Customer Relationship Management: Guidelines and Resources

© Copyright Carter
McNamara, MBA, PhD, Authenticity Consulting, LLC

Although there is a conventional difference between the terms “customer”
and “client,” this topic refers to “customers” as meaning
both. Also, although a product is a tangible offering and a service is an intangible
offering, this topic often refers to “products” as meaning both. The
activities of customer relationship management apply to any type and size of
organization, so the term “organization” refers to that wide variety,
as well. Before reading this topic, you might read about the Relationship
Between Managing Supply Chain, Operations, Quality, Customer Relationships and
Customer Service.

Sections of This Topic Include

Introduction

Suggested Pre-Reading
You Are Probably Doing Some CRM Now, But …
What is a CRM System?
What Are the Main Benefits of a CRM?
Types of CRM Functions
Types of CRM Systems

Planning Your CRM System

Preparation
1. Clarify Organizational Goals and Measures
2. Align CRM Goals With Organizational Goals
3. Clarify How Customers Will Be Treated Differently
4. Decide What Organizational Design Changes Are
Needed?
5. Select the Best CRM Software

Developing Your CRM System

Redesign Your Organization As Needed for CRM
Start Cultivating a CRM Culture
Delegate CRM Goals to Teams and Employees
Train Employees About CRM

Managing Your CRM System

Manage Your CRM Teams and Employees
Manage Your CRM Software
Evaluate Your CRM System

General Resources

Glossaries
Organizations

Also consider
Customer
Service Management
Operations
Management
Quality Management
Supply
Chain Management
Related Library Topics

---

INTRODUCTION

Suggested Pre-Reading

Customer Relationship Management (CRM) ensures that the ongoing relationship
between your organization and its customers is always very valuable to everyone
involved. That was easier to do in the past when an organization was expected
to provide a product or service, and the rest was up to the customer.

That has changed dramatically. Today, customers can instantly access opinions
about your organization and its products. Also, they can instantly order products
and services from anyone else around the world.

So before reading the following guidelines and resources in this topic about
CRM, it would be very useful for you to first get some understanding of the
proactive, systematic, high-quality process required to ensure ongoing, great
customer service today.
All About Customer
Service: Overview and Numerous Resources

You Are Probably Doing Some CRM Now, But …

If you work in an organization, then you are probably already involved in some
form of CRM now. This is true whether your organization serves customers who
are internal or external to your organization, or both.

What do you do now to ensure a great ongoing relationships with your various
customers? For example, how do you keep track of information about them? Highlights
from your conversations? Their feedback about your services? Your plans about
serving them into the future? Schedules of when to contact them and what to
say?

For example, do you have a central database that organizes that information?
Do you use spreadsheets with customer information? Do you resort to using the
contacts list in your phones? Are there multiple people involved in serving
customers? If so, then how do you all ensure you are effectively sharing the
right information at the right times? How are you reminded of when to contact
certain customers and for what purpose?

The answers to those kinds of questions comprise some of your activities in
CRM. CRMs can be implemented and utilized in a rather informal, sporadic and
reactive approach. Or, they can be implemented in a proactively planned and
highly integrated approach. If your organization plans to grow and develop to
the next life
cycle, then you are far better off to use the latter approach. Fortunately,
there are many highly practical and affordable guidelines and tools that can
help you.

What is a CRM System?

A system is a recurring cycle of activities, including:

1. Planning to determine goals and how they can be achieved, and
2. Then developing and managing resources and activities to achieve those goals,
   and
3. Then evaluating whether the goals have been achieved or not, and
4. Then using the learning from the evaluation to improve the quality of the
   next round of planning.

Thus, a system is a recurring loop of components — in a continuous cycle of
improvement. Customer relationship management is best done as a system; otherwise,
the management tends to be highly reactive and sporadic, often resulting in
a patchwork of disconnected and ineffective activities.

The purpose of a CRM system is to take a recurring, comprehensive and systematic
approach to ensuring a mutually fulfilling relationship between your organization
and all of its customers. The system works with any type and size of organization
that has customers, whether internal, external or both. Here are two additional
perspectives:

• “Customer relationship management (CRM) is the combination of practices,
  strategies and technologies that companies use to manage and analyze customer
  interactions and data throughout the customer lifecycle, with the goal of
  improving customer service relationships and assisting in customer retention
  and driving sales growth.” SearchCustomerExperience
• “Customer Relationship Management (CRM) in a very broad way can be
  defined as the efforts made towards creating, developing, and maintaining
  a healthy and long-lasting relationship with the customers using technology.”
  TutorialsPoint
• “CRM is an organizational strategy, not a software tool — although
  software can be used to help the CRM system to work toward its purpose.”
  Carter McNamara

The CRM guides and supports customers through the various phases of the customer
relationship phases, as well as the phases in the sales pipeline.
The Three
Phases of CRM
Five
Customer Relationship Stages for Full Engagement

What Are the Main Benefits of a CRM?

The more you understand your customers — their types
and needs,
what they value,
their activities with your organization — then the more likely they will remain
loyal to your organization. Here is a list of some of the overall benefits of
a CRM system:

• You can easily access comprehensive and integrated customer-related information
  in one place, rather than sorting through a variety of different channels
  and people.
• It improves customer communications because you know how they prefer to
  communicate, the most recent status of communications with them, and what
  their current priorities are.
• It increases efficiencies and team work in operations, helping organizations
  to evolve through the necessary organizational life cycles.
• Overall, you can increase customer satisfaction, loyalty and retention —
  ultimately, increasing profits for businesses and community impact for nonprofits.

If yours is a small or medium-sized organization, then you might be mistakenly
thinking that a CRM system is much too complex and expensive for your organization.
If so, then you might benefit from reading this article.
Top
Five Myths About CRM Debunked

Types of CRM Functions

The CRM system works by pulling together information about your customers from
a variety of different sources that you specify in order to automate:

• Marketing, for example, organizing information about each
  different group of customers, and then tailoring sales and marketing campaigns
  to each (see Marketing)
• Sales, for example, analyzing information about each customer
  to help them to evolve through the sales pipeline, as well as using CRM for
  account and contract management (see Sales)
• Customer service, for example, recognizing your different
  types of customers, the needs of each and what they value, as well as noticing
  their complaints and what has worked to resolve them (see Customer
  Service)
• Analytics, for example, generating forecasts of likely
  demands for certain types of goods and services, as well as what might be
  the best pricing structures for them (see Business
  Data Analysis)
• Collaboration, for example, sharing calendars and project
  plans, as well as coordinating common communications across different stakeholders
  (see Team Building)

By automating these functions with CRM software, you can organize information
from your documents, notes, phone calls, emails, chats and forums. You can program
some CRM software to monitor certain social media tools to notice comments regarding
your organization and its products and services.

Thus, CRM systems can give you a clear picture of each of your customers to
help you cultivate a strong relationship with each as you support them through
the customer
life cycle.

Types of CRM Systems

When considering which type of CRM system might be best for your organization,
it helps to consider from among three main types including the following. You
will notice that they correspond closely to the above-mentioned types of CRM
functions.

1. Operational – This type focuses especially on activities
   in sales, marketing and customer service. It also organizes information about
   customers, including each individual customer, as well as different groups
   of customers. It is the most popular type.
2. Analytic – This type analyzes information to suggest, for
   example, buying patterns of each group of customers as well as their spending
   patterns and timing to convert leads to contracts.
3. Collaborative – This type coordinates the sharing of up-to-date
   information among different key personnel and teams, as well as among different
   groups of stakeholders, including, for example, suppliers, distributors and
   vendors.

CRM
Types
Operational,
Analytical, Collaborative
An Introduction
to Different Types of CRM Systems
What
is CRM? 3 Types of Customer Relationship Management

---

PLANNING YOUR CRM SYSTEM

Preparation

Understand Problems and Pitfalls to Avoid
in Implementation

Now, before you plan and implement your CRM system, is the best time to consider
the types of problems that can occur — not later on when you are in the middle
of trying to operate the system, while also trying to resolve problems in how
it is operating.
Why CRM Fails
Top 5 CRM
Software Pitfalls
Avoid the
Four Perils of CRM
Why
CRM Projects Fail & How To Avoid These Pitfalls
Top
10 CRM Implementation Pitfalls

Form a CRM Team

The planning and implementation of a CRM system requires sufficient time, energy
and expertise, as well as a variety of different perspectives. That means a
well-qualified and designed CRM Team of the most suitable members from your organization.
The CRM Team would make recommendations to management about, for example:

• Goals for the CRM
• Metrics to measure progress toward the goals
• The best approaches to train employees about CRM
• Criteria to select the best CRM system
• The best CRM system that meets the criteria

It is best to draft a job description for the CRM Team to be used when explaining
the CRM Team’s role to upper management and suggesting who should be on it.
The description also gives guidance and direction to the CRM Team as it is doing
its job.

It is often best, as well, to train the members of the CRM Team about CRM. It might
be useful to hire an expert to do that training, as well as to being a resource
to the CRM Team as it does its job.
How
to Build the Perfect CRM Implementation Team
How
To Structure Your CRM Implementation Team
5 Important People
You Absolutely Need for CRM Success

Also see
Hiring
Consultants
Team
Building
Team
Performance Management

Understand the CRM Planning
Process

Here are some excellent articles that can give you and your CRM Team a good impression
of what is generally involved in planning and developing your CRM system. You
might read them in this order from general to more specific:
Top
4 CRM Implementation Considerations
How to Complete
a CRM Implementation in 5 Steps
How
to Create a CRM Strategy in 7 Steps

1. Clarify Organizational Goals and
Measures

What are the organization’s overall goals regarding its sales, customers and
service? For example, are they to increase sales revenue, expand marketshare,
increase customer retention and/or reduce customer complaints? What is your
unique
value proposition to sell your products and services to different groups
of customers? What is your unique
selling proposition that separates you from your customers?
Strategic Planning
How to Do to Planning
Goals
and Objectives Should Be SMARTER

2. Align CRM Goals With Organizational Organizational
Goals

Define the CRM goals needed to help achieve the strategic goals. For example,
should you focus more efforts on various preferred groups of customers, such
as the most profitable customers, new customers, current customers and/or reducing
their complaints? As much as possible, associate the necessary SMART
objectives needed to implement each CRM goal. It is helpful to articulate a
fictional customer profile, or persona,
to most easily consider the nature of each group of customers.

