21 Management Experts Share the Biggest Mistake Companies Make When Managing Multiple Contractors and Consultants

For growing companies, sometimes one of the best business decisions it can make is to leverage the help of experienced independent contractors and consultants. The top benefits of working with contractors is saved time, which would otherwise be spent screening and training new full-time hires, and increased control over business costs and project growth, since contractors and consultants are more apt to stick to a very strictly defined project scope.

But that doesn’t mean managing contractors and consultants is an easy decision, nor something that should be taken lightly. This is especially true when a company tries to manage multiple contractors and consultants at once.

Since we at Zintro work directly with many contractors and consultants, as well as with businesses who utilize their services, we wanted to learn more about how to manage multiple contractors, More specifically, we wanted to learn real tips from management experts on the most common (and avoidable) mistakes companies tend to make when having multiple contractors or consultants employed with their business. To do that, we asked 21 management experts the following question:

“What’s the biggest mistake companies make when managing multiple contractors and consultants?”

We’ve collected and compiled their expert advice into this comprehensive guide to better management of contractors and consultants. See what our experts said below:

Meet Our Panel of Management Experts:

Jay LashJay Lash

Jay Lash serves as Vice President of Corporate Development for MBO Partners, the largest provider supporting the $250 billion-and-growing independent contracting and consulting sector in America. Jay joined the company in 2010 and is responsible for the company’s market positioning within the procurement and HR communities.

One of the most common mistakes companies make when hiring independent contractors is…

Having inconsistent processes.

Too many times companies allow managers and executive leadership to “wing it” when bringing in consultants. Taking the time at the front-end to initiate a thoughtful process that covers the bases will pay off in the long run. Organizations should aim to provide a consistently good experience for the talent, while also protecting the company from potential liabilities. A consistent process would include contracts, payment plans, statement of work and on-off boarding. Think of it as important as bringing on a new employee. You wouldn’t treat each new employee as a one-off. Develop a process that works for all stakeholders.

Dr. Joanie B. ConnellDr. Joanie B. Connell

Dr. Joanie B. Connell is the Founder of Flexible Work Solutions, a nationally recognized consulting firm that specializes in leadership assessment, development, and retention for all professional levels. She also serves as a university professor teaching business and psychology students of all ages at a host of top tier high education institutions across the country. Her book, “Flying without a Helicopter: How to Prepare Young People for Work and Life”, is in early release now.

When it comes to the biggest mistakes companies make when managing multiple contractors, what it all comes down to is…

Failing to integrate consultants.

When consultants are treated as outsiders or as competition to insiders or as competition to each other, it’s a lose-lose situation.  Integrating consultants into the company culture and values and treating them as partners, instead of competitors, is the way to increase performance all around.  It’s also the way to lay the groundwork for long-term productive partnerships.

Jeff HarmonJeff Harmon

Jeff Harmon is the president of Brilliance Within Coaching & Consulting which specializes in developing principled, character driven business leaders while helping them translate their strategies into focused, actionable plans that ultimately drive business results. Jeff is the author of “The Anatomy of a Principled Leader: A Field Guide to Being the Type of Leader Everyone Dreams of Working for.” Jeff has been developing leaders for nearly 20 years and has led the execution of over 100,000 hours of business strategy for information technology, financial services and non-profit organizations.

The biggest mistake companies make when managing multiple contractors and consultants is…

Treating them as nameless, faceless “assets” or “hired help” and simply expect them to perform based purely on the agreement.

To do this is to ignore the opportunity to get more than you’re contracted to get. The agreement gets you a certain number of hours and specific deliverables, but full engagement, passion, commitment and extra effort or value are things must be volunteered. To get to this requires an investment in the relationship with the contractor and consultant and the building of influence for yourself as THEIR leader. This type of influence is always built on serving them.

Ron FormanekRon Formanek

Ron Formanek is the CEO of Telecom Solutions Inc., a technology company based in Colorado Springs that provides quality telecommunications, data and various other technology products.

The biggest mistake companies make when managing multiple contractors and consultants is…

Being sure they are carrying the proper types and amounts of insurance, if they have any at all.

If not you could end up being liable for it when your own insurance companies audit you at the end of the year… I would request copies of all insurance certificates to include but not necessarily limited to: workmen’s comp, liability and auto.

George AthanGeorge Athan

George Athan is Chief Strategist at MindStorm Strategic Consulting and a keynote speaker. George’s primary work is as a business strategy consultant helping companies, business owners, and executives aggressively grow their organizations through four key performance areas of Strategy, Innovation, Marketing, & Sales.

