and type of company? Are their solutions “canned,” or are they tailored to meet your special issues, management style and culture? Remember: There is a good chance that the concepts that worked somewhere else probably won’t meet the unique needs of your company, so focus should be on compensation expertise, and not solely on industry penetration. Creativity from broader perspectives results in progressive programs.
- Cost – Does the proposal cost align with the approach presented? It is not always recommended that price comparison be the deciding factor unless you can ensure that you are comparing identical proposals. Remember: If the price is too low, it could be a “loss-leader”, just to get in the door. If the price is too high, you are probably paying for their overhead and marketing, as well as their learning curve.
- Deliverables – What will you receive at the end of the project? Will you receive concepts or the actual finished materials, documentations, formulas, etc.? Remember: It is extremely important that the deliverables you actually receive are everything you expect, so that you have all the tools and materials you need going forward.
- Commitment – Will a consultant be available to assist you in the future? Does the consultant provide you with the materials and availability necessary to fully implement and use the program in the future? Will they be available to you on an ongoing basis? Remember: The consultant’s responsibility is to provide the tools and training so you can handle things on your own. However, they should be available to assist your company when you need support. Developing a working relationship with the consultant provides an opportunity to leverage their knowledge of your company/organization for future initiatives.
- Relationship – Who will actually do the work? Will the consultant who sold the project continue to be available to you during the project phases? Remember: The person you are speaking with may only be a salesperson, not the consultant who will actually be involved with the assignment.
After you have decided to pursue an engagement with an outside consultant to assist you, we hope you will consider Compensation Resources as a resource.