When deciding CRM goals, it is often useful to consider various metrics, or
measures of progress, for a CRM system. The metrics themselves can become goals
to achieve.
The
CRM Metrics: How to Measure the Performance of CRM
How
to Measure CRM Success
CRM
Metrics: What Should You Monitor and Measure?

Also see
Action
Planning and Operational Planning
Strategic
Action Plans & Alignment

3.Clarify How Customers Will Be
Treated Differently

How can you best evolve each preferred group through the sales pipeline, while
maintaining strong customer relationships and services? For example, should
you sell directly to them or use a distributor? For each group, should you start
or enhance a call center, up-sell or cross-sell, focus on certain types of discounts
and/or improve quality management? Also, what are the most appropriate communications
channels for each preferred group?
All About Sales
How to Work With Others

4. Decide What Organizational
Design Changes Are Needed?

A conventional rule in deciding the structure of something is “form follows
function.” In other words, the structure of the organization (its design
and roles) should be to what is most useful in implementing the organization’s
functions (its goals and methods to achieve those goals).

So what departments, teams and employees are now — and should be — involved
in dealing with customers, for examples, sales, marketing and customer service?
What roles are now — and should be — involved in using the CRM system, including
its software? What goals should each department, team and various employees
have in customer relationship management? What SMART objectives should be associated
with each goal?
Organizational
Structures and Design
Requirements
for Successful Organizational Change

5. Select the Best CRM Software

What Type of Software Platform is Best?

On-premises

In this type, you install the CRM software on your computer system, as well
as maintaining, troubleshooting and updating the software. You would either
use one of the free CRM tools (listed later on below) or buy or license a tool
from a vendor.

This type of software installation works best if you have available ongoing
technical skills for installation, troubleshooting and upgrades. You also will
need considerably more time to install the software as you climb the often steep
learning curve to understand the software and its installation. You are likely
to face occasional periods of downtime of the software as problems are solved
and upgrades are installed.

Cloud-based

In this type, you subscribe or license the software from a vendor that makes
the software available to one or more people in your organization, depending
on the licensing agreement. The vendor manages all aspects of the software,
including installation, testing, training, troubleshooting and upgrades. This
works if you have a suitable budget. Fortunately, the price of CRM software
has continued to decrease over the years.

How to Select the Right CRM Software

Questions to Consider When Specifying Your Software Requirements

Itarian
lists a variety of questions to consider, including:

1. Is it suitable for your size of organization?
2. Are there any limitations to the number of users?
3. Is it easy to use?
4. Can it be integrated with your other computer systems?
5. Is it easy to integrate with other customer service solutions that you already
   use?
6. What are its security features against hackers’ attacks?
7. Is the software affordable and fits in your budget?

You should also consider:

1. What type of CRM software do you need? (See Types of CRM
   Systems)
2. What type of technical support does the vendor provide? How reliable is
   it?
3. Does the vendor provide training?
4. Does the vendor include a careful manual for implementing the software?
5. Does the vendor provide demonstrations that your employees can experience?
6. What are some of its customers saying about the software?

Specify the Requirements for the Software

Now you are ready to specify what you want the CRM software to accomplish for
you. It is best to write a software requirements specification (SRS), while
focusing now on the needs of your organization, and not on the particular software
tool that you might already prefer. Later on, you will take your SRS to the
various CRM software vendors for you to carefully decide if their software will
indeed meet your organization’s needs.
How
to Create an SRS for CRM
CRM Software
Requirements for Your Business
How
to Define Your CRM Software Requirements

CRM
Requirements Example Document
Five
Levels of CRM Requirements
Specify
Your CRM Requirements

Lists of Some CRM Software and Costs to Consider

Free CRM Software

7 Best Free and
Open Source CRM Software Options
How
Can You Use Gmail as CRM Tool?
Evernote
The Free CRM With Something
for Everyone
Best Free CRM Software
for Business in 2019
Free CRM for Small Business

Fee-Based Software

CRM Software
Best CRM Software
2019: Comparison & Reviews
The 25 Best CRM Apps
for Every Business
CRM Tools
Customer
Relationship Management Software

For Small Organizations

“Most of the businesses out there will choose a CRM software to measure
the performance of their strategy. The good news in selecting a CRM Software,
is most of the complexity has been taken out of the process now. The best CRM
software solutions include SaaS (software as a service delivered online), and
innovations in this area improve everyday. This means there is no longer a costly
need of an in-house IT team and server space. At least this will be the case
for 97% of all businesses with less than 10 employees.” Thinkaboutcrm

For Nonprofits

Nonprofits can also use CRM software, for example, for tracking clients, program
outcomes, funders, results of fundraising, volunteers, memberships and their
membership levels.
How to
Choose the Best CRM for Your Nonprofit
6
Awesome Nonprofit CRM Options for Your Organization
Top
Nonprofit CRM Software

Now Select the Best Software For Your Needs

You are in a great position now to begin working with various vendors to get
the best software to meet your needs, as specified in your SRS. You might include
your specification in an overall Request for Proposal (RFP). You also might
bring the members of your Implementation Team with you when talking to the vendors.
Your
Definitive CRM Selection Guide and Checklist
How
to Choose Customer Relationship Management (CRM) Software
Choosing
CRM Software
23
Tips for Choosing the Right CRM Software
A
Step-By-Step Guide To Selecting The Right CRM Software
CRM
Vendor Evaluation Matrix
A
CRM Evaluation Checklist: What Should You Look For?
A
CRM RFP Guide and Template for Creating the Perfect Proposal

Also see
4
Reasons Business Contracts Fall Apart
US
Business Contracts

---

DEVELOPING YOUR CRM SYSTEM

Redesign Your Organization As Needed
for CRM

Consider the goals and objectives that you established during the CRM planning
for each department, team and employee associated with customer relationship
management. What teams and roles should exist? How should they be integrated
with each other? For example, which departments, teams and employees should
be collaborating with each other and how? What organizational design would best
facilitate that type of involvement and collaboration?
Understanding Organizational
Structures and Design
Work
Design and Job Design
Organizing
or Reorganizing an Organization and Its Employees
How to Know What
Positions and Jobs Are Needed

Start Cultivating a CRM Culture

Research shows that long-lasting, successful change in an organization usually
requires a change in its culture. Unless the culture begins to change, it does
not matter how much advice and many tools that the organization gets. A change
in culture will determine whether they are actually used or not.

Great customer relationship management is a mindset. It is a way of thinking,
prioritizing and planning about customer relations in an organization. It guides
how decisions are made and how problems are solved regarding customer relations.
When many people in an organization have that mindset, then the organization
has a CRM culture.
CRM
Culture – How to Bring CRM Culture Successfully?
10
Steps to Implementing a CRM Culture in the Organization
Creating
a CRM Culture

Also see
Cultural
Change
Planning
Team Building

Delegate CRM Goals to Teams and Employees

Consider the CRM goals and associated objectives that you decided during the
planning. Which goals should be delegated to which teams and employees? Make
sure that you make the assignments according to the team performance management
and employee performance management practices that are formally established
in your personnel policies.
Goal
Setting with Employees — What Should Employees Work On?
Team
Performance Management: Performance Planning Phase (Assigning Goals)

Also see
Personnel
Policies

Train Employees About CRM

It is critical that all employees have a mindset of great customer relationships,
especially as a result of having great relationships with customers. The relationship
requires skills customer service, including in building
trust, having empathy
for others, listening,
asking thoughtful questions
and sharing feedback.

Training also includes how to use the CRM software, for example, its purpose,
how to use it, how it integrates with other computer systems, and where to get
help. Good CRM software should come with ample documentation about how to use
it. If you licensed or bought the software, the vendor will very likely have
time-tested training and materials to use.
Keep
It Simple: Training New Employees on the CRM System
How
to Train Your Staff for CRM
The Importance
of Training in CRM Success

Also see
About
Training and Development

Also see
Cultural
Change
Planning
Team Building

---

MANAGING YOUR CRM SYSTEM

Manage Your CRM
Teams and Employees

You have already done the phases of setting goals and delegating them to the
appropriate teams and employees. Remaining tasks are to monitor and measure
progress toward those goals, implement performance improvement methods where
needed, and reward/compensate teams and employees accordingly.

For teams:
Team
Performance Management: Performance Appraisal / Evaluation
Team
Performance Management: Development (Improvement) Planning Phase

For employees:
Giving
and Receiving Feedback
Evaluating
Performance (Performance Appraisals)
Rewarding
Performance
Addressing
Performance Problems
Performance
Improvement/Development Plans
Firing
Employees

Ensure all necessary collaborations are occurring among teams and stakeholders,
for example, cross-collaboration between marketing, sales and customer service
activities.

Monitor and evaluate the achievement of team and employee CRM-related goals,
and report the progress toward achieving the organizational and CRM goals.

Also see
What
is Supervision? How Do I Supervise?

Manage Your CRM
Software

The management activities specific to the CRM system include, for example to:

• Develop useful written procedures about managing and using the CRM system.
• Ensure all necessary employees continue to effectively use the CRM software
  — that is, they are indeed adopting the CRM system.
• Update the content in the CRM software, for example, adding and modifying
  current contents from the functions of marketing, sales and customer services.
• Manage the CRM software, for example, doing backups and upgrading the versions
  as necessary.

Evaluate Your CRM System

Evaluations should monitor various metrics, or measures, to decide how well
the CRM system is operating. (Various metrics were listed above in the section
2. Align CRM Goals With Organizational Goals .)

Evaluations should especially be in regard to measuring the extent of achievement
of the CRM goals that you had established for your customer service management
system.

Be sure to use the learning from your evaluation activities to improve the
next round of the planning of your CRM system. In that way, you are indeed treating
your CRM as a recurring system of integrated and tightly aligned activities.

Also see
How
to Design Successful Evaluation and Assessment Plans

---

General Resources

Glossaries

CRM Glossary
CRM Definitions and Glossary

Organizations

Customer Service Institute of America
International Customer Service Association
National Customer Service Association
North
American Customer Service Management Association
SOCAP International

---

Learn More in the Library’s Blog Related to Customer Service and Satisfaction

In addition to the articles on this current page, also see the following blog
that has posts related to Customer Service and Satisfaction. Scan down the blog’s
page to see various posts. Also see the section “Recent Blog Posts”
in the sidebar of the blog or click on “next” near the bottom of a
post in the blog. The blog also links to numerous free related resources.