The biggest mistake companies make when managing multiple consultants is…
Hiring multiple consultants. It becomes a situation where there are too many advisers and the person who hired the consultants do not know who to listen to when there is a difference of opinion. What tends to happen is the company tries to compromise by taking a little advice from each. This rarely works because each piece of advice comes with a long term strategy behind it. Without following through the consultants full strategy, that one individual input is usually useless. Here at MindStorm, we will not work with a client unless we are the sole consultant on that project. As they say, too many chefs spoil the broth!
For the situations where there is no conflict, such as an IT Consultant and a Marketing Consultant, then the biggest mistake is to not get everyone together early. Each unit has to operate as one and every action has to be in line with the companies ultimate goal. By getting all the heads together early, the company can save themselves a lot of headaches!

Ian JacksonIan Jackson

Ian Jackson is Managing Partner with Enshored. Enshored specializes in optimizing business operations for mid-market companies by leveraging consulting and outsourcing capabilities previously reserved for the largest corporations, and generally finding 60-80% reductions in staff costs.

The biggest mistake companies make when managing multiple contractors and consultants is…

Not creating clear accountability for each party will lead to a frustrating situation for all parties.

Everyone must be clear on what their role is and where their responsibilities start and end. You must also not expect more than what you are paying them for – they most likely will not behave like employees.

I also believe that you need extra regular communication both one on one and with groups of contractors working in the same area to align everyone and deal with the knowledge gaps that come with working with outsiders.
I’ve witnessed many times a post-mortem situation where it is impossible to blame anyone but the hiring party for any failures due to a lack of clear goals, metrics for measuring them and rewards for exceeding targets.

Tom WheelwrightTom Wheelwright

Tom Wheelwright, CPA and CEO of ProVision, is a leading tax and wealth expert, published author (Tax-Free Wealth) on partnerships and corporation tax strategies, and a Rich Dad Advisor/Speaker for Robert Kiyosaki, who wrote Rich Dad Poor Dad. Tom is best known for making taxes “fun, easy and understandable,” and specializes in helping entrepreneurs and investors build wealth through practical and strategic ways that permanently reduce taxes. He has been on the Real Estate Guys Radio Show, Money Radio 1510 Business for Breakfast, written for CEO Blog Nation, and frequently speaks at Rich Dad conferences worldwide. Learn more about Tom’s work at taxfreewealthadvisor.com.

The biggest mistake companies make when managing multiple contractors and consultants is…

Having the consultants report to multiple people.Ideally, all of the consultants would report to a single individual, either within the company or a lead consultant. The water gets very muddy when you have lots of chiefs and no direction.

Deborah Schroeder-SaulnierDeborah Schroeder-Saulnier

Deborah Schroeder-Saulnier, D.Mgt. is the Founder and CEO of Excel Leadership Solutions, a global management consulting firm that works collaboratively with business leaders, and a highly sought advisor to senior executives. Leveraging her 25-year career in senior leadership roles, and consulting to business/industry, she partners closely with executives to solve problems, clarify focus, and accelerate the pursuit of critical market, organization, and leadership priorities. She has worked with a number of Fortune 500 companies worldwide, including Boeing, Citigroup, Bunge LTD., Scottrade, Danfoss, IPC-The Hospitalist Company, RGA – Reinsurance Group of America, Scottrade, and World Wide Technology.

The biggest mistake companies make when managing multiple contractors and consultants is…

“Not” managing them.

Very quickly you can get into schedule delays, missed deadlines, scope creep, cost over-runs, communication issues, role confusion, and much more. Setting the agenda and guiding the experts through a single point of contact, beginning with onboarding, reduces conflict and confusion on several fronts, thereby reducing cost and ensuring greater success in achievement of the respective goals.

The following highlight key components of effective management when working with a model that engages multiple contractors and consultants:

  • Clarifying the “End” Game: Engaging the contractors and consultants in conversations to understand the end game and outline their contribution to the organization can reduce time and lower costs in the long-run.
  • Making Introductions to Key Stakeholders & Each Other: Taking time to make introductions to key executives and partners with whom they will be working accelerates movement in the desired direction.
  • Setting Expectations: Ensuring expectations are set, and re-set as necessary, not only for the outcomes but also interactions and performance protocols clarifies your expectations and sets everyone up for success.
  • Establishing “Progress Update” Meetings: Staying on top of progress and resolving issues in a timely way will ensure unnecessary time is not added to project work.
  • Pro-actively Addressing Concerns: People often switch jobs and companies. Having a process in place to notify and address concerns, such as these, before they occur will keep things streamlined.
  • Mitigating Risk with “No Surprises:” Filling all appropriate partners and leadership in on a decision or issue guarantees smooth problem solving and conflict management. No one appreciates surprises or volatile conditions.

