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The downside of seeking business advice on the cheap

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A man walks into a hospital. He needs emergency care.

A doctor orders immediate surgery. It may be painful, the man is told, but it's absolutely necessary.

The man gets up to leave. "Where are you going?" the doctor cries.

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"I just needed to know what to do. I'll go perform the surgery myself," the man says.

This isn't pure fantasy, but close to the reality some nonplussed professional-service providers are finding these days.

Businesses in trouble and in need of consulting services all want more for less these days. But in trying to save money and implement strategic changes, management restructuring or other productivity improvements themselves, they end up getting less for less, said Heidi Hamilton, a management consultant with Priority Solutions in Vancouver.

"What happens is that you leave, and they go back to putting out fires, as opposed to addressing what they need to address," Ms. Hamilton said.

From the business's perspective, owners feel they are stretched nearly to the breaking point and have limited resources to implement consultants' recommendations. So they try to implement the changes piecemeal, with the consultant no longer around. As one of Ms. Hamilton's clients acknowledged, "It's great to have the recipe, but what we really need is the cook."

So how can consultants, accountants and other professionals still give clients more for less, while making sure their recommendations will be correctly brought to bear?

One way is to give the clients, particularly middle managers within larger companies, more of a personal stake in implementing the new changes.

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"First of all, it involves bringing them in on what the strategy is – in other words, showing what the organization wants to do and why, and what their role in doing that is," Ms. Hamilton said.

"Like anything, you get the buy-in first, and make sure they feel like they're invested in delivering that. And then it's giving them a structure or package that's going to incentivize them to go there and get that, and to make them fully accountable," she said.

This takes a change of attitude toward professional services, she indicated. Many companies, for instance, should spend extra time and money on fully utilizing an audit, she said. Rather than seeing it as a necessary evil for tax purposes, a full audit can be used to explore weaknesses in the business.

"It's very difficult for people like accountants to show the value or to get customers to understand the value of something simple like that. [Businesses] could pay a little bit more and get a whole lot more out of it," Ms. Hamilton said.

Another way to get more for less is to use standardized consulting and professional services. The Business Development Bank of Canada, whose mandate is to aid small and medium-sized businesses across the country, has developed what it calls standarized solutions to consulting.

One example is a standard way of teaching advanced financial literacy to clients.

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"We're going to bring in tools such as cash flow worksheets," said Jacques Légaré, director of business organizational capabilities at BDC. "So, at the end of the mandate, we'll have raised his awareness and expertise in financial management. He's not going to become an accountant, but he'll know enough so that when he meets the banker, when he meets his auditor, he'll be able to understand what's on the balance sheet and the financial report."

Think of it as an assisted, self-guided approach for the kinds of firms the BDC usually works with – those of less than $2-million in size.

"That to us was a challenge. How can we better serve customers that need more and more training? Because [for] these small organizations, the pace of change is so fast. They need more information. They need more knowledge," Mr. Légaré said.

Larger companies face bigger hurdles. Departments often work in silos, and broad, strategic change is difficult. But as big companies face constant competition from startups, professional services can help by tapping a company's size and technological edge.

"For example, companies are collecting vast amounts of data and wrestling with the best ways to store, secure, mine and monetize the data and drive business decisions," said Kimberly Connors, Canadian IT advisory leader at the giant consultancy Ernst & Young.

To serve those big companies, consultancies such as EY are changing the ways in which they deliver services, more in line with new technology.

The ultimate problem is that professional services, particularly ongoing services such as information technology and accounting, and even legal services, are being commoditized – that is, becoming more generic in the eyes of clients.

"What you're seeing across [accounting] is that an accountant is an accountant is an accountant. Now, we all know that's probably not true, but that's how it's being treated. So, their margins are being squeezed tremendously," noted Kevin Gauci, managing director of the management consultancy Optimus SBR.

This is happening less with consultants because of the uniqueness of each project, Mr. Gauci added. "We're really not feeling that pressure. Of course we're feeling pressure on rates and on 'I need you to make sure that what you deliver has value.'"

To remedy the demand for more for less, consultants are asking clients to focus their needs much more precisely. Before there was a tendancy to hire consultants to solve general problems – without a clear mandate, and often based on a past working relationship between consultant and client. "And so, you would make lots of recommendations, because the mandate was very large. And it's natural that only 25 per cent of recommendations would get implemented," Mr. Gauci said.

Clients are now more focused upfront on what they want, "and we love that. That guarantees we are going to deliver value, because we know what they are actually trying to do," he said.

"It's funny. People say, 'Aren't you talking yourself out of work?' And we say, 'No, because if we got [that less-focused] work, it would have been impossible to deliver. And we actually would have run the risk of being fired or hurting our name and our brand," Mr. Gauci said.

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About the Author

Guy Dixon is a feature writer for The Globe and Mail. More

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