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Consulting Firms and Subcontractors: How to Make it Work (Better)

NASA widely publicized the “seven minutes of terror,” which was the critical phase of the Mars lander mission during which the spacecraft entered the Martian atmosphere and autonomously landed the Discovery rover on the planet’s surface.

NASA has nothing on consulting firms. You experience seven minutes of terror every time a subcontractor stands up to present to one of your clients.

Your consulting firm has probably experienced mixed results with consulting subcontractors in the past.* Fortunately, you can lower the risks and improve the results from outside talent.

Employing subcontractors effectively to expand your consulting firm’s capacity and capability isn’t rocket science. Success comes down to forethought, planning, systems, templates and controls.

Look at your consulting firm’s subcontractor preparedness across four phases, and improve your performance in each.

Find and Select Subcontractors

Consider the full range of skill sets, experience and traits you may need in order to flesh out your consulting firm’s capacity.

For each distinct need, develop a pool of at least three subcontractors who are amenable to working with your consulting firm. The right time to develop this pool is now—long before you win work that’s going to demand subcontractors. You don’t want to be scrambling to find resources in the days leading up to a project kickoff.

Also, prepare your consulting firm’s standard contracts and think through your fee structure for subcontractors in advance.

Fees and compensation structures for subcontractors comprise a topic deserving a separate article, if enough readers are interested. In general, set your fees so that your contractors are fairly compensated, your risk is minimized and your consulting firm’s margin is maximized.

By the way, if you’re wondering where to find great subcontract consulting resources, that’s another fair question that I’ll address in a future article.*

Onboard Subcontractors

Your consulting firm, your subcontractors and your clients will all be happier if you have a well-documented onboarding process for your subcontractors. Even a one-pager that details logistics (e.g., who to call about what) and reinforces your firm’s values is helpful.

Ensure roles and responsibilities are clear and explicitly communicated.

Any “rules of engagement” between your subcontractors and your consulting firm’s clients should be captured in the standard, onboarding packet you hand a subcontractor.

Finally, consider applying the 3 Rocks personnel approach to subcontractors. This approach defines what your consulting firm’s expectations are, and also what “above and beyond” looks like (Rock Star) and what is considered unacceptable.

It’s not enough to define the center of the road you want your subcontractors to drive down. Show them where the edges are too.

Execute the Project with Subcontractors

You can skate by with loosely documented approaches when you’re relying on full-time consulting staff. They’ve learned the ropes and have had years of guidance to deal with unexpected developments.

However, if you’re pulling in subcontractors, you’re probably at capacity—which means you don’t have tons of time, or you’re operating in an area where your knowledge isn’t deep—which means you don’t have a ton of oversight strength.

Therefore, your consulting firm’s subcontracting mantra should be: templates, systems and more templates.

Document the heck out of the execution phase of your consulting projects and, especially, what you expect your subcontractors’ deliverables to look like.

Also, maintain your control over every critical, client-facing aspect of your consulting engagements. Don’t allow important deliverables to flow directly from a subcontractor to your client without passing through a review process.

Wrap Up and Improve Your Subcontracting

Your consulting firm has a project, postmortem process. (You do, right?) Apply that same process to the subcontracting portion of your project.

What went well? What could have gone better? How could you have enabled your subcontractor to perform better? What changes should you make to your subcontracting process?

What have you found is important to make subcontracting work well for your consulting firm? (Or, as a subcontractor, what enables you to succeed?)


22 Comments
  1. Adrian Botham
    March 10, 2021 at 6:07 am Reply

    Hi David,
    Thanks for this article. It’s landed at a great time for me as I’ve recently started using subcontractors in the last few months and I’ve had a few issues.
    As I’m a structured thinker, I have an onboarding approach, systems and the like, which are working well so far. Where I’ve had a few issues is with the compensation structure. To cut a long story short, I was too generous with my first subcontractor and only realised this too late. He then expected the same on the next assignment, which I couldn’t do, and it’s led to us parting ways for now. Luckily, I found a replacement quickly, used a different compensation structure (after doing research among my more experienced friends/mentors) and it’s working out okay for now.
    I’d welcome your thoughts on this important topic in a future article please.

    • David A. Fields
      March 10, 2021 at 6:20 am Reply

      Congratulations on building your business to the point where you’re using subcontractors, Adrian. Also, good on you for thinking generously about compensation–while it may have led to an unprofitable project and non-repeatable expectations, at least you were being abundant rather than stingy.
      Your experience isn’t uncommon, and setting the compensation correctly is important enough that it deserved its own article. If you have a moment, pass along the case study of your original compensation structure and where you’ve moved to. You can post it here or shoot me an email.
      I appreciate your sharing today, Adrian!

      • Chris Doig
        March 10, 2021 at 12:15 pm Reply

        I have found subcontractors often want the same rates they would give a client if they worked directly for them. They put very little value on the sales effort we provide and the systems we have. With customers pushing the price down and subcontractors increasing the costs, making enough profit can be challenging.

