статьи авторов Руководства

Doctors in The House

(The Moscow Times, June 20, 2002)

Choosing the right consultant can be vital for the health of your business.

The local consulting market started to take shape in the late '80s, pre-conditioned by the country's shift to a market economy. Due to the nonexistence of private entrepreneurship during the Soviet period, the range of available consulting services was rather limited (for example, staffing foreign companies with support personnel).

Once market transformations had begun, the newcomer foreign companies started to demand consulting services, thus giving rise to the Russian consulting sector. It is noteworthy that Western companies created particularly efficient demand for consulting services, which allowed for the growth of both the representative offices of the major foreign auditing and consulting firms and the Russian corporate "zero-starters."

Practically all the consulting services available in the West are presently also rendered in Russia. However, services well-established in the West often appear to be at the start of their lifespan in Russia. For example, executive coaching is done only by 2 or 3 companies, with less than one year's experience.

Nowadays Russia is home to all of the former "Big Five," the major auditing and consulting networks' representatives, and blue-chip consultancy representatives (some of which, however, are just merely indicating their presence). Besides, the Russian consulting sector has already emerged, and is now represented by a wide range of various firms: from the major players, who outstrip the Big Five's Russian representative offices in terms of sales, to individual consultants.

It is noteworthy that some of the problems faced by international business in Russia are culturally specific, and Western experts are often unaware of how to deal with these. Examples include certain issues of customs regulation, peculiarities of disclosing information about Russian counter-agents and handling privatization and bankruptcy cases. These niches are completely filled by specialized Russian consulting companies. Moreover, large Western consulting companies frequently offer their Russian clients standard approaches that are unadjusted for the domestic situation, for example, PR services or collecting information about the Russian markets.

Russian consulting companies working with foreign businessmen usually employ bilingual specialists, thus ensuring not only more comfortable conditions for negotiations, but also a keener insight into their clients' problems. If you have a local problem, a multinational brand-name company may not necessarily be the best solution. Moreover, there is a possibility you will be treated as a "minor" client.

How to Choose

Choosing a consultant is as important as choosing a family doctor. Just as a doctor is responsible for your health, a consultant will see to the health of your business. While looking for a doctor, many people would turn to someone they trust for a recommendation. Although choosing from the specialists your partners recommend has certain undisputable advantages, the options will always be limited. First, the problems to be resolved via consultants are unique, and second, your partners might be your competitors.

When starting your search, you should primarily formulate the task you need a consultant for. If you want to meet formal legislation requirements, i.e. to undergo an audit, make a property assessment, or register a representative office, you will have to deal with commodity services. Such services are barely distinguishable from one another, as their only quality criterion is whether state bodies were satisfied or not. Therefore, the choice will primarily rest on the attractiveness of the bids.

Also, you need to remember that your time spent choosing adds indirectly to the service cost. So as a general rule, the more complex and risky the project, the more scrupulous the procedure of selecting the consultant.

Drawing up the Shortlist

If you require more complex services, such as legal or taxation consulting, marketing research or strategy development, the search process will be more formalized.

Divide the selection procedure into two stages: research and personal contact. As regards the research, first make a shortlist of the companies that, in your opinion, are able to resolve your problem. Base it on an analysis of companies' web sites. Be sure to browse through the "Vacancies" pages and note the specialists the company is intending to hire. This information may often be an important indicator of the company's professionalism. Note if previous clients have given references regarding the consultant's performance.

Information Sources

Information about consultants in English is available on the www.mbtg.ru and www.expat.ru web sites, at trade representative offices, Chambers of Commerce, and in classifieds columns. Any of the inquiry mailing systems currently on the web, such as www.econom.ru, are only good for choosing a commodity services consultant. For a more sophisticated project, you will have to compile the list of candidates yourself. For this purpose the catalogue of consulting companies (which includes a description of their services) at www.cfin.ru may be of use to you. The information is only in Russian, however.

Efficiency Assessment:
Formal Signs

As the practice shows, neither the availability of licenses and accreditations, nor the place in the professional ratings, membership of professional associations, a professional liability insurance policy, or the length of time spent in the market can be considered a direct indication of the consultants' professionalism. Nevertheless, these issues are worth your attention. However, more important selection criteria are informal indications such as the availability of references, the company's insight into your problems and its ability to demonstrate this insight to you. The final choice of the consultant should be made only after you have met all the candidates.

References

Proven previous experience is the major criterion for the selection. If possible, contact former clients of the candidates. This will compliment the recommendations, which are often written by the consultants themselves and will spare you the trouble of facing pseudo-consultants, who excel in selling themselves, but whose performance is modest.

Personal Meeting

When selecting the candidates, arrange a meeting, or visit them in their offices. Tell them you are holding a tender and ask them to prepare the following documents: a specified proposal, references from clients, and an estimated quantitative assessment of the efficiency of the joint work.

Make any relevant material available to them in good time, to let them assess the scope of the work and estimate the cost. If someone else will be working with the consultants alongside you, invite these people to the meeting and consider their opinions.

Make a list of questions for which you wish to have answers by the end of the meeting. To eliminate the effects of the subjective factor, ask all the candidates the same questions.

Be particularly meticulous about the candidates' attitude to confidentiality matters. Note whether they are willing to tell you about their former projects, or indicate the names of the companies they have worked with previously. Do remember that in the future they may be talking about you. If they do not mention the names of previous clients, citing confidentiality, it should alert you.

If at the meeting consultants question you about matters they could have found in open sources, this indicates a lack of interest in the work. When concluding the meeting, ask candidates the straightforward question of why you should choose their particular company for the job.

After making the final choice, be polite when advising the other candidates about your decision; you may have to work with some of them later.

Cost Optimization

While negotiating the work, ask your consultant if he or she sees any possibility for cutting costs. Sometimes,you will automatically get a 10 percent discount on the price. If you are undertaking to do part of the work yourself (collecting the information, preparing the documents in electronic format etc.), you may get an even better discount.

If you are working for a famous company, the consultant is likely to agree to drop the price, since having your company name on his or her client list will be an image-booster.

If possible, divide the work into several stages, with the respective payment for each. This will allow you to refuse poor service in good time.

While drawing up the contract, make a point of including a clause about the consultant's financial liability for failure to meet the contractual work schedule.

You have to bear in mind that good can never be cheap. As a guide, the approximate average hourly rate for the services of an expert from an average Russian company is: accountant - $30, value consultant - $30-$50, auditor (to Russian standards) - $30-$50, auditor (to international standards) - $60-$90, lawyer - $ 60-$90.

What Can't be Done by Consultants?

When employing a consultant, you should realize that he or she is no magician and can not take decisions in your place. You bear the responsibility for your business in the same way you do for your health. A consultant is like a doctor - he makes the diagnosis and prescribes the medicine. Swallowing the pills and doing exercise at the gym is your part of the job.