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Effective Due Diligence

Some reminders on the elements of effective due diligence when hiring an HR consultant -- or "you don't need a consultant to hire a consultant."

This article accompanies Corporate vs. Consulting

Tuesday, March 1, 2011
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Given the trend towards HR outsourcing that has emerged during the past decade, coupled with the proliferation of external HR consultants offering their services, it makes sense to explore what best practices have evolved in recent years for doing effective due diligence before selecting an external consultant.

The following outline represents our best advice, based on many years both buying and selling HR consulting services. A systematic due-diligence process can be broken down into five key steps:

1. Define the scope and context of the consulting engagement by asking the following questions:

* What is the expected project outcome?

* What are the critical competencies required to achieve that outcome?

* What is the project's allotted budget?

* What is the timeframe needed to meet the objective?

* How will progress be tracked and measured?

* What are the consultant's attributes that will best fit with the company culture?

* Who are the key stakeholders that the consultant will have to interface/serve/consult with to ensure success?

2. Develop a "success profile" that the selected consultant will be measured against.

* Once the project's scope and context are set, develop a success profile of both technical and personal attributes the consultant should possess.

* The success profile should be competency based. It can then be easily highlighted on a tracking grid allowing for a more organized, systematic comparison if there are several strong candidates to choose from. For example, if the project requires creative thinking, research and strong presentation skills, then make sure you objectively rate those competencies.

3. Investigate the field of available consultants.

Block out time to become familiar with the possibilities. There really is no formal, systematic way to do this. Probably the best advice is to utilize your professional network "to learn the field."

* Consider size and structure of the types of consulting organizations in the field (solo entrepreneurs, small-group practices, corporate consulting practices, etc.)

* Does the consultant or practice offer a wide range of services in case the scope changes or expands?

* What are the professional and educational backgrounds of the consultants' pool (which may be important in terms of validating the work)?

* Develop an understanding of what represents standard verses customized types of projects in your target area.

4. Identify and evaluate potential candidates.

* Query them as to specific consulting assignments they've completed to make sure that they truly understand the world of consulting.

* Identify ways for them to demonstrate their skill and knowledge, possibly using a work sample format. Also ask for a written outline of how they would approach your specific assignment. Be clear that you're asking for general guidelines that will help inform your decision and that you're looking for rough outline, not free consulting.

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* During the interview process, make sure the consultant meets with those key stakeholders who will be involved with the project to assure a good "culture" fit.

* Evaluate, based on tangible evidence of past performance, whether the consultant has real capacity to deliver on the project. Discuss with potential consultants their experiences with similar types of projects and be sure to do a reference check with their prior clients.

* Make sure you do your diligence on potential obstacles the consultant may encounter within the organization. Challenge them on how they will deal with those obstacles.

* During the interview process, make sure there is a good balance between explaining the project and getting the consultant to talk enough to be able to determine how well their skills fit with the potential assignment.

* Be clear about the money upfront. Discuss billing timeframes and expectations to scope.

5. Set clear rules of engagement.

* Make sure the "Rules of Engagement" are clear between all parties involved, ensuring a successful outcome for both you and your HR consultant.

In conclusion, while there are no guarantees that, by doing a systematic due diligence, you will identify and select the perfect HR consultant 100 percent of the time, one thing is clear: If you do follow a careful, well-thought-out process, you will significantly enhance your chances for a successful hire.

Richard B. Marcus, Ph.D. is a business psychologist who has an independent practice in Philadelphia. Rob Rosend is vice president of human resources at Storeroom Solutions in Radnor, Pa.

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