Library’s
Customer Service Blog

---

For the Category of Customer Service and Satisfaction:

To round out your knowledge of this Library topic, you may
want to review some related topics, available from the link below.
Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been
selected for their relevance and highly practical nature.

Related Library Topics

Recommended Books

---

What Really Constitutes a Business Crisis?

© Copyright Michael Nayor

There are many types of issues facing businesses, but what counts as a true crisis?

It’s not always immediately apparent when your organization is in the initial stages of a crisis. To this effect, I am pleased to bring you a guest blog submission by Michael Nayor, founder and CEO of crisis consulting firm The Rhodell Group, that investigates “What Really Constitutes a Business Crisis.”

What is a Business Crisis?

A business crisis can be anything that can negatively effect a company’s reputation or bottom line. Many events at first blush may not appear to be serious. HP’s firing of Mark Hurd and the subsequent entanglement with Oracle was not a big deal in the scheme of things, even though internally it must have been a shocker. However, the death or resignation of a key person in any organization could very well be serious for any company depending on just how key that person really was. Natural catastrophes, product recalls, labor disputes, computer data losses. The list is endless. Some are temporary. Some can cause the demise of a company. Most can be handled with honesty and the realization that it may be necessary to absorb losses over the short haul in order to achieve a long and healthy business life.

Two Categories of Business Crises

Two distinct categories of crisis need to be recognized. In one we lump all those events over which we have no control, such as product tampering by outside forces or natural disasters. Even in these situations there are always some actions we can take: tamper-proof packaging, liability insurance, proper protocols. But generally these events can blind-side us.

The second category contains all those events that might have been avoided had we chosen to take the actions necessary to protect ourselves and the public. Some are obvious. We look at the BP oil spill and see things that surely could have been done. Other events are not so obvious and these are the ones that can be insidious. When a management believes it is doing the right thing but in fact is fueling a potential crisis we have the makings of a catastrophe. A couple of examples will make this abundantly clear.

Market share is usually very important to a company, oddly sometimes more important than the bottom line. There is always great competition for new customers. Many times the efforts and resources devoted to advertising, marketing and selling to new customers are at the expense of a company’s loyal customer base. This can even be seen at the local level. Where I live heating oil companies consistently offer new customers a deal for the first year in order to lure them in. This, of course, is done at the expense of old, loyal customers who have to make up the slack. The result is that many savvy oil customers these days do a lot of shopping each year to find the best deal. Loyalty is a thing of the past. On a national level the problem has gotten even more serious. A recent financial story in The New Yorker last month observed that there is almost universal recognition that customer service in this country has deteriorated. Such service is considered a “cost”. Companies are looking for the customers they don’t have so they are willing to spend on marketing and advertising but are not as interested in adding to their costs of service. The article made it sound a little like cynical dating. Companies are interested in luring you in but then once they have you, they don’t quite value you as much as the next potential customer they want to corral.

Lack of service is not just a pain for helpless consumers. In this internet age they can do something about it. This is how a company can sow the seeds of its own destruction, and inexorably create its own crisis. Companies and their products and services are being rated on the internet and consumers don’t hold back. They tell it like it is. Granted, competitors may be planting some of these negative comments but for the most part product and service evaluations are being taken at face value. The moral of the story: be faithful to those who brought you to the dance, or the consequences could be severe.

Another form of self-inflicted crisis involves weathering the storm

Whether in politics, professional sports, or in business, “players” still believe that because of their importance they can ride out any issue or problem. They can’t. We can all easily tick off a dozen or so examples, but the latest is surprising. Johnson & Johnson has recently gone through a spate of recalls of tainted children’s Tylenol and Motrin. The Company has generally kept a low profile and even contracted with a third party to buy up Motrin off retail shelves rather than announce an actual recall. And for the last decade it has been settling with claimants for a variety of injuries and death allegedly due from Ortho Evra, a contraceptive patch made by its subsidiary, Ortho McNeil. It appears clear that the current management of J&J has not followed in the footsteps of the management that handled the Tylenol crisis of 1982 which is often cited as the quintessential example of crisis management in modern corporate history. Back then cyanide had been found in bottles of Tylenol in the Chicago area. J&J immediately issued public warnings, issued a product recall, created tamper-proof packaging, and before long was back in business. The Company was up-front and willing to bite the bullet in the best interests of the public. Unfortunately that does not appear to be the philosophy today. There is clearly a danger in believing one’s invincibility. The trust and respect of the public is at stake, and once lost, is very difficult to retrieve.

A crisis is not just the obvious explosion at a plant or a mine. Companies can and do create their own crises. Companies must evaluate their philosophy, their strategy and their honesty. They must take action to minimize their vulnerabilities but at the same time be prepared to take action in the best interests of the public if they value company longevity.

---

For the Category of Crisis Management:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

• Related Library Topics
• Recommended Books

All About Crisis Management

---

Sections of This Topic Include

• 10 Steps of Crisis Communications
  
• Guidelines for Successful Crisis Management
• Guidelines for Successful Social Crisis Planning
• Examples of Organizations’ Successful — and Unsuccessful — Crisis Management

Also consider

• Crisis Management: Advice about responding to a crisis, once it’s already occurred
• Business Insurance: Guidelines and advice about buying various kinds of insurance
• Risk Management: Guarding against theft, fire, disasters, etc.
• Safety in the Workplace: About types of workplace injuries, programs to reduce accidents, etc.)
• Protecting or Repairing Your Reputation
• Related Library Topics

Learn More in the Library’s Blogs Related to Crisis Management

In addition to the articles on this current page, also see the following blogs that have posts related to Crisis Management. Scan down the blog’s page to see various posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog. The blog also links to numerous free related resources.

• Library’s Business Ethics Blog
• Library’s Crisis Management Blog

---

The 10 Steps of Crisis Communications

By Jonathan L. Bernstein (Update � 2016 by Jonathan Bernstein. All rights reserved.)

Crisis: Any situation that is threatening or could threaten to harm people or property, seriously interrupt business, significantly damage reputation and/or negatively impact the bottom line.

Every organization is vulnerable to crises. The days of playing ostrich – burying your head in the sand and hoping the problem goes away – are gone. You can try, but your stakeholders will not be understanding or forgiving because they’ve watched what happened with Volkswagen, Chipotle, FIFA, and Lance Armstrong.

If you don’t prepare, you will incur more damage. When I look at existing crisis management-related plans while conducting a vulnerability audit (the first step in crisis preparedness), what I often find is a failure to address the many communications issues related to crisis or disaster response. Experience demonstrates that organizational leadership often does not understand that in the absence of adequate internal and external communications:

• Operational response will break down.
• Stakeholders will not know what is happening and quickly become confused, angry, and negatively reactive.
• The organization will be perceived as inept, at best, and criminally negligent, at worst.
• The length of time required to bring full resolution to the issue will be extended, often dramatically.
• The impact to the financial and reputational bottom line will be more severe.

The basic steps of effective crisis communications are not difficult, but they require advance work in order to minimize damage. So if you’re serious about crisis preparedness and response, read and implement these 10 steps of crisis communications, the first seven of which can and should be undertaken before any crisis occurs.

PRE-CRISIS

1. Anticipate Crises

If you’re being proactive and preparing for crises, gather your Crisis Communications Team for intensive brainstorming sessions on all the potential crises that could occur at your organization.

There are at least two immediate benefits to this exercise:

• You may realize that some of the situations are preventable by simply modifying existing methods of operation.
• You can begin to think about possible responses, about best-case/worst-case scenarios, etc. Better now than when under the pressure of an actual crisis.

In some cases, of course, you know a crisis will occur because you’re planning to create it – e.g., to lay off employees, or to make a major acquisition.

There is a more formal method of gathering this information I call a “vulnerability audit,” about which information is available here.

This assessment process should lead to creating a Crisis Response Plan that is an exact fit for your organization, one that includes both operational and communications components. The remaining steps, below, outline some of the major topics that should be addressed in the communications section of the plan.

2. Identify Your Crisis Communications Team

A small team of senior executives should be identified to serve as your organization’s Crisis Communications Team. Ideally, the organization’s CEO will lead the team, with the firm’s top public relations executive and legal counsel as his or her chief advisers. If your in-house PR executive does not have sufficient crisis communications expertise, he or she may choose to retain an agency or independent
consultant with that specialty. Other team members are typically the heads of your major organizational divisions, as any situation that rises to the level of being a crisis will affect your entire organization. And sometimes, the team also needs to include those with special knowledge related to the current crisis, e.g., subject-specific experts.

Let me say a word about legal counsel. Historically, I used to have to do a lot of arm-wresting with attorneys over strategy and messaging. They were focused strictly on the court of law and, of course, a crisis manager is focused primarily on the court of public opinion. More and more lawyers understand that the organization in crisis can be destroyed in the court of public opinion years before the legal process plays out. And attorneys have also come to understand that, while “no comment” translates as “we’re guilty or hiding something” to the public, there are a lot of ways to say very little without compromising legal matters, while still appearing responsive to those seeking more information.

Remember this – entire countries and causes have had their ambitions thwarted, or aided, as a consequence of their trials in the court of public opinion.

3. Identify and Train Spokespersons

Categorically, any organization should ensure, via appropriate policies and training, that only authorized spokespersons speak for it. This is particularly important during a crisis. Each crisis communications team should have people who have been pre-screened, and trained, to be the lead and/or backup spokespersons for different channels of communications.

All organizational spokespersons during a crisis situation must have:

• The right skills
• The right position
• The right training

The Right Skills

I’ve met senior-level corporate executives who could stand up in front of a 1,000-person conference audience without a fear and perform beautifully – but who would get virtual lockjaw when they knew a camera was pointed their way for a one-on-one interview.

I’ve also known very effective written communicators who should probably never do spoken interviews because they’re way too likely to “step in it” using that format. These days, spokesperson responsibilities invariably include online communication, and social media is a very easy place to make a mistake.

Matching potential spokespersons’ skills with their assignments as a member of the Crisis Communications Team is critical.

The Right Position

Some spokespersons may naturally excel at all forms of crisis communications – traditional media, social media, B2B, internal, etc. Others may be more limited. Only certain types of highly sensitive crises (e.g., ones involving significant loss of life) virtually mandate the chief executive be the lead spokesperson unless there is very good cause to the contrary.

The fact is that some chief executives are brilliant organizational leaders but not very effective in-person communicators. The decision about who should speak is made after a crisis breaks – but the pool of potential spokespersons should be identified and trained in advance.

