Consultants add value if used properly but can't replace permanent staff
If HR professionals ever need to make a business case for hiring permanent staff versus using consultants, they should trot out the special report from Ontario’s auditor general on the province’s electronic health records initiative.
Ontario’s eHealth debacle (there really isn’t another word for it) provides a textbook case of how not to staff an organization. The 52-page report from auditor general Jim McCarter is compelling, and it gets really interesting from an HR perspective on page 35. That’s where the report goes in-depth about the use and procurement of consultants.
The report is available on the auditor general’s website but here are two numbers you need to know: 300 and 27. The former is the approximate number of consultants the Ministry of Health and Long Term Care’s eHealth initiative employed and the latter is the number of full-time ministry employees.
That’s a 10-to-one ratio. If you’ve ever wondered what an organization run almost entirely by consultants would look like, now you know. It’s not pretty. And eHealth was undoubtedly run by consultants — some of the senior management positions were held by consultants. These consultants even had the authority to hire more consultants.
And by relying on consultants instead of hiring employees, the province certainly wasn’t getting a bargain. As the auditor general noted, a consultant with a rate of $300 per hour would collect more than $500,000 in one year. “Even the most experienced full-time employees are paid considerably less,” he said.
Consultants were also used to do administrative activities. They were paid, at rates in the $300-per-hour range, to prepare, review and edit voice mail greetings, thank-you letters, internal memos, intranet pages, seasonal party communications and documents prepared by other consultants. (Nothing like hiring a consultant to review another consultant’s work.)
And the downside doesn’t end with the money. When a consultant’s tenure ends, he walks out the door with his knowledge. True, the same could be said for a full-time employee who departs, but at least there’s a chance the employee will stick around long term.
The report isn’t an indictment of consultants. But it’s a guilty verdict on the consequences of using them improperly. Used properly, consultants are worth their weight in gold. They bring expertise to the table that doesn’t exist internally and provide fresh thinking. But consultants should never form the backbone of an organization.
What can HR professionals learn from this report? It’s a vindication of the merits of headcount: Not only are full-time employees the best people to run a company, they’re also a relative bargain.
