Trust me, I’m a consultant

06/07/2012 § 2 Comments

The issue of trust recently came up in a discussion with a research partner. In the ‘make or buy’ deliberation, one of the things to weigh up is trust. You can do the work yourself — make it — or you can buy in a consultant. If the work is sensitive or c0nfidential*, then bringing in a third party seems riskier. They are not under your direct control, and the contracted relationship is finite rather than open-ended.

This view, though, misunderstands the business of consulting. Consultants trade on reputation. Their capital base is the goodwill and trust they have built up through prior assignments. Being untrustworthy eats into their capital, which has long-term implications for their ability to earn a living.

In addition, consultants need to prove themselves reliable over and over again. Each new proposal, each new assignment, is another occasion when consultants have to demonstrate their knowledge, capability, and trustworthiness.

Contrast this with an employee. Employees only need to get through a single hiring decision (and then survive the 90-day trial period). After that, they just have to be mediocre. They just have to demonstrate that they aren’t bad enough for the employer to bother with a firing process. Even if they do end up leaving under less than ideal circumstances, the probability that the information will reach potential new employers is fairly low.

Is every consultant trustworthy? Of course not. But then, neither is every employee. It’s just that a consultant playing the long game and not ideologically driven actually needs to be more scrupulous than an employee. If nothing else, mercenaries are predictable.

Also, there are two aspects to trustworthiness:

  • whether the consultant is discreet and respects c0nfidentiality
  • whether the consultant can be trusted to do the work correctly.

A lot of focus goes on the first aspect, but the second aspect is actually harder to verify. If clients knew how to do the work, they wouldn’t be hiring consultants. So, they have to accept on faith — they have to trust — the quality of the work.

Which makes consultants a bit like car mechanics. You may not really understand what they are doing, but over time the good ones develop trust and a loyal clientele.

*Please excuse the odd spelling — it gets me through some firewall.



§ 2 Responses to Trust me, I’m a consultant

  • Paul Walker says:

    Surely a consultant just has to look better than the alternative. All consultants could be bad, you just have to look a little less bad than the other guy. Thus you get a low level equilibrium.

    • Bill says:

      Well, that would be the lemons market argument. But there are alternatives to consultants in a way that there aren’t alternatives to cars. You can hire someone to do the work and make the quality control internal to the firm. Consultants have to be less bad than hiring new employees.
      Of course, that means that when there are institutional limits to hiring (sinking lid policies, for example), then the cost of hiring goes up so the quality of consulting doesn’t have to be as high!

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