Internal consultant?

When planning for new change initiatives, many organisations consider the trade-off between either using an internal resource/consultant or hiring an external consultant. In the decision making process, a variety of factors should be explored. An overview of several key considerations that can play a role.

In principle, external and internal consultants possess the same characteristics: they are both tasked with solving organisational problems and implementing the proposed solutions in order to improve the performance of the organisation. Despite the similarities in their job description, there are several large difference between both types of advisors (as described in the section external vs internal). In addition to the advantages and disadvantages named for each type of advisor, several contextual factors and considerations remain, in order to determine a preference for one over the other.

External consultants can be (in some cases better) used when deeply specialist knowledge is needed for a large-scale project, or when a neutral, independent, view is needed to resolve a problem. Sometimes, an organisation simply has insufficient capacity in-house to tackle a specific issue, or the board is in need of external expertise to properly assess the risks of the alternatives at hand. Internal advisors, on their side, know the organisation well and, for example, are aware of what is taking place within the organisation – as they speak the language of the organisation and understand the culture of the professionals working there. Furthermore, hiring an external consultant can be a more costly commitment, whereby an internal advisor, from a cost viewpoint, could be the better choice. Internal advisors can also switch gears faster within the organisation, if necessary.

Organisations should first decide whether an external view is necessary for a particular dilemma. If so, how much expertise is required? When large organisations already have a mature internal consultancy division, the choice of whether or not to hire an external consultant is often made more easily. However, when a major (change) project requires a large quantity of resources (human capital, specific expertise), it can be easier to choose for external reinforcement.

An important task is to, beforehand, determine which problems an external consultant should solve. Some tasks are crystal clear: a consultant is hired to carry out a specific assignment. Other times, the task is less clear, and the duration of projects cannot always be clearly defined. When a task is less clear or specific, it often can be clearly defined by the expected outcome. When organisations, for instance, want to improve the communication within their organisation, it must be clearly defined what outcomes the improvement trajectory must secure: are there goals objective (e.g. that everyone within the organisation can communicate directly with one another via a specially designed chat programme)? Or must the presence or involvement of employees improve at meetings? Is more cooperation needed between staff with different tasks? Etc.

Organisations must clearly define the task and draft what the expected (quantitative) end results are, which includes, for example, distinct timeframes, or (when relevant) the fee that external consultants will receive in exchange for their work. Furthermore, organisations must distinguish, in advance, which expertise and skillset an (internal or external) consultant should have in order to realise the drafted goals. Additionally, for any project, one must consider the working style and culture within the organisation, and the required profile the (external) consultant will need to fit to the organisational culture and the staff involved in the project.

Despite the many pros and cons both types of advisors hold, in many cases the decision whether or not to hire an external consultant is ultimately a question of budget. In some cases, a specific budget or subsidy scheme may be available for the purpose of hiring externally, in which case the choice could become more easy, but when there are no such limitations organisations must thoroughly examine the above mentioned aspects before making their decision.

Consulting Industry