Scratch below surface to find consultant objectivity

Most systems consultants offer unbiased advice, but check their track record and ask questions
By David Brown
|Canadian HR Reporter|Last Updated: 02/15/2005

Any time an HR department goes looking for a consultant to help choose an HR management system, one of the primary concerns should be finding truly objective, unbiased help, says Marilyn Blackwood, formerly an independent consultant specializing in system selection.

HR technology experts are an “incestuous group,” says Blackwood, now director of global HRMS for Montreal-based CAE, a provider of simulation technologies and integrated training services. Most of the consultants know most of the other consultants, and often have working relationships or experience with most of the vendors.

In most cases, that is not a problem, she says. “All I can say is that good consultants are going to be very objective and are going to look for the best solutions for their client.”

In the consulting world, reputation is all important, she says. For consultants to stay in business they need to be objective because word spreads if they are not. Eventually, they will find it difficult to get customers.

But if client organizations aren’t careful they could hire a consultant who may be a little too close to one vendor and end up with a system that may not be best for the organization but is preferred by the consultant for self-interested reasons.

For instance, beware the selection consultant who is also interested in implementing the system, she says.

“If that consultant you bring in to help you in the selection process has any expectations of staying during the implementation process, there is always the chance that they are going to lean toward the system they are comfortable with,” she says.

The reality is implementation work is more lucrative than selection work, says Canadian HR Reporter regular contributor Al Doran, a Toronto-based HR systems consultant specializing in system selection.

Consequently there are not very many consultants who focus solely on selection. There are many who say they can provide selection advice, but often they are more interested in implementation, he says.

There is another reason consultants can sometimes be less than fully objective, he adds.

In some cases consultants have a more direct incentive to recommend one system over another. Formal partnerships and alliances are common and well-known, he says.

But in other cases there are less formal, more subtle arrangements being nurtured by overly eager sales reps out in the field. It is usually a case of, “If you direct some clients to us, we can work out a commission for you,” says Doran.

“These are things that do go on and it goes on quite a lot,” he says. HR people have to be aware of it, ask questions and dig deep to see if the consultant has a history of impartial recommendations. If the last five or six recommendations are all for one system, that is a pretty revealing red flag, he says.

Last year, Florida-based Best Software set up a new HR consultant alliance program. It offers HR consultants with clients in the U.S. a 10-per-cent referral fee for clients that buy the company’s Abra HR software, as well as special training and industry information for an annual fee of $495 US.

Tom Edgar, president of T.R. Edgar & Associates, a McLean, Virginia-based HR consulting firm, joined the program in December.

Like Blackwood, he believes that in the consulting business, reputation is everything. But he is not concerned that joining the program will hurt his reputation or even raise issues about objectivity.

Edgar works almost exclusively in a unique niche market in which Best Software’s Abra system is simply the best product available.

“This town is all about government contractors,” says Edgar about McLean, which is just outside Washington, D.C. Most of his clients are small- to mid-size defence contractors and almost all of those clients use an accounting system called Deltek. Edgar said that, to his knowledge, Abra is the only system able to communicate effectively with Deltek.

Edgar pointed out that he is first and foremost an HR generalist consultant, more inclined to put in a compensation system or an affirmative action program than a technology system. “I am not in the systems business,” he says. And so anytime he gets involved with technology it is because a client grows to the point where a new HR management system is necessary.

They could buy one of the large vendor systems for as much as $1 million or get some of the add-on HR functionality for the Deltek system, which could still cost them as much as $500,000.

Or else they can buy most of the basic Abra modules and spend $20,000 or $25,000. The natural choice is to go with Best Software, says Edgar.

“I am referring it already. I am recommending it already. It fits the space in which I work most of the time. Why wouldn’t I sign up? It gives me a piece of the pie,” he says.

He says he has discussed buying Abra with three clients since joining the program and in each case he told them about the program. “I’m not trying to hold anything back,” he says.

Finders fees and other forms of partnerships and commissions are common in the industry on an informal level, says Tom Tillman, director of product marketing for Best Software.

“It is not unusual at all for consultants to partner with authorized resellers of software products,” he says.

“We have always had relationships with consultants. We just felt it might make some HR consultants more comfortable to have a more formalized vendor-sponsored program.”

Some client organizations may be uncomfortable with hiring a consultant in the program, and some consultants will prefer to remain unaligned, says Tillman.

But those consultants that join the program could say they are actually able to provide a better service to their clients because of the industry information and training Best Software will be providing, he says.

“This program is an opportunity for an additional source of information on technology trends. And if they choose to recommend us that is fine, and if they don’t they still have that source of information.”

He adds that the program does not require the consultants to give Best Software any business, nor is it expected to be a big revenue generator for the company. It is more of an outreach program to develop relationships with consultants, he says.

What’s more, the program is intended for HR consultants as opposed to HR technology consultants, he says. “I doubt that the consultants who are doing the research and analysis on HRMS would tend to be part of this program.”

The key to picking the right system is clearly defining what the organization needs and wants, says Blackwood. Not all organizations will need a consultant to do that, she says. Some organizations, particularly larger ones, will have the in-house expertise to figure out what they want and need from a system and which ones are most likely to meet those needs.

“As far as most of the major HRMS systems out there, I would say the majority of them are the same. They are not that different,” she says. “Some will be a little stronger in one place and a little weaker somewhere else, so it is important for the buyer to know where their emphasis is.

“Really, as long as you know your requirements, it is pretty easy to figure out the (systems) that should make it to your short list,” she says.

“The technology is the least of the issues. Most of the systems available today, the technology is current and common. It is really not the issue. It used to be years ago… The real issue is making sure you have defined what it is that you have to do and confirmed carefully with the vendor that is what the system can deliver.”

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