        • David A. Fields
          March 10, 2021 at 4:14 pm

          In-demand subcontractors are often resistant to discounting their price, even though they haven’t had to do any of the sales work and even though they’re not taking on the contract risk. By the same token, Chris, if you’re bringing the best in the business to the table for your clients, then you can reflect that in your fees. And if your clients don’t value that, then don’t subcontract to the best in the business!

          The one thing you actually don’t have to tolerate is being squeezed in the middle. Instead, match your subcontractor’s skill and value to the client’s desire for skill and value.

          Great point to bring up, Chris, and I appreciate you voicing your experience.

  2. Kerry Nesbit
    March 10, 2021 at 7:27 am Reply

    I was a subcontractor for a fund-raising consultant from 1983 until his retirement in 2008, providing writing and graphic design services for most if not all of his clients. In all but a very few cases, I had no direct contact with the clients, and he presented all deliverables—mostly capital campaign case statements, annual giving solicitation packages, annual reports and student recruiting publications—most likely without acknowledging my involvement. I worked behind the scenes for an hourly rate, and he applied a 100% mark-up. The relationship worked well because I quickly learned what he had to teach me about successful fund-raising appeals and was able to deliver work that, along with his consulting advice, resulted in successful campaigns.

    In my own business over the years, I’ve subcontracted with printers to produce stationery and brochures, signs, banners, etc. for my own clients, and have had a few clients later approach the printers directly for reprints. To their credit, the printers I’ve dealt with have let me know they’ve been contacted by my clients and offered me the option of participating in the projects. In most cases, I’m happy to turn over responsibility for proofing, approvals and timely payment to the client and printer, but I appreciate the courtesy being notified. So I would suggest, in establishing relationships with subcontractors of any kind, addressing the issue of working with the client in the future–especially if the subcontractor will work directly with the client rather than behind the scenes as I did with my fund-raising consultant client.

    • David A. Fields
      March 10, 2021 at 7:51 am Reply

      Thank you for contributing your experience as a case study, Kerry. You’ve highlighted a couple of important issues to take care of during the contracting process: non-circumvention and non-solicitation agreements.

      While most consulting firms probably wouldn’t consider printing and construction of materials to be subcontracting, your example also adds weight to the importance of giving clear direction and creating long-term relationships with your subcontractors.

      I appreciate you joining the conversation, Kerry!

  3. Kay Palmer
    March 10, 2021 at 9:43 am Reply

    My first time in employing a subcontractor, I resourced a person I had known for a number of years and we had worked together as employees for a corporation. Much to my chagrin, his first words, past the initial greeting, was to ask where the supply closet was, so that he could pick out the supplies he was thinking he would use on the project. We were paid well to do the consulting work, to ask for supplies, to me, was out of line. A learning opportunity to add to my onboarding expectations, that the subcontractor is responsible for thier own office suppplies for the project!

    • David A. Fields
      March 10, 2021 at 10:20 am Reply

      That’s a funny, if painful, example, Kay! Ground rules, ground rules, ground rules. What’s acceptable and what’s not. First time subcontractors in particular need good direction and guidelines.
      Thank you for sharing that instructive story, Kay.

  4. Mark Nevins
    March 10, 2021 at 10:08 am Reply

    David, I would be quite interested in hearing your thoughts and fees and compensation structures.
    This is a great topic – – thanks for exploring it.

    • David A. Fields
      March 10, 2021 at 10:21 am Reply

      Thanks for expressing your interest, Mark. Look for that article in the coming months.

      • Patrice Gorin
        March 14, 2021 at 4:21 pm Reply

        David, very insightful and timely article and comments as I am looking for help. I am most interested in the examples discussed of subcontracting behind the scenes and ‘on stage’; as well as your analysis of the best mix (depending how productised the consulting service is) and fee/business model. Would love to also see an example contract. Will you be attaching some chocolate too ??

        • David A. Fields
          March 14, 2021 at 4:34 pm

          If you’ve reached the stage where you’re looking for help on your projects, you’re heading in the right direction–Patrice. That means you can focus on what you’re best at (and enjoy most) while increasing the profitability of your consulting practice.

          Typically, unless your output/delivery is extremely customized, you’re best off leading the client-facing aspects of your work. Your subcontractors can stay completely behind the scenes (like analysts) or support you in your presentation and delivery of results.

          By the way, all our clients do receive chocolate–not matter where in the world they are, my team finds a way to make it happen! (We have our priorities straight.)

  5. Kevin Pendergest
    March 10, 2021 at 10:26 am Reply

    David,
    Over the past 25 years of owning my own consulting firm, I have both used many sub-contract consultants on projects to provide very specific services in areas outside my expertise and I have also worked as a subcontractor to firms who needed my expertise in order to be able to secure projected they were pursuing. I am a firm believer in the value of these type of strategic alliances and it has proved to be very profitable over the years.

    • David A. Fields
      March 10, 2021 at 11:12 am Reply

      Thanks for the living example of how valuable subcontracting can be on both sides of the table, Kevin. My consulting practice–the Ascendant Consortium–was entirely built on the idea of subcontracting, so I’m right there with you in recognizing how powerful it can be.

      Also, congrats on 25 years owning your firm! That’s no mean feat and is another point of testimony showing how effective subcontractors can be as part of the consulting model. I’m glad you shared today, Kevin–super helpful!

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