Not only are spokespersons needed for media communications, but for all types and forms of communications, internal and external. This includes on-camera, at a public meeting, at employee meetings, etc. You really don’t want to be making decisions about so many different types of spokespersons while “under fire.”

4. Spokesperson Training

Two typical quotes from well-intentioned executives summarize the reason why your spokespersons should receive professional training in how to speak to the media:

“I talked to that nice reporter for over an hour and he didn’t use the most important news about my organization.”

“I’ve done a lot of public speaking. I won’t have any trouble at that public hearing.”

Regarding the first example, there have hundreds of people skewered by CBS’ “60 Minutes” or ABC’s “20/20” who thought they knew how to talk to the press. In the second case, most executives who have attended a hostile public hearing have gone home wishing they had been wearing a pair of Depends. They didn’t learn, in advance, the critical differences between proactive PR, which focuses on promoting your organization, and crisis communications, which focuses on preserving your organization.

All stakeholders, internal and external, are just as capable of misunderstanding or misinterpreting information about your organization as the media. It’s your responsibility to minimize the chance of that happening.

Spokesperson training teaches you to be prepared, to be ready to respond in a way that optimizes the response of all stakeholders.

5. Establish Notification and Monitoring Systems

Notification Systems

Remember when the only way to reach someone quickly was by a single phone or fax number, assuming they were there to receive either?

Today, we need to have – immediately at hand – the means to reach our internal and external stakeholders using multiple modalities. Many of us have several phone numbers, more than one email address, and can receive SMS (text) messages or faxes. Instant Messenger programs, either public or proprietary, are also very popular for business and personal use. We can even send audio and video messages via email. And then, of course, there is social media. This may be the best/fastest way to reach some of our stakeholders, but setting up social media accounts for this purpose and developing a number of followers/friends/contacts on the various social media platforms (e.g., Facebook, LinkedIn, Google+) is not something you can do after a crisis breaks, because nowhere does news of a crisis spread faster and more out of your control than on social media.

Depending on how “techie” we choose to be, all of this type of communication – and more – may be received on or sent by a single device!

It is absolutely essential, pre-crisis, to establish notification systems that will allow you to rapidly reach your stakeholders using multiple modalities. The Virginia Tech campus shooting catastrophe, where email was the sole means of alerting students initially, proves that using any single modality can make a crisis worse. Some of us may be on email constantly, others not so. Some of us receive our cellphone calls or messages quickly, some not. If you use more than one modality to reach your stakeholders, the chances are much greater that the message will go through.

For a long time, those of us in crisis management relied on the old-fashioned “phone tree” and teams of callers to track people down. Fortunately, today there is technology – offered by multiple vendors for rent or purchase – that can be set up to automatically start contacting all stakeholders in your pre-established database and keep trying to reach them until they confirm (e.g., by pressing a certain number on a phone keypad) that the message has been received. Technology you can trigger with a single call or email.

Monitoring Systems

Intelligence gathering is an essential component of both crisis prevention and crisis response.

Knowing what’s being said about you on social media, in traditional media, by your employees, customers, and other stakeholders often allows you to catch a negative “trend” that, if unchecked, turns into a crisis.

Likewise, monitoring feedback from all stakeholders during a crisis situation allows you to accurately adapt your strategy and tactics.

Both require monitoring systems be established in advance. For traditional and social media, Google Alerts are the no-cost favorite, but there are also free social media tracking apps such as Hootsuite. There a variety of paid monitoring services that provide not only monitoring, but also the ability to report results in a number of formats. Monitoring other stakeholders means training personnel who have front-line contact with stakeholders (e.g., Customer Service) to report what they’re hearing or seeing to decision-makers on your Crisis Communications Team.

6. Identify and Know Your Stakeholders

Who are the internal and external stakeholders that matter to your organization? I consider employees to be your most important audience, because every employee is a PR representative and crisis manager for your organization whether you want them to be or not! But, ultimately, all stakeholders will be talking about you to others not on your contact list, so it’s up to you to ensure that they receive the messages you would like them to repeat elsewhere.

7. Develop Holding Statements

While full message development must await the outbreak of an actual crisis, “holding statements,” messages designed for use immediately after a crisis breaks, can be developed in advance to be used for a wide variety of scenarios to which the organization is perceived to be vulnerable, based on the assessment you conducted in Step 1 of this process. An example of holding statements by a hotel chain with properties hit by a natural disaster, before the organization’s headquarters has any hard factual information, might be:

“We have implemented our crisis response plan, which places the highest priority on the health and safety of our guests and staff.”

“Our thoughts are with those who were in harm’s way, and we hope that they are well.” “We will be supplying additional information when it is available and posting it on our website.”

The organization’s Crisis Communications Team should regularly review holding statements to determine if they require revision and/or whether statements for other scenarios should be developed.

POST-CRISIS

8. Assess the Crisis Situation

Reacting without adequate information is a classic “shoot first and ask questions afterwards” situation in which you could be the primary victim. However, if you’ve done all of the above first, it’s a “simple” matter of having the Crisis Communications Team on the receiving end of information coming in from your team members, ensuring the right type of information is being provided so you can proceed with determining the appropriate response.

Assessing the crisis situation is, therefore, the first crisis communications step you can’t take in advance. If you haven’t prepared in advance, your reaction will be delayed by the time it takes your in-house staff or quickly hired consultants to run through steps 1 to 7. Furthermore, a hastily created crisis communications strategy and team are never as efficient as those planned and rehearsed in advance.

9. Finalize and Adapt Key Messages

With holding statements available as a starting point, the Crisis Communications Team must continue developing the crisis-specific messages required for any given situation. The team already knows, categorically, what type of information its stakeholders are looking for. What should those stakeholders know about this crisis? Keep it simple. Have no more than three main messages that go to all stakeholders and, as necessary, some audience-specific messages for individual groups of stakeholders. You’ll need to adapt your messaging to different forms of media as well. For example, crisis messaging on Twitter often relies on sharing links to an outside page where a longer message is displayed, a must because of the platform’s 140 character limit.

10. Post-Crisis Analysis

After the cowpies are no longer interacting with the air-circulating device, the question must be asked, “What did we learn from this?”

A formal analysis of what was done right, what was done wrong, what could be done better next time and how to improve various elements of crisis preparedness is another must-do activity for any Crisis Communications Team. I have developed a formal process for accomplishing this, but even a solid in- house brainstorming session can do the job.

“It Can’t Happen To Us”

When a healthy organization’s CEO or CFO looks at the cost of preparing a crisis communications plan, either a heavy investment of in-house time or retention of an outside professional for a substantial fee, it is tempting for them to fantasize “it can’t happen to us” or “if it happens to us, we can handle it relatively easily.”

Hopefully, that type of ostrich emulation is rapidly becoming a thing of the past. Yet I know when all is said and done, thousands of organizations hit by natural and man-made disasters will have suffered far more damage than would have occurred with a fully developed crisis communications plan in place. This has also been painfully true for scores of clients I have served over the past 30+ years. Even the best crisis management professional is playing catch up – with more damage occurring all the time – when the organization has no crisis communications infrastructure already in place.

The Last Word – For Now

I would like to believe organizations worldwide are finally “getting it” about crisis preparedness, whether we’re talking about crisis communications, disaster response or business continuity. Certainly, client demand for advance preparation has increased dramatically in the past decade, at least for my consultancy. But I fear there is, in fact, little change in what I have said in the past – that 95 percent of American organizations remain either completely unprepared or significantly under-prepared for crises. And my colleagues overseas report little better, and sometimes worse, statistics.

Choose to be part of the prepared minority. Your stakeholders will appreciate it!

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Guidelines for Successful Crisis Management

The following links are to a wide variety of guidelines for successful crisis management that will avoid crisis management mess. Many of the articles include real-life examples of success.

Recommended Articles

• What Really Constitutes a Business Crisis?
  
• Crisis Management
• Making a Statement
• Are You a Crisis Manager?
  
• Coping with catastrophe: what keeps us going in the face of adversity?
• Managing in Crisis
• Your Crisis Communication Response Plan is Due for Maintenance (And/Or a Rewrite)
• Questions to Avoid Crises
• Prevent and React

Additional Articles

• Who Does What?
• Turning a Public Crisis Around
• The Crisis Counselor
• The Doctor Recommends Crisis Prevention – But It’s Your Choice
• Information Security as Crisis Prevention (video)
• Crisis Simulation
• The Right Steps
• Take Advantage of Crises to Grow and Learn
• Crisis Management and Customer Service
• After A Crisis
• Various Manuals for Crisis Interventions
• Questions to Avoid Crisis
• Reality of Communication
• Training to Prevent Disasters — Not Just the Job of TSA
• Turning a Liability into an Asset
• Proactive Crisis Management
• Avoiding Pain
• Crisis Leadership
• Transparency in Crisis
• Can You Simulate a PR Crisis and Then Handle the Real Thing?
• Your Crisis Communication Response Plan is Due for Maintenance (And/Or a Rewrite)
• Fix the Problem
• Prevent and React
  
• Online Crisis Management Tools
  
• Honest Insurance?
  
• Crisis on Stage
  
• The Human Touch
  
• Coping with Tragedy
  
• Take Responsibility
  
• Ready and Able
  
• Three-Act Crises
• Own It
  
• Learning from Crisis
  
• Prepare With Dark Sites
  
• Real Crisis Management
  
• Simplify and Repeat
  
• Have a Plan
  
• Reputation Combat
  
• Are You Vulnerable?
  
• Bring On The Hate
  
• Crafting the Ideal Apology
  
• Role Responsibility
  
• Rumor and Innuendo
  
• When Share Price Puts a Value on Brand Reputation
  
• Business as Usual
  
• 10 Ways to Ruin Your Company’s Communications Efforts
  
• Don’t Tip Your Hand
  
• Red Cross UK Disaster Challenge
  
• You Know What You’re Talking About, Right?
  