James BerryJim Berry

Jim Berry is the Managing Member of RRB Development, LLC, a second-generation commercial real estate and development firm, and has been on the corporate (or client) side of hiring and managing multiple contractors and consultants for 14 years. He is currently a consultant hired by companies to manage multiple contractors and consultants on their behalf, and has seen firsthand the management of contractor and consultant successes and failures across a broad spectrum of professions and overseas cultures.

The biggest mistakes companies make when managing multiple contractors and consultants are…

  • Not clearly defining the goal(s) and expected timeline of the work and its various deliverables. Communicating goals and deadlines goes beyond defining a scope of work on a contract or agreement; to be effective companies should take the extra time to clearly explain ‘why’ they need the work performed. If a consultant or contractor truly understands the ‘why’ of what the client is hiring them to do and ‘why’ they need items by a certain time, it is much easier for them to determine what tasks are on the critical path and what items lack the importance of obtaining an on time goal for their client.
  • Not defining a clear and consistent method of communicating and updating each other over the life of the project. A simple weekly, biweekly or monthly regimen of providing a client with an update should be a requirement of all good consultant and contractor scopes. I have three simple rules on project reports: 1) keep the format simple; you have not hired these professionals to write you weekly updates, you have hired them to help you obtain the company’s goals. 2) Do it with consistency; it doesn’t matter how often just make sure it is the same time every time 3) Read the reports.
  • Not treating them like company assets. A good reliable consultant or contractor can at times be very difficult to find and you never know when you may need to hire them again (or hire the competition and find the same project manager at the new company). Just like employees like to work for great bosses and generally excel under their leadership, consultants and contractors like to work for great clients and love meeting a client’s goal or beating their deadline.
  • Not letting them do what you have hired them to do. Too often I have seen excellent consultants silenced by business owners and or managers eager to exert their knowledge or power on a topic. What makes a great leader is not knowing everything about all things, but making the right decisions with the information you have been provided. If you’ve hired a consultant to provide you with their expert opinion, analysis or recommendation then at least hear them out when they are discussing options, findings or recommendations.

Ramon KhanRamon Khan

Ramon Khan is the Marketing Manager of National Air Warehouse, an online leader in the HVAC industry. He currently manages up to eight regular vendors in his current role, and has experience with many contractors employed by the company as well.

The first mistake that I see businesses do when managing multiple contractors is…

To think that contractors or consultants will solve all of their problems.

This type of mentality can lead businesses to be at the mercy of their consultants for success, which is not a good situation for any business. It also puts businesses in a constant cycle of hiring and firing vendor after vendor. This is natural because no vendor can meet unrealistic goals or satisfy a client who does not set proper goals and expectations.

Make sure that your business is hiring the correct agencies for the right purpose. Start by truly identifying the issues that you need to solve. Doing so will allow for you to ask the correct questions and properly quality any prospective agency before moving on to the hiring and on boarding process. By taking the time to get a detailed picture of what issues you are trying to solve, you will have a much easier time managing the projects. Some of the most common mistakes I see businesses do when dealing with this with multiple vendors are:

  • Hiring an unnecessary number of vendors due to lack of understand of the core issues that need to be solved.
  • Not providing detailed project task and goals which delays project finish times.
  • Not setting or tracking milestone timelines for project completion dates.
  • Not properly setting up weekly routine to follow up times with vendors to track progress.

The biggest issue that I see is not periodically re-evaluating your vendor’s performance. Without this value step, it is very possible that performance can slowly deteriorate over time to the point where the relationship no longer servers both parties.

Keeping and detailed spreadsheet of your vendors along with the milestones that need to be reached will be very useful. This allows you to have a quick snapshot of where all your current projects stand. You can further break down your list with a detailed overview for each vendor to have a clearer idea of where each individual project stands.

Brandon HowardBrandon Howard

Brandon Howard is a web designer, developer, marketer, problem solver, and most importantly an entrepreneur, who founded All My Web Needs, a full service internet marketing and web design company in Nashville TN. He owns several online businesses providing a wide range of products and services in different industries both nationally and internationally. Brandon is always looking for new things to benefit the open source web community as well as striving to find unique ways to help small and start-up businesses grow their online presence.

The biggest mistake we’ve made as a company managing multiple contractors and consultants is…

Stretching ourselves too thin.

