by Merlin Hernandez

Managing consultant risk requires a proactive mindset that seeks to create a contract that outlines in detail who is responsible for the outcome of the project, what constitutes the beginning and end of the project, its distinct phases, allocated financial and physical resources, unique activities and information specific to the project, and well-defined roles of participants. But the key to avoid misunderstandings that can lead to conflict is to develop a risk profile early in the process. A risk management analysis will identify possible problems and failures during the contract phase, and how they are to be addressed. These may then be included in the contract. A contract should not only outline consulting services and deliverables but should ensure that necessary resources are in place. In addition to conditions provided to maintain project continuity, in case of any resource failure or cancellation, a provision for financial restitution to the consultant must be included in the contract.

But there is no substitute for good relationship management skills on the part of a consultant that is specifically aimed at client engagement. It may be a mistake to assume that because an invitation to consult emanated from the client, there will be willingness to accept the process or ensuing recommendations. Relationship building is an integral part of the consultancy. It supports client participation in the process, facilitates client learning, and helps to build consensus on recommendations to improve the effectiveness of the business. The consultant is then seen less as an intervention in processes and practices to which the business has grown comfortable, and more as a transformative element. As part of ensuring that a consultancy speaks to client needs, operates with minimum resistance, and meets client expectations, consultancies should have an early review component at the end of the exploratory phase to find common ground and build client engagement.

This is the interface that is meant to trigger the process of transformation for both client and consultant through the recognition that there is need for a period of accommodation and adjustment for both parties. This is before the full research is done and also serves to guide the research focus. It is an important aspect of managing consultant risk for several reasons. Small business clients are often cagey about revealing their financial information to a “stranger” and would often respond to initial questions in ways that maintain the image they wish to portray. The consultant needs to find ways to access relevant information in as short a time as possible in order to render a meaningful service. Most of the time a small business client has had no experience with what the process entails and as a new element in their business, the consultant has to earn their trust.

The client engagement process presents an opportunity to allay client resistance as they get a sense of what the project would entail and become willing to open up in response to some of the areas raised. It also eliminates any pre-conceived ideas the consultant might bring to the process. Having full financial, research, and other available information around which to structure the inquiry reduces the possibility of making recommendations that are too far divergent from what the business can afford or what the client expects. Once the consultant has an appreciation of the company’s position, financial and otherwise, the client could be more effectively engaged. Recommendations would be more closely tethered to business needs for greater client satisfaction.

But there is always the possibility that a conflict could arise. A contract may not cover the full range of potential conflicts and the quality of the consultant-client relationship will determine how easily conflicts are resolved. In a situation where the parties are not able to resolve the issue, mediation could be valuable. A mediator acts as an intermediary between the parties and encourages settlement of disputes by pointing out the strengths and weaknesses of each party’s case. This should be the preferred method for dispute resolution since mediators do not make decisions or awards, and there might still be the possibility to preserve the relationship with the client if the issue is kept out of court. But this might only be possible if an objective third party essentially removes emotion from the discourse.

It comes right back to relationship management as central to managing consultant risk, and more especially so in the small and medium enterprise sector. The trust relationship allows the consultant to become a credible source of information necessary to effect change. The client input allows the consultancy to be resonant with the client perspective. Misunderstandings will be productive and refined as the collaborative process evolves. The risk of client dissatisfaction is thus minimized in a shared vision of the solutions to be applied to the problems faced by the business.

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Merlin Hernandez is an entrepreneurial development and management consultant who operates mainly in the small and medium enterprise sector. For more information on this topic, please send enquiries to