• Bird Flu Breakout
  
• Caribbean Cops Get Crisis Communications Training
  
• The Digital Media Law Project
  
• FEMA’s Pledge to Prepare
  
• High-Speed Crisis Management
  
• Shoe Shackles Raise Consumer’s Hackles
  
• Video Crisis Management
  
• Paterno Family’s Reputation Management no Touchdown
  
• Romney Film Reveals Crisis Management Risk
  
• Calm Yourself Through Crisis
  
• Hotel Hacker Exposes E-Vulnerabilities
  
• Make Your Apology Mean Something
  
• Short Term/Long Term
• The Crisis Show
• The Crisis Show Ep. 2 – Crises, Crises, Everywhere!
• The Crisis Show Ep. 3 –
• Data Jackings and #Fail Tweets
• The Crisis Show Ep. 4 –
• Corporate Crises
• The Crisis Show Ep. 6 –
• Colorado, Tony Robbins, Olympics & Penn State
• The Crisis Show Ep. 9 –
• Back to School

Also consider

• Social Networking and Social Media
• Public and Media Relations (including online reputation management)

Guidelines for Successful Social Crisis Planning

Copyright Jonathan L. Bernstein

As it stands today, crisis management is very much entwined with social media. Whether you like it or not, when trouble hits you’ve got to quickly meet your stakeholders in the places they frequent in order to maintain control of your story, and that means being ready. In an article for business2community.com,
David Vap provided some solid tips for getting your organization in position to handle social crises:

1. Understand your organization. Review external communication processes, social capabilities, and corporate culture. This is where we recommend scenario planning. Key questions could include: how would we respond if a vocal customer complaint suddenly went viral? How would we respond to a brandjacking attack?
2. Create a new social mindset in your organization. The social shift calls for a mindset characterized by transparency, accountability, employee empowerment, and planned spontaneity. Technology is certainly a crucial component of dealing with crisis communication, but preparing processes and practices must come first.
3. Know your consumers. Listen to conversations unfolding on the social web about your brand, and respond/employ proactive social support. Also identify your customer advocates on the social web – they will be invaluable in the event of a crisis.
4. Form a social crisis team. A successful social strategy must cross the boundaries of department and hierarchy because consumers expect a seamless experience. Build a cross-functional team, including a social media manager, a product owner, and at least one executive sponsor. Draw up a social team charter to clarify roles and responsibilities and create an internal collaboration space for this team.
5. Roll out a social crisis communications plan. Develop a playbook with guidelines for the social crisis team. Define an escalation process for potential PR issues. Build feedback into every step so you can adapt. Your plan needs to think through three areas – process and culture (what / who needs to change), technologies and tools (what to use to get there), and key metrics (what to track).

I especially like this list because of step two, “create a new social mindset in your organization.” Far too many businesses create social media accounts and install fancy managing programs but neglect proper training and education, not only stifling possible gains but also creating the risk of improper use, which raises the chance of crisis even further.

• Uses of Social Media for Disaster Response
• Are You Prepared For a Social Media Crisis?
• Uses of Social Media for Disaster Response
• Avoiding Pain
• Transparency in Crisis
• Social Media in Emergencies
• How to Start a Social Media Crisis
• Qantas Neglects Twitter in Crisis
• Social Crisis Planning
• Social Management
• Twitter Mistakes to Avoid
• Blogging for Crisis Management
• Getting Started with Social Media
• Crisis Communication via Twitter
• Fight Back with Social Media
• Putting Out Fires with Twitter
• Tech to the Rescue
• Rounding Up Rumors
• Disaster Management
• Emergency Twitter Tips
• FEMA and Social Media vs. Irene
• Define Your Goals for Social Media
• Twitter Underprepared for Censorship Backlash
• Social Media and You
• Social Media Crisis Management Strategies
• Social Media Preparedness
• $28k of Taxpayer Money �to Tweet?
• Flinging Mud with SEO
• Listening for a Crisis
• Social Media and Your Next Crisis
• ASUS Fails at Social Media
• Handling Negative Comments
• Social Media for Reputation Repair
• The Outrage Trap: How You Get Turned into a Dupe by Political and Activist Groups
• One’s Missed Opportunity is Another’s Brilliant PR
• When Deleting Social Media Comments is OK
• Winnie the Pooh on Social Media

Examples of Organizations’ Successful — and Unsuccessful — Crisis Management

One of the best ways to learn is from the mistakes of others. The following links are to many examples of crisis management done poorly.

• Chevron Gets Pranked
• Qantas Neglects Twitter in Crisis
• Monkey Business at the Better Business Bureau
• Air New Zealand Shows How to Fight Back
• Dell Has a New Crisis
• Man Declared Dead too Soon
• Bad Guys Lose with Google
• Anti-Bimbos
• Bad Crisis Communications Hurts Electronics Manufacturer
• Most Hated Companies
• Twitter or the Web?
• Storing Good Will
• Charlie Sheen — Misunderstandings about Addiction and Crisis
• Crisis Leadership in Japan
• Celeb Denies Make-A-Wish
• If You Lie Down With Dogs
• Southwest ™ Sub-Par Crisis Management
• Lessons from P&G
• Playstation Network Breach
• Southwest Gets It Right
• Impostors
• Zombies Attack
• Weiner Scandal
• Almost Good Crisis Management
• Delta Drops Fees, Learns Lesson
• E.coli Crisis
• Responsible Behavior
• Nikon Averts Facebook Crisis
• Penn State Crisis Management — ESPN Interview with Jonathan Bernstein
• USAJobs Controversy
• BofA Gets Brandjacked
• GM’s Crisis Management
• Kansas Gov. Bungles Social Media Crisis Management
• Can Apologies Be Funny?
• Don’t Let Reputation Damage Become Disaster
• NY Times Pays for Errant Email
• Ryan Braun: Victim or Villain?
• Talk About Transparency!
• Citibank – A Grimm Fairy Tale
• Crisis Management During Hard Times
• Crisis Management from the Marine Corps
• Dane Elicits Pain About Obama’s Public Speaking
• How To Say No Comment Without Saying No Comment
• More Military Crisis Management
• Army General Neil Tolley Opens Mouth, Inserts Combat Boot, Endangers Secret Ops
• Citibank – A Grimm Fairy Tale (update)
• Correcting a Customer Complaint Crisis
• How You Can Cause a Crisis by Giving Someone the Finger
• Is Siri Stalking You?
• Glaxo’s $3 Billion Deceit
• Toyota’s Crisis Management Runs Flat
• SumoSalad Hepatitis A Disaster
• Travelocity’ s Good Deed Goes Punished
• Crisis Management for Android in OS Wars
• GoDaddy Does Online Reputation Management
• Worried About Mass Shootings? Think Prevention
• Employee Error Dings Aussie Red Cross’s Reputation
• FEMA Combats Sandy Rumors Online
• When it’s OK to laugh, and when it’s not
• Quick Crisis Management from O2

Also consider

• Preventing Violence in the Workplace
• Safety in the Workplace
• Crisis Manager Newsletter and various information on crisis management

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For the Category of Crisis Management:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

• Related Library Topics
• Recommended Books

Guidelines and Resources for Termination Phase of Consulting

Much of the content of this topic came from this book:

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Sections in this Topic Include:

• Description
  
• Goals for This Project Termination Phase
  
• Typical Reasons Projects Are Terminated
  
• Avoid Project Creep
  
• Avoid Client Dependency
  
• Generate Letter of Project Termination
  
• Also See These Closely Related Topics

Strongly Recommended Pre-Reading

• All About Consulting – Types, Skills and Approaches
• Collaborative Consulting for Performance, Change and Learning
  
• Guidelines and Resources for Contracting Phase of Consulting
  
• Guidelines and Resources for Discovery Phase of Consulting
  
• Guidelines and Resources for Action Planning Phase of Consulting
  
• Guidelines and Resources for Implementation Phase of Consulting
  
• Guidelines and Resources for Project Evaluation Phase of Consulting

NOTE: There can be very different styles in going through this project termination phase, ranging from a carefully specified and sequential set of activities to an unfolding and non-sequential arrangement. See the very Different Approaches in Consulting. For the sake of being highly informative with clear and well organized information, this topic will explain a rather orderly, but highly collaborative approach to project termination.

(This phase is sometimes referred to as the Separation Phase.)

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Description

See a video about project termination, including reasons to terminate, ethical considerations, legally terminating and managing relationships. From the Consultants Development Institute.

The purpose of this phase of the consulting process is to ensure there is an
effective termination of the project. The activities of project termination
are very important to address even if the client asserts that the project has
been successful and suggests that no further activities are needed. The activities recognize key learnings from the project, acknowledge the client’s development, formalizes the end of the project, and identifies next steps for you and your client. It helps to avoid “project creep” where the project seems
to never end because the requirements for success keep expanding. It also helps to avoid an unethical dependency of the client on the relationship with you.

• Project Termination: How and When to Terminate a Project
  
• Project Closing
  
• The Project Closure Process and Why It’s Important

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Goals of This Project Termination Phase

1. Ensure that there is a specific termination to your consulting project.
2. Identify the next steps for both of you.
3. Formalize the end of the project.

Typical Reasons Projects Are Terminated

• Desired results of the project have been achieved.
• The end date of the contract is reached.
• Your client runs out of resources for the project.
• Your client leaves the organization.
• Your client’s organization experiences a dramatic change of some kind.
• You or your client somehow violates one or more terms of the contract.
• Your client is not able to utilize the outcomes from the consultation work.

Reasons Why Success Might Not Have Been Achieved

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Avoid Project Creep

It is during this phase that you and your client should begin the process of separating from the consulting relationship – the relationship in which your client relied on you for guidance and materials to address the same type of problem that had occurred in their workplace. However, even if you had successfully helped your client to solve the problem and to adopt new practices and structures into their organization, then sometimes the client continues to ask you for additional assistance.

It may be because the client is consciously or unconsciously taking advantage of your expertise as long as it seems that you are still involved in the project. So the client might continue to add requirements to the original contract. This is called “project creep”. In that situation, it is very important to specify that you both should redo the contracting phase to generate a new contract or formally modify the existing contract in order to accommodate the new requirements from the client.

---

Avoid Client Dependency

Or, the client might want to remain in some kind of relationship with you, personal or otherwise. So the client might suggest one or two new projects in which you could consult even if they do not require your particular expertise. That is called a client dependency on the consultant and it is highly unethical for the consultant to cultivate.

In that situation, if you do indeed have the expertise to help the client with the one or two new projects, then specify that you both should do the contracting phase for each of them. Otherwise, it would be unethical for you to contract to deliver services in which you have very little, if any, expertise to offer.