When using contractors you have to keep in mind that they have the ability to turn down work. They typically seek out other providers to get them the work they need as well, so whether they’re already occupied by another project or they just went on vacation you can’t ensure their availability. We’ve run into this several times, which is why we now have several contractors of each type that we work with on a regular basis. That way if a graphic designer isn’t able to do a job we turn to the next one to see if they are available.

Hamilton PowelHamilton Powell

Hamilton Powell is the CEO of Crown & Caliber, LLC, a luxury watch consignment company based in Atlanta, GA, which he founded in early 2012. He is also the managing member of Powell Growth Capital, LLC, the funding source of Crown & Caliber.

The biggest mistake that companies make when managing multiple contractors and consultants is…

Not making clear and measurable goals.

It is very important to set expectations and relay them to the appropriate parties. The goals and expectations must be realistic and communicated properly. Constant communication is important to ensure that everyone’s expectations and goals are aligning properly. To make sure that these goals are being achieved, it is helpful to set milestones and deadlines. This way, all involved parties can make sure that they are staying on track and are still working toward the correct goals.

David JohnsonDavid Johnson

David Johnson is the Founding Partner of ACM Partners, a boutique advisory firm advising small and mid-sized businesses. He is an expert in performance improvement, turnaround and restructuring, and has several articles and speaking engagements to his credit.

The single biggest mistake that face in managing teams of contractors and/or consultants is…

A lack of a defined company employee as project manager.

In order to realize the full value of teams of outside professionals, careful oversight by company management is essential.  Such oversight helps to ensure that project plans are on track, and that any changes in scope are well-communicated and approved before additional work starts.

Bob HothemBob Hothem

Bob Hothem is the Owner of The Alternative Board franchise in Miami Valley. The Alternative Board (TAB) is the world’s largest provider of executive peer advisory boards servicing over 3,000 business owners worldwide. As a large, global network, TAB is affiliated with an extensive range of business professionals.

The biggest mistake companies make when managing multiple contractors and consultants is…

Coordination of services.

The key is to get what you pay for but also be certain that there is minimal  overlap. A comprehensive statement of work followed by a scheduled review of progress against deliverables is the key.  Engagements can take on a life of their own which routinely results in cost overruns. Frequent comparisons to the statement of work will help guard against this black hole.

Megan LangleyMegan Langley

Megan Langley is the Director of Marketing at OutMarket, a provider of marketing automation software and services for marketing teams to drive quantifiable results.

The biggest mistake companies make when managing multiple contractors and consultants is…

Not doing their homework up front.

This mistake can be made at a couple of steps in the process. Before you even start looking for contractors or consultants, fully define the scope of their work. Will it only be project based, are there technical skills required, what are the expected timelines? Decide how you will determine if a consultant has the right skill sets by researching interview questions. The second mistake is often during the interviewing period. Be sure to look for companies and individuals that you trust; Have you worked with them before? Do they come highly recommended? You need to find an agency that matches your communication preferences: weekly meeting, only through email, etc. Managing consultants can be tricky, you need someone that you trust should something go wrong.

Once you’ve decided on contractors or consultants, it’s important to stay involved in the projects along the way. A consultant may have worked in your industry but they don’t know your business like you do, or may only complete the tasks that are requested but won’t think about the big picture. Stay involved in the process so corrections in the project can easily be made along the way. Also be sure to dedicate enough time to communicate expectations, deadlines and timelines to all consultants or contractors.

Toby FarrandToby Farrand

Toby Farrand is the Vice President of Engineering and Operations at Ooma Inc., a consumer telecommunications company based in Palo Alto, California. Mr. Farrand oversees all of Ooma’s technical development, manufacturing and engineering. He has spent over 20 years creating technologically advanced products, from personal computers and video game consoles, to satellite networking systems and home broadband media centers.

I think the key to managing multiple contractors and consultants is to…

Have a clear line of authority for who is responsible for the productivity of the consultants.

I think it is very easy for a consultant to report to no one and everyone, with no one taking direct ownership over whether the company is getting its money’s worth out of every consultant.  Often companies try to control consultant expenses by having them approved at a high level.  Sometimes this extends to having the invoices approved at a high level in the organization.  At Ooma, we do the opposite.  We have the lowest possible person in the organization who is responsible for the consultant sign and approve the invoice.  That person should be keenly aware of the expense and should be paranoid that the company is getting a good deal.

Andrew LouderAndrew Louder

Andrew Louder is a Senior Manager with Jabian Consulting in Dallas, TX. Specializing in vendor management strategies, Andrew has implemented these solutions across multiple industries for technology-driven businesses. Prior to his work at Jabian, Andrew was a strategy consultant with Ernst & Young and KPMG.

