Tech & Work

Growing your consultancy: Choosing subcontractors and partners

If you don't have the funds for full-time staff, you may decide to work with contractors or alliance partners. Find out what to do before hiring support teams and what the cost differences will be.

Part of advancing and growing a consulting firm is making good hiring decisions—whether it’s staff or subcontractors and alliance partners.

As I outlined in my article about hiring permanent staff, there are good reasons to bring on full-time employees. You may find that it makes more sense to work with subcontractors instead. This hiring initiative brings its own set of issues and problems.

Choosing the best contractor
The subcontractors that I've hired to work along with my company are typically independent contractors and contractors/consultants from other companies.

Ideally, these are people that I know and trust, but that is sometimes not the case. If you are considering hiring a subcontractor that you do not know well, you need a process by which to validate that he or she knows how to do what he or she is being hired to do.

This means really putting the subcontractors to the test. One approach is to walk them through tough scenarios and see how they respond: Did they ask the right questions and pick up the right cues? Or did they go off down the wrong path and not take the time needed to investigate the best options.

In choosing contractors, you must communicate what you expect; you are responsible for making sure they have the technical, analytical, and personal skills to accomplish your goals. Check the references they’ve provided and ask those references specific questions relating to follow-through, dependability, and skill sets.

Once you’ve decided to hire contractors, you must set very clear goals and expectations—for example, make it clear that the agreement is performance-based, and that if they are unable to deliver, you'll have no choice but to terminate it.

Sometimes, subcontractors don’t work out as well as you might hope. When this happens, first find out whether there may be a misunderstanding or if there is confusion about some aspect of their duties. If the performance doesn't change in a week to two weeks, it is probably time to move on. Don’t delay—doing so just causes more problems for you and for the client whose project the contractor is handling.

Hooking up with partners
In addition to contractors, you should also explore whether you would benefit from finding an alliance partner. Partners typically play a bigger role in the project. That means they may have more visibility, more responsibility, and contribute more to the overall success or failure of the project.

For example, you may bid on a project to design and implement a new application system. You have the resources to perform the analysis and high-level design. You have the project management expertise. What you lack is a team of five or six Java developers. You need a team to fill this void, and you would rather work with an established team rather than try to build one by hiring six individual contractors. This is where an alliance partner can be quite handy and cost-effective, because you won't spend time placing ads, interviewing, and researching candidates.

But while an alliance can deliver such teams with specific skill sets, they often aren’t easy to establish due to the complexity of technologies and diverse locations. You need to find a company that has complementary rather than competitive service offerings. You want a partner that shares your values, that communicates well, and is receptive to doing things that may be different from what it's used to.

As with the subcontractor relationship, is important to establish clear roles and lines of authority when building an alliance relationship; there needs to be one leader and one process for addressing problems. You'll be partners in the project, but you want to present a single contact to the customer. This will avoid confusion and keep communications smooth.

The big differentiator between hiring a contractor and establishing an alliance partnership is cost. An alliance partner will generally cost more money because it traditionally provides more services and accountability. For example, an alliance partner should provide its own errors and omissions coverage and general liability coverage. This is a cost that most contractors aren’t burdened with.

Some things aren't different
Some business aspects are similar with both contractors and alliances. For example, both should sign non-compete and confidentiality agreements and be aware that they bear the same responsibilities for the protection of your business and the confidentiality of your customers as an employee would.

Your probability for success, both as a consulting firm and as a hiring manager, can be maximized through careful planning and preparation, frequent analysis of your plan vs. the state of your projects, and knowing when “enough is enough,” and it is time to pull the plug on the growth initiative.

With proper planning, careful execution, and well-researched staff support decision making, your efforts will be successful and reward you well.

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