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Generate Letter of Project Termination

Regardless of the reasons for termination of the contract, you should formally terminate the project with a letter to your client. This practice is too often forgotten, yet it is meaningful to ensure that you and your client clearly recognize that the project has indeed been terminated. In a written document that is dated and signed to the client:

1. Specify the document is your specification of the termination of the project.
2. Specify the reason(s) for termination of the project.
3. Reiterate the accomplishments of the project.
4. Congratulate them on their new developments and learning.
5. If appropriate, request permission to use any of their complimentary comments as testimonials in your advertising literature about your services.
6. Add any final invoices.

Include the following sentence: “If you do not agree with all of the contents of this document, then please respond in writing to me with your reasoning and within two weeks of the date on this document.” (This is not legal advice.) That useful phrase might protect you at some time in the future if your client ever decides that your project was not successful, after all.

Also See These Closely Related Topics

• Overview of the Field of Organization Development
  
• Guidelines, Methods and Resources for Organizational Change Agents
  
• Competencies and Resources for Organizational Change Agents

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Additional Library Resources in the Category of Organizational
Change and Development

• Related Library Topics
• Recommended Books

Guidelines and Resources for Project Evaluation Phase of Consulting

Much of the content of this topic came from this book:

• © Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Sections in this Topic Include:

Description
Goals for This Project Evaluation Phase
Some Evaluation Questions to Consider When Doing a
Results Evaluation
Reasons Why Success Might Not Have Been Achieved
When Clients Are Reluctant to Do Final Evaluation
If Desired Results Are Still Not Achieved, Cycle Back?
Some Useful Resources and Skills for This Phase
Also See These Closely Related Topics

Strongly Recommended Pre-Reading

All About Consulting
– Types, Skills and Approaches
Collaborative
Consulting for Performance, Change and Learning
Guidelines
and Resources for Contracting Phase of Consulting
Guidelines
and Resources for Discovery Phase of Consulting
Guidelines
and Resources for Action Planning Phase of Consulting
Guidelines
and Resources for Implementation Phase of Consulting

NOTE: There can be very different styles in going through this project evaluation
phase, ranging from a carefully specified and sequential set of activities to
an unfolding and nonsequential arrangement. See the very Different
Approaches in Consulting. For the sake of being highly informative with
clear and well organized information, this topic will explain a rather orderly,
but highly collaborative approach to project evaluation.

(This phase is sometimes referred to as the Evaluation and Adoption Phase,
although some practitioners separate the Adoption phase and consider it to be
focused especially on ensuring the client has adopted the new practices needed
to solve the client’s problem — and learned how to solve similar problems into
the future.)

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Description

See a video about project evaluation, including overcoming barriers, benefits of evaluation, evaluation planning, questions to ask and responses to results. From the Consultants Development Institute.

By now, you and your client have made a consistent and focused attempt to implement
the action plans (perhaps combined into an Implementation Plan). The primary
purpose of this phase is to assess whether success was achieved in the project.
Success
is usually defined during the contracting
phase and sometimes at the end of the discovery
phase after recommendations have been approved by the client. The purpose
also is to ensure that your client’s organization has adopted the new
approaches and practices to avoid or manage similar situations in the future.
This is the phase of the consulting process that really pays off if you have
been working collaboratively with your client.

Goals of This Project Evaluation Phase

1. Decide if the issues that were identified during discovery have been successfully
   addressed.
2. Decide if the vision for change has been achieved (that is, if your client
   decided to develop a vision for change during the project).
3. Decide if the action plans have been implemented.
4. Decide whether it is necessary to cycle back in the consulting cycle or
   proceed to the next phase, project
   termination.

Some Evaluation Questions to Consider
When Doing a Results Evaluation

1. Has success, and any other desired goals and outcomes, been achieved? If
   not, what else needs to be achieved?
2. Have the critical success factors identified during the contracting
   phase been achieved?
3. Has the vision for change been achieved? If not, what else needs to be
   accomplished to achieve the vision? How should that be done?
4. Have all of the action plans been implemented? If not, which necessary
   action plans should still be implemented?
5. Has the organization successfully adopted the new structures and practices
   to avoid problems like this in the future?

Reasons Why Success Might Not Have Been
Achieved

When projects do not achieve success, it is often one or more of the following
reasons:

• The overall situation changed. In small organizations, a project might successfully
  identify a major issue and actions to address that issue, only to discover
  that a different, major issue had suddenly become much more important.
• Key people succumbed to burnout. The stress of the change effort was such
  that some people lost their ability to sustain momentum and focus on their
  work. Consequently, they were longer effective in the project – or their
  jobs.
• Key people left the organization. Small organizations tend to have a high
  employee turnover rate – employees come and go rather quickly. It can
  be a disaster to a project if your client suddenly left the organization.
• The relationship between you and your client degenerated. If you and your
  client have not worked at sustaining an effective working relationship, it
  can fall apart completely during the rigors of implementation.
• Key people in the organization refused to implement the action plans. If
  you and your client have not met the Requirements
  for Successful Organizational Change, then people in the organization
  are much less likely to implement the plans for change.

When Clients Are Reluctant to Do Final Evaluation

Surprisingly, it can be a major challenge to get the client to undergo a final
evaluation of the results of the project, especially if it already seems clear
that the project has been successful. When that happens, consider the following
guidelines.

• Ensure that your evaluation design suits the nature and needs of your client’s
  organization.
• Explain what evaluation is. Help clients realize that they are probably
  already doing evaluation, but just not calling it that.
• Explain that evaluation focuses on relevance, utility and practicality,
  not just on complete accuracy, validity and reliability.
• Explain that evaluation is often associated with a great deal of learning.

If Desired Results Are Still Not Achieved, Cycle
Back?

If, after having conducted most or all of the project evaluation, it is clear
that success has not been achieved, then consider the following guidelines.

• Be authentic. Respectfully name what you are seeing or hearing (the evidence)
  for why you believe the project is not achieving success. Do not include any
  judgment about people in the organization.
• Realize your client’s lack of participation may be a form of project
  resistance. If so, then be authentic to address that, as mentioned above.
• Respectfully acknowledge the other priorities of your client.
• Remind your client of the importance of achieving the success.
• Remind your client: choices about the project are choices about the organization.
• Mutually decide if you should cycle back to an earlier consulting
  phase in the project.

The upcoming project
termination phase shares ideas when it seems the project needs to be terminated.

Some Useful Resources and Skills for
This Phase

The
Evaluation of Organization Development Interventions: An Empirical Study
Best
Practice in Organization Development Evaluation
How to Measure
the Intervention Process?
Thinking
Differently about evaluating OD interventions
Evaluating
Organization Development Interventions
A
Framework To Evaluate Consulting Efforts

How to
Design Successful Evaluation and Assessment Plans
Basic
Guide to Program Evaluation (use to conduct evaluations during and at the end
of the project)
Evaluation Activities
in Organizations (all kinds)

Also See These Closely Related Topics

Guidelines
and Resources for Termination Phase of Consulting

Overview
of the Field of Organization Development
Guidelines, Methods and Resources for Organizational Change Agents
Competencies
and Resources for Organizational Change Agents

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Additional Library Resources in the Category of Organizational
Change and Development

Related Library Topics

Recommended Books

Guidelines and Resources for Implementation Phase of Consulting

Much of the content of this topic came from this book:

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Sections in this Topic Include:

• Description
  
• Goals for This Implementation Phase
  
• Managing Change During Implementation
  
  • Reminder, Who is Your Direct Client Now?
    
  • Following Best Practices to Support Change
    
  • Maintaining Momentum During Change
    
  • Continual Monitoring and Evaluating Implementation
  • Ensuring Ongoing Communication of Status
• Adjusting Plans, If Needed
  
• If the Project Gets Stuck
  
• Also See These Closely Related Topics

Strongly Recommended Pre-Reading

• All About Consulting – Types, Skills and Approaches
• Collaborative Consulting for Performance, Change and Learning
  
• Guidelines and Resources for Contracting Phase of Consulting
  
• Guidelines and Resources for Discovery Phase of Consulting
  
• Guidelines and Resources for Action Planning Phase of Consulting

NOTE: There can be very different styles in going through this implementation phase, ranging from a carefully specified and sequential set of activities to an unfolding and nonsequential arrangement. See the very Different Approaches in Consulting. For the sake of being highly informative with clear and well organized information, this topic will explain a rather orderly, but highly collaborative approach to implementation.

(This phase is sometimes referred to as the Intervention Phase or Transition Phase.)

---

Description

See a video about the implementation phase, including ingredients for change, change management plans, integrating plans into organization, sustaining client’s and consultant’s momentum, managing resistance, tracking status and adjusting plans. From the Consultants Development Institute.

At this point in the project, you and your client have worked together in the discovery phase to examine your client’s situation and generate recommendations to address it. During the next phase, the action planning phase, you both developed action plans to implement each recommendation — and each action plan specified various objectives to be accomplished, along with who will be accomplishing them and when. Then you might have integrated the action plans, along with plans for communications, learning and evaluation into an overall Implementation Plan.

In this phase, you and your client will work together to effectively implement the Implementation Plan. Although you want to work in a highly collaborative manner with your client, it is ultimately your client who must implement that Plan in the workplace. Your role is to guide and support your client along the way. Organizations, especially small- to medium-sized ones, often have major challenges to overcome when trying to accomplish successful change in their organizations. They face shortages of funds, time and energy.

Now is when you must muster all of your skills as a consultant because you will be working to get a lot done, but will be working through others to do it. You might sometimes struggle just to know the status of implementation of plans. You might need to modify the plans at times and that will be fine as long as you make those changes systematically. It is not unusual in this phase to encounter some resistance to change from your client. If so, then you will need your skills in authenticity and assertiveness to respectfully address it. Other times, you will congratulate them on their accomplishments.

• The Intervention Phase « Organisation Development
• The Implementation Phase of Consultation

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Goals for This Implementation Phase

1. Integrate the Implementation Plan and its various associated plans throughout the necessary systems in your client’s organization.
2. Ensure continued motivation and momentum to implement the plans.
3. Keep monitoring the status of implementation using the measures of success identified during the action planning.
4. Continue to show support from top leaders in the organization.
5. Regularly communicate status to all relevant stakeholders.

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Managing Change During Implementation

Reminder, Who is Your Direct Client Now?

In the contracting phase, we talked about the importance of always knowing who the direct client is now. That is the person or team who has the most influence in helping you now in the project. It can be a different person or team at different times.

Types of Clients (this helps answer the critical question: “Who is the current client?”)

