Should your consulting firm be rewarded for your hard work on behalf a client? The simple answer is:
The more nuanced answer is, “Mostly not.” We’ll get to that in a minute.
The confusion between effort and money-owed runs rampant on both sides of the consulting table. Clients often believe they are paying for effort. They presume they should pay your consulting firm by the hour or day.
That’s silly. Good quality delivered fast can be preferable to slightly better quality that takes longer. Hence, paying based on the amount of time invested is a deeply flawed approach to management consulting, internet searches and pizza.
You are (or should be) quite practiced in explaining the difference between time and value, and adept at closing projects with value-based fees.*
However, clients aren’t the only perpetrators of the time-equals-value myth.
Consulting firms are also prone to confusing exertion and benefit, and believe they should be paid for their effort. We frequently hear consultants justify their fees by saying, “This is hard work” or “This takes a lot of time.”
To which a client can rightly respond, “So what?”
An hour of your hard work has no inherent value. Only the benefits your consulting firm produces merit remuneration from clients.
(That does not mean your consulting firm should only be rewarded for “successful” projects. Engagements with high outcome risk may create substantial value even if they fail, because of the learning and the upside opportunities.)
Decouple value, effort and time at your consulting firm.
Explain to clients that they’re paying for the benefits of your expertise, not hours of labor.
More importantly, clarify your consulting firm’s internal thinking.
Not every hour of effort you expend produces the same value for clients.
To help you sever the mental link you’ve forged between time and rewards, follow the steps below.
Step 1: Assess Value and Time
(This task is very important.) Analyze your work, tasks, time and outputs. What creates the most value for clients with the least effort from your consulting firm?
Step 2: Handle Inefficiency
Step 2A: Based on your analysis, where is the value-to-effort ratio low?
Step 2B: How can you cut those low value steps out or hand them off to some other party so that you produce more revenue for less effort. (This is back door way into focusing your consulting firm around what you do best.)
Step 3: Leverage Strengths
Step 3A: Based on your analysis, what combination of high-value, low-effort activity could you package up and sell to clients as a freestanding offering?
Step 3B: How can you produce more of that high-value offering and transfer it to more clients with even less effort?
Time is a limited resource. Therefore, you need to consider its consumption during a consulting project in the context of the value of that time.
Once you’ve determined which of your efforts produce the most value for clients, then the time spent on those efforts is one guide (not the only guide) in setting your fees for your projects.
This approach ensures your consulting firm is being compensated for the value you generate while appropriately acknowledging a linkage between time and value.
Virtually every consultant occasionally falls into the trap of feeling they should be paid for their hard work, and forgetting that only the client’s perceived value matters.
You’ll succumb to that thinking less often when you’re acutely aware of how, precisely, your consulting firm creates value.
What low value, high-effort task can you eliminate from your workflow?
Text and images are © 2023 David A. Fields, all rights reserved.
Report writing used to be the lowest value:effort ratio for me. Even with as much outsourced as possible. Other tactics I now employ to deal with this is incremental reporting and iterating through feedback loops from clients – constant co-design and smaller deliverables. Also, constant creatiin – eg from meeting notes to report section with little friction. And real time ‘frameworking’ (not a word but basically visual note taking) – these often end up in final outputs. There is a similar unhelpful value:effort ratio in clients’ minds around outputs (I’m ex BIG consulting co, where this is rife) where long report = value. I can say more now in a few pages of diagrams than others say in 100s of pages. Making this clear to clients is the final bit of how I try and decrease the effort in reporting to clients.
Tim, that’s an outstanding example of diagnosing value vs. effort than decoupling them.
Report writing is the bane of many consulting firms’ existence and, ironically, reports create far more opportunity for downside than upside impact. A poorly written or error-filled deliverable diminishes that value and credibility of a consulting firm in the eyes of the client; however, all the effort required to buff out every error and polish the communication does not add to the perceived value–it’s taken for granted. The better solution, as you have discovered, is to deliver results and recommendations in different, less labor intensive formats.
Thanks for the excellent highlight of a low-value, high-effort activity, Tim!
I am also ex-MBB, then 15y VP/SVP hands-on experience in large industry. Nowadays I make clear from day 1, that I don’t like PPT (other than for pure communication). But that I prefer writing a concise ~2-5p word-memo (may include some slides).
— Much more fun
— Muuuch less work
— Much better thinking (rather than perfecting slides)
— If the client indeed requires some PPT: he/she doesn’t expect beauty 🙂
— Much quicker to grasp
— Much better to describe and truly understand more complex thoughts, situations and conclusions
— Much easier to comment on in writing (“Track Changes” in MS Word!)
In addition, I try to avoid in-depth proof of facts&figures, other than for essential aspects. Often facts&figures are quite quickly “good enough”, and don’t need “perfect”. For the real important facts&figures, and the thinking: no short-cuts at all.
I try to frame it to the client like: “I am absolutely happy to dig deeper whenever you need it… = whenever you believe, that this additional information might change your perspective, or even a decision. Otherwise let’s rather spend my time on sth more value creating to you”.
The above works in most cases: the more senior, and the more operational the client individual, the better. Worst are young ‘ex-MBB etc.’-strategy persons… (like myself 19y ago 🙂
Very well said, Ulrich. As you deftly pointed out, lower-level clients are often more fixated on all the details that take unwarranted time to deliver and actually create questionable, marginal value.
Your example of changing your workflow to create more value with less effort is outstanding. Thank you for sharing it with me and other readers.
This is great. I hate PPT
Raoul, it’s amazing how many consultants dislike PowerPoint, yet use it daily. Sorta makes you wonder how many of our clients hate PowerPoint too! (To be fair, it’s a great tool, it’s just over used.)
Thanks for chiming in, Raoul.
Because I do organizational development consulting and coaching, my impact is experiential. Culture exists in conversations and behaviors, not in reports. I provide resources as needed, but not reports. My motto is “I don’t do deliverables.” I don’t actually tell my clients that, but if a potential client wants some sort of report to be the output of our work it’s likely I’ll turn them down.
Well done, Lisa. I’d venture to say that even within your experiential work, there are tasks that produce huge value and others that provide marginal, incremental benefit. There may be opportunities to refine even further what you do for your clients so that you create the greatest impact in the least amount of time.
I’m glad you chimed in today, Lisa. Your approach will help quite a few readers.
… That said, if it’s something I think is fun to create, or something I can reuse, I just don’t label it a deliverable.
Thanks for pointing out out that I should keep an eye out for tasks that produce marginal, incremental benefit. I will watch for those.
Outstanding, Lisa! Let me know how you fare in your efforts to root out low-value tasks.