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Getting the job done isn’t adding value
Here’s a scenario. Your boiler has just exploded. A geyser is spurting from the top, instantly soaking the ceiling and walls in rust-coloured boiling water. On the threshold of your utility room, your toddler looks in, eyes as wide as saucers. You can already start to feel the chill as radiator after radiator starts to cool. You take a deep breath, and phone a plumber.
The Block-A-Lot van is a bit dusty and dented, but Dave, one of the firm’s top operatives according to the person you spoke to in the Block-A-Lot call centre, was just around the corner “helping a little old dear reset her thermostat” and was happy to drop around. He’s a bit less happy when he looks at the mess. Much head shaking has ensued, and he’s pointed out where your previous plumber went wrong – “You’ve had some cowboys in here” – but genuinely keen to help. He’s unpacked a lot of tools and is now pondering which screw to turn first. You helpfully point him towards the large hole at the back of what’s left of the boiler. “Ah,” he says.
Consultants like to talk a lot about adding value to their clients, but I’m starting to wonder if they’re talking about the wrong sort of value. Our research regularly shows a gap between clients’ positive perceptions of the quality of work consultants do and the value they add over and above the fees they charge (previous research tells us that this is the best way to phrase the question). Typically, around 70% of clients think positively about quality, but only around 40% think that consultants add value. That doesn’t mean that 60% think consultants charge more in fees than they add in value (only about 12% say that—which is still too high, but that’s another blog). In fact, about 48% think that the value added is in line with the fees charged – they bought a service and got what they expected. The service can, of course, add value, but the value it adds is to the organisation: A new IT system may add value by reducing costs; a new strategy may add value by highlighting new opportunities to generate revenue. But when consultants help organisations cut costs or grow their top line, they’re simply doing their job: They’re creating value for the business, but it’s value clients expected them to add, not additional value. The confusion between “expected” and “additional” value has a whole host of implications. At the very least it explains why clients and consultants often reach an impasse around performance-related payment: Consultants are looking to be incentivised around on time and on budget delivery, which clients interpret as being asked to pay extra for what they see as the standard service.
Back to Dave. It’s 8pm. His gaze shifts between the gaping hole at the back of the boiler and his watch. Clearly, fixing this is going to take a big bite out of his plans for the evening. You’re already paying Block-A-Lot’s premium rates and the idea of offering more to do the job he’s been hired to do sticks in your craw. “Coffee?” you say, brightly.
And that’s what happens in consulting. To be fair to the Daves of this world, consultants are acutely aware that no project is as simple and straightforward as a client thinks it is. It is never, let’s face it, “just” a loose screw or a gaping hole. But that doesn’t change things from a client’s point of view: Plumber or consultant, you’ve been hired to do a job and any value you create is part of that job (restoring heat to the house, cutting costs), not an added extra.
What kind of consulting is it that involves saying, “that thing I promised to do—you need to pay me more to get it”?