The biggest mistake companies make when it comes to managing their contractors or consultants is…

Not implementing a Vendor Management structure for holding them accountable for their performance.

Poorly performing contractors can be crippling to a company’s performance and financials. By implementing a structure that maintains oversight on them, a company can make quick performance adjustments as needed, keep an eye on their forecast vs. actual in spend, and leverage best practices for the procurement of future vendors.

A good Vendor Management structure ensures someone manages the agreed upon contract (Contract Management) and someone manages the vendor’s execution (Execution Management). In Contract Management, you make sure the vendor is meeting their contractual obligations such as milestones and performance metrics. In Execution Management, you make sure the vendor is performing the services they agreed to provide. If the vendor isn’t holding up their end of the deal, it’s time to adjust or terminate. Once this structure is in place, getting the most out of your vendors becomes less of an issue and more of an added benefit.

Ed HerreraEd Herrera

Ed Herrera, APR is the Chief Communications Officer for a business finance firm and Founder of Forage Public Relations.

The biggest mistake companies make when managing multiple contractors and consultants is…

Not setting specific goals and a timeline for those goals.

While, if managed effectively, the practice of hiring contractors can save a firm thousands of dollars, it can also cost just as much, if not more when there is a breakdown in communication and expectations.  Executives and managers often believe that outlining the problem/opportunity is sufficient for a contractor to work his/her magic.  Yet, they are quite surprised when things do not pan out as envisioned.

It is the responsibility of the executive or manager to understand the problem/opportunity and set goals that are specific, measurable, and achievable. He/she must also set a timeline for these goals to be accomplished by the contractor.

Specific goals accompanied by a realistic timeline encourages accountability. Measurable goals help the manager determine the effectiveness of the contractor’s strategies and tactics.

Kevin JonesKevin Jones

Kevin Jones is Senior Information Security Architect with Thycotic, a security company based in Washington DC. He has over 8 years of experience developing security web applications and working with other development teams on web security. Kevin is also an ASP.NET MVP and ASPInsider, and actively contributes to the community around software security for web development.

One major mistake organizations can make when managing independent contractors is to…

Overlook security permissions on sensitive network assets.

Most contractors are honest, hardworking people who aren’t in the business of theft or espionage, but if they aren’t following your company-wide security policies, their mismanaged access can create risk. Often, contractors are not held to the same security standards as full-time employees. As a result, they can have unfettered access to segments of the enterprise network that they shouldn’t. Don’t forget that Edward Snowden was a government contractor when he helped himself to NSA data. Businesses need to limit privileged credentials assigned to contractors, only allowing them to access what they need to complete their work.

Once a contractor has completed his time at your business, his passwords must be changed immediately, so he no longer has access to those assets. Hackers consistently identify contractors as a prime target for cyberattacks. Further, securing the network perimeter no longer stops at corporate offices. Instead, businesses have to consider the homes and mobile devices of contractors who may work remotely or from the road.

Hussein YahfoufiHussein Yahfoufi

Hussein Yahfoufi is an Entrepreneur and the current VP of Technology & Corporate Services at OneRoof Energy, where he leads software products innovation, development, support and delivery for employees, affiliates, partners, and customers. His team develops the technology to streamline operational processes (reduce costs), support rapidly growing business (scalability) and redefine the solar industry (innovation). He is also the founder of DiamPrice and Appsplit. Learn more about Hussein and his work at his website, www.husseinyahfoufi.com.

I think the biggest mistake you can make when managing multiple contractors is…

Not setting the proper expectations with each contractor and figuring out how each contractor (or consultant) fits into your overall org strategy.

For each consultant on the team you need to make sure there are clear expectations and needs: a contract, what will they work on, how many hours. You need to be clear and understand what each contractor will contribute to your organization and make sure they and your team knows that well – get on the same page as early as possible. Also understand if they are filling in for a full time position or just doing a quick project for you. If you are filling positions that you need for the foreseeable future and you potentially expect to bring them on full time, make sure you have that conversation early to know if they are eligible to work full time, or if they are interested, so there are no surprises in the future when you try to convert them.

David WaringDavid Waring

David Waring is the Co-Founder of FitSmallBusiness.com, a site that provides in depth how to guides for small business owners.

The biggest mistake I have seen companies make when managing multiple contractors and consultants is…

Not defining upfront what a successful outcome looks like for the project they are working on.

Just as with employees contractors and consultants need to be managed and that means agreeing ahead of time what a successful outcome looks like, what tasks will be needed to reach that outcome, and then demanding accountability for the agreed upon plan.

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