Following Best Practices to Support Change

When this implementation phase is in regard to changing a significant part of an organization, then the guidelines in the following topic should be closely reviewed.
Guidelines, Methods and Resources for Organizational Change Agents

Maintaining Momentum During Change

See a video about the nature of coaching, when to use the conversations, nature of useful questions, role of actions and learning and defining “successful” coaching. From the Consultants Development Institute.

This is often the most difficult part of a project for significant change. The consultant and client need to continue to keep meet the Requirements for Successful Organizational Change:

1. Motivate change – Remind people of the need for the change and how it benefits them. Leaders must continue to show strong support of the change. Continue to solicit everyone’s feedback about the change.
2. Remind them of the vision — They need to see some vision of success, some goal they are working toward. It should be very relevant and realistic.
3. Cultivate political support – Keep the support of all key power players, for example, senior management, subject matter experts and others who are recognized as having strong expertise and integrity in the organization.
4. Manage the transition – Ensure ongoing coaching to leaders and managers about helping their employees to deal with challenges, especially stress and time management. Continue to communicate status to all employees. Be willing to adjust plans as necessary.
5. Sustain momentum – Communicate accomplishments to everyone. Reward those who lead and excel. Authentically and assertively address resistance, including from the client and the consultant. Integrate new practices into plans, policies and job descriptions.

• How Do We Ensure Implementation of Our Plan?
  
• 5 Tips for Managing Resistance to Change
  
• How to Remain Authentic With Yourself and Others
  
• Motivating Others (e.g., to implement the changes and action plans)
• Coaching (e.g., consultant and client to clarify and achieve goals, and learn at the same time)
• Delegating (e.g., for leaders and supervisors to ensure action plans are implemented)
  
• Mentoring
• Stress Management
  
• When to Bail from a Consulting Project

Continual Monitoring and Evaluating Implementation

There are numerous means to track and evaluate the status of implementation of the action plans (that is, the Implementation Plan), including:

• Spoken words (conversations with leadership)
• To-do lists
• Status reports
• Staff meetings
• Chief Executive Officer reports to the Board of Directors (if the organization is a corporation)
• Planned-versus-actual reports
• Project reviews

Basics of Monitoring, Evaluating and Deviating from Plan (in context of strategic planning, but applies to change management plans, too)

Ensuring Ongoing Communication of Status

One of the most powerful means to ensure the success of organizational change is through ongoing, systematic communication to all stakeholders about the status of the change activities. Communication reduces people’s resistance to change. It maintains their focus on the vision and actions for change. It shows them that the top leaders continue to support the change effort. Ultimately, it helps to maintain the motivation, vision, political support and momentum to accomplish successful change.

Unless your client has a large organization, you need not have an extensive and detailed Communications Plan. The Plan should identify what messages need to be conveyed to which specific groups of stakeholders, along with how, who and when.

• Basics of Writing and Communicating Plans (in context of strategic planning, but applies to change management plans, too)
• Basics of Internal Organizational Communications (to communicate the actions plans)

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Adjusting Plans, If Needed

Plans are rarely implemented as designed. That is not a problem – it is acceptable to adjust plans. The plan is only a guideline – not a strict roadmap, which must be followed exactly as specified when first written. Plans must be flexible. Changes can be done systematically, including to:

1. Recognize the need for a deviation from the plan.
2. Understand the reason for the deviation.
3. Decide what the change should be.
4. Communicate the need for the change to the plan and what the change should be (before making the change to the plan).
5. Obtain approval to make the change.
6. Make the change to the plan.
7. Update the version of the plan, for example, changing the date on each of the pages and adding commentary that explained the change.
8. Track the status of the plan.

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If the Project Gets Stuck

Projects can get stuck for a variety of reasons, for example, if the overall situation changes, people succumb to burnout, key people leave the organization, the relationship between the consultant and client changes, or people refuse to implement action plans. If the implementation of the plans gets stalled, then you might cycle back to an earlier phase in the consulting in order to update and restart the change management project.

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Also See These Closely Related Topics

• Guidelines and Resources for Project Evaluation Phase of Consulting
  
• Guidelines and Resources for Termination Phase of Consulting
• Overview of the Field of Organization Development
  
• Guidelines, Methods and Resources for Organizational Change Agents
  
• Competencies and Resources for Organizational Change Agents

---

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Additional Library Resources in the Category of Organizational Change and Development

• Related Library Topics
• Recommended Books

How to Successfully Hire and Work With an Excellent Consultant

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Sections of This Topic Include

• Understand What to Expect from a Professional Consultant
• Situations When a Consultant is Useful
• Where to Get Consultants
• How You Can Make a Consultancy as Productive as Possible
• Getting and Hiring the Consultant
• Additional Advice (orienting consultant, evaluating project, avoiding IRS penalties, etc.)

Also consider
Related Library Topics

---

Understand What to Expect from a Professional Consultant

When hiring consultants, it is important to understand what consulting is, the types of consultants and services that you might need, and what to expect from hiring a professional consultant. Therefore, be sure to read

• All About Consulting – Types, Skills and Approaches
• What Do Consultants Bring to the Table?
• Sample Checklist for Hiring Consultants
• Defining Success With Consultants
• Is Your Consultant Enriching Your Judgment or Retarding it?
• Generalist or Specialist — Which do I consult? (which to hire, too)
• Working With Consultants

Situations When a Consultant is Useful

The following are typical situations when an organization might need a consultant.
1. The organization has no expertise in the area of need.
2. The time of need is considered short-term, e.g., less than a year, with a general start and stop time.
3. The organization’s previous attempts to meet their own needs were not successful.
4. Organization members continue to disagree about how to meet the need and bring in a consultant to provide expertise or facilitation skills to come to consensus.
5. Leaders want an objective perspective, i.e., someone without strong biases about the organization’s past and current issues.
6. A consultant can do work that no one else wants to do.
7. An outside organization demands that a consultant be brought in, e.g., a funder wants to ensure the organization is well suited to spend the funder’s money.
8. The organization wants a consultant to lend credibility to a decision that’s already been made (this situation would be looked at by many experienced consultants as highly unethical).

Good Reasons to Hire Consultants and Poor Reasons to Hire Consultants

Where to Get Consultants

1. Contact professional associations, e.g., networks of organization development practitioners, facilitators, trainers, fundraisers, accountants, lawyers, computer users, etc.
2. Contact local large corporations; they often have community service programs and can provide a wide range of management and technical expertise.
3. Consult the local telephone company’s Yellow Pages under the category “Consultant” and “Volunteering.”
4. Call a local university or college and speak to someone in the college of Human Resources, Training and Development, or Business Administration.
5. Ask other organizations for ideas, particularly those that have similar services and head-count size, for contacts and references.
6. Nonprofits in Minnesota, see the “Directory of Services and Resources for Minnesota Nonprofits” from the Minnesota Council of Nonprofits (642-1904).
(Note that nonprofits can often get consultants to provide services on a pro bono basis. It’s worth asking, especially if the consultant is in strong agreement with the community’s need for the nonprofit’s services.)

How You Can Make a Consultancy as Productive as Possible

(This section includes advice graciously provided by Barbara Davis, 317 South Hamline, St. Paul, Minnesota 55105)

1. Know what you want to do, and make sure your organization is prepared for it.
2. Try to reach internal agreement (board and staff) about the consultancy.
3. Don’t become dependent on a consultant.
4. If possible, don’t limit the consultant to recommending action; get the consultant involved in implementing recommendations.
5. Fix causes, not symptoms.

Getting and Hiring the Best Consultant

(This section includes advice graciously provided by Barbara Davis, 317 South Hamline, St. Paul, Minnesota 55105)
1. Give interested people the information they need to understand your needs by using a “request for proposal” (RFQ) or through direct conversation. (See Sample Request for Proposal.)
2. Get a written proposal from every interested party.
3. Get a bid on the fee and reimbursable expenses.
4. Look at more than one proposal and examine them all carefully.
5. Interview the best prospects and check their references. (Consider their extent of expertise, listening skills, ability to adapt to the nature of your organization, ability to coach to ensure the organization can address the problem in the future, etc.)
6. Don’t pick someone based only on price.
7. Write a good contract including (see Sample Agreement for Services):
· a list of “deliverables”
· a project completion date
· a payment schedule
· checkpoints at which you can evaluate programs
· a “bail-out” clause
· name of person in your agency who has the authority to agree to expenditures or approve work
· agreement on reimbursable expenses
· understanding on who will do the actual consulting
· (see the following section, Additional Advice, about considerations regarding IRS)

• Land Mines Ahead — Avoiding 12 Common Pitfalls of Hiring Consultants
• Hiring consultants with poor screening invites lousy work
• Request for Proposal (Wikipedia)
• Sample Request for Proposal

Additional Advice

(orient consultant, evaluate project, avoid IRS penalties)

1. Help Consultants to Understand Your Organization:

There are a few basic techniques which can greatly help the consultant to understand your organization, particularly if they are brought in to work organization-wide and non-technical issues.

a) Help them understand your service(s), market(s) and stakeholder(s).
For example, provide them copies of your strategic plans, budgets, policies, most recent annual report, organization charts, and advertising/promotions/sales literature. If there is a full range of these types of documents, your organization probably values careful documentation when making important decisions, and will likely prefer the same from the consulting project. If these documents appear to be very comprehensive and include a great deal of graphs, figures, and numbers, your organization probably highly values careful research, analysis, and conclusions, and will prefer the same in the consultation project.

b) Give them a sense for the overall nature of your organization, e.g.,
Are staff highly independent and work alone or do they prefer working in teams? Do you go for consensus on decisions even if it takes a long time to get or do you want timely closure on decisions? Are their strong traditions you require based on the diversity of your workforce? How does the staff feel about using consultants?

c) Give them a sense for the overall priorities of your organization,
e.g., you might attempt to identify the general life stage of your nonprofit, e.g., start-up, developing/building, stabilizing, declining, etc. The stage will indicate your overall priorities, as well, e.g., getting any help you can get, grabbing market share and/or more clients and/or more revenue, developing a wide range of careful documentation, divesting resources while ensuring client needs are met, etc.

2. Include Frequent Evaluations, Including Project Follow-Up

The extent of the consultant’s and clients’ participation in evaluating the project is often an indicator of how much they really see themselves responsible for the overall, long-term quality of the consulting project.

a) The consulting project should be evaluated regularly, including briefly at the end of each meeting (about the process used in that meeting), at mid-point in the planning effort, and at its end. Specify in the contract that certain deliverables (e.g., tangible products, such as reports, presentations, project reviews, etc.) be delivered during the project. Ideally, the project is evaluated at three months and six months after completion of the project, particularly about whether the consultant’s recommendations were implemented or not and whether the project’s goals were reached or not.

b) Establish criteria early on from which the overall consulting effort can be evaluated at the mid-point and end of the project. Establish criteria by having you and the consultant specify what constitutes a successful consulting project and process. Get descriptions to be as detailed as possible to later know if the project was clearly a success or not.

c) Don’t base evaluations mostly on feelings. Avoid this mistake by specifying, as much as possible, behaviors that will reflect a successful consulting project.

3. If IRS Disagrees Service Provider is “Independent Contractor,” You May Pay Penalties and Taxes

The Issue
A major, recent issue found during IRS audits is nonprofits arranging to use what they term as “independent contractors,” but what the IRS concludes are “employees.” In these cases, the IRS demands the nonprofit pay back taxes and penalties. Consequently, a client must be very careful when entering into a relationship with a service provider to ensure the relationship will be deemed an “independent contractor” relationship by the IRS.

Background
As background, one aspect of the arrangement between a client and consultant is that the client typically does not have to pay benefits and workers compensation, match Social Security payments, and withhold income taxes. Consequently, the IRS is quite concerned that clients accurately classify their service providers as “employees” or “independent contractors.” There appears to be no clear distinction between the two in the law, and each situation is settled on a case-by-case basis. However, there are certain guidelines a nonprofit can follow to minimize the likelihood that IRS will deem a service provider to be an employee.

Guidelines to Minimize Likelihood of IRS Penalties and Taxes
Whether a service provider is an employee or an independent contractor depends primarily on the extent of control the client organization has over the service provider: the less control in the relationship, the less likely the IRS will deem the service provider an employee. Consider the following actions when attempting to define the relationship with an independent contractor:
1. Carefully specify your relationship with the service provider in a written document.
2. The terms of the relationship (specific services, fees, project start and stop dates, etc.) should all be specified in the contract.
3. Attempt to arrange fees to be based on results or tasks, rather than on time.
4. In the document, specify the relationship to be with an independent contractor who is responsible to pay their own taxes.
5. The service provider should have all or considerable discretion in how services are carried out, including the process and scheduling.
6. The service provider should be responsible to obtain and pay for their own training to carry out the services.
7. The service provider should not be required to carry out his or her services at the offices of the client.
8. The service provider should have or be making obvious efforts to advertise and retain business with other clients.
9. The service provider should have their own place of business.
10. Note that the more a service provider appears as a manager (i.e., makes operating decisions, supervises people, is responsible for resource allocations, etc.), the more likely the service provider will be deemed an “employee” by the IRS.

• Sole Proprietor? Or Independent Contractor? What’s the Difference?
• What is a “Self-Employed Individual?”

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For the Category of Human Resources:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

• Related Library Topics
• Recommended Books

Guidelines and Resources for Discovery Phase of Consulting

Much of the content of this topic came from this book:

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Sections in this Topic Include:

• Description
  
• Goals for This Discovery Phase
  
• Now is a Good Time to Establish a Project Team
  
• Now Is the Best Time to Choose a Diagnostic Model
  
• Planning Your Research
  
• Collecting Your Data
  
• Analyzing Results of Research
  
• Generating Recommendations Based on Results of Discovery
  
• Sharing Findings and Recommendations With Clients
  
• Also See These Closely Related Topics

Strongly Recommended Pre-Reading

• All About Consulting – Types, Skills and Approaches
• Collaborative Consulting for Performance, Change and Learning
  
• Guidelines and Resources for Contracting Phase of Consulting

(This phase is sometimes called the diagnostic phase.)

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Description

Audiences for This Topic

This phase is useful for internal and external consultants, but also for leaders and managers whose roles include guiding and supporting others to solve complex problems in their organizations.

Different Approaches to This Phase

There can be very different approaches and styles in going through this discovery phase, ranging from a carefully specified and sequential set of activities to an unfolding and nonsequential dialogue with clients. (See the very Different Approaches in Consulting and How Consultants Customize Their Approaches.) For the sake of being highly informative with clear and well organized information in this topic, it will explain a rather orderly, but highly collaborative approach to discovery that is especially useful when working to address recurring, complex issues in organizations.

Typical Activities in This Phase

Whether you are an external or internal consultant, if you are attending to a complex problem or goal, then you and your client will work together during this phase to understand more about the overall priority (problem or goal) of the change effort and how you all can effectively address it. Together, you will collect information, analyze it to identify findings and conclusions, and then make recommendations from that information. Sometimes the data-collection effort is very quick, for example, facilitating a large planning meeting. Other times, the effort is more extensive, for example, evaluating an entire organization and developing a complete plan for change.

Importance — and Ethical Responsibility — to Do This Phase

Sometimes, people minimize the importance of – or altogether skip – this critical discovery phase, and start the project by articulating an ambitious and comprehensive vision for change. However, many would argue that it is unethical to start making ambitious recommendations without fully examining (or  discovering) the current situation in the client’s organization. Focusing most of the change efforts on achieving a robust vision, without at least some careful discovery, often can be harmful to your client’s organization because your project can end up dealing with symptoms of any current issues, rather than the root causes. Also, the project could end up pushing an exciting vision that, while initially inspiring and motivating to many, could be completely unrealistic to achieve — especially if the organization already has many current, major issues to address. Therefore, when working to guide change in an organization that already is facing several significant issues, you are usually better off to start from where your client is at now — that means conducting an effective discovery to identify current priorities for change.

Discovery Itself is Powerful Strategy for Change

Your activities for discovery do not have to be tedious and demanding — almost overwhelming. Just the activities of working to understand more about the organization can itself cause a major change in the client’s organization. For example, the activities help your client to become more enlightened about their organization and excited about making any necessary changes. The activities help members to feel that their opinions and concerns are being heard. That feeling is critical to sustaining the type of motivation and momentum required for successful change. Perhaps the most important result from discovery is mobilizing your client for change. As a result, you now have their interest, focus and energy for changing their organization. These features are critical to the success of your project.

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Goals for This Discovery Phase

See a video about finding root causes, targeting the problem, selecting performance standards, focusing research, collecting data, analyzing data and generating useful recommendations. From the Consultants Development Institute.

The primary purpose of the discovery phase is to fully understand the client’s situation by examining the area of the organization that needs the most attention and what kinds of attention it needs. By collaborating with your client during this phase, you orient your client to accepting feedback about the situation and also the recommendations for how it can be addressed. In their book, Practicing Organization Development : A Guide for Consultants, Rothwell, Sullivan and McLean mention the following benefits of an assessment — the type of activity that is at the core of this discovery phase:

1. It identifies the causes of problems in the organization.
2. It provides the basis for sharing feedback between you and your client.
3. It provides background information for upcoming action planning.
4. It provides a basis for tracking and evaluating the project activities.

The goals of this phase are for you and your client to collaboratively:

1. Decide what information is needed, starting with the symptoms of the situation.
2. Decide how that information can be collected and by whom in a realistic and practical fashion.
3. Gather that information, usually by conducting an assessment of some kind.
4. Understand the information — often, this is not nearly as difficult as it might seem.
5. Identify key priorities that are revealed from the collected information.
6. Share mutual impressions of what the information indicates. The mutual impressions are critical to the upcoming action planning phase of consulting.

Additional Perspectives on Discovery Phase

• Problem Defining and Consulting
  
• Analysis & Diagnosis in Organization Development – pt. 1
  
• Analysis & Diagnosis in Organization Development – pt. 2
  
• Analysis & Diagnosis in Organization Development – pt. 3
  
• Organizational Diagnosis and Development
  
• Consulting Process – Understanding The Discovery Phase
  
• Diagnosing Organizations: Methods, Models, and Processes
  
• Organizational Diagnosis: What You Need to Know and Why Organizations Need
  
• Problem Solving in Consulting
  
• Organizational Diagnosis Design
  
• Organisational Diagnosis
• Diagnosing your team�and curing its ills
  
• Team Leadership: Diagnosing Process Problems
  
• Diagnosing the Need for Team Building
  
• Diagnosing Team Problems

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Now is a Good Time to Establish a Project Team

One of the most powerful means to cultivate collaboration is by working with a project team comprised of key personnel from the client’s organization. The use of a project team helps to ensure that the client understands the activities in the project, takes strong ownership of them and therefore is much more likely to implement the necessary changes needed in the organization. The “job description” for the team might be to work with you to:

• Answer various questions from you during the project. There will be times when you do not understand various terms and practices within the client’s organization. Team members can explain what is happening, any effects on the project and suggest how the project might be modified.
• Review various drafted results from the consulting process. For example, team members can help develop and review plans for data collection, collect and analyze that data, generate preliminary recommendations and conduct presentations.
• Help customize plans and activities during upcoming phases in the consulting cycle. Team members could give you feedback to ensure that the project’s activities suit the nature and needs of their organization. Team members often know more about the organization’s culture and how to work within that culture than the consultant.
• Monitor progress of the project. Team members should know the project plans and be aware of the status of their implementation. Members can help by suggesting any changes needed to get the plans back on schedule.
• Sustain momentum throughout the planning process. Team members can show enthusiasm and support for the project. Other members of your client’s organization can be inspired if they see their fellow employees really believing in the project.
  • Establish the Project Team
  • Team Building

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Now Is the Best Time to Choose a Diagnostic
Model

See a video about what performance is, including the role of performance standards that often are in diagnostic models. From the Consultants Development Institute.

What is a Diagnostic Model?

We all have diagnostic models. Some are explicit and known to us. Others are implicit and intuitive. For example, think about how you feel about a certain team or organization that you know about. You probably had some automatic reaction to it, for example, a conclusion or a feeling that it is struggling or high-performing. That reaction came from some explicit or implicit set of standards that you have for how it should be acting or performing. You probably also had some suggestions for what it could do to improve. That is your diagnostic model.

Without an explicit and mutually discussed diagnostic model, you and your client can end up just wondering around in the project according to each of your own unknown biases and standards, often believing that you all are working well together — when you actually are not. Each of you might be seeing the same organization very differently and coming up with very different recommendations.

Benefits of a Diagnostic Model

A very good diagnostic model can be useful to:

1. Suggest a set of best practices or a standard of performance in regard to the area in the organization that exhibits the ongoing problem.
2. Suggest what data needs to be collected in the organization to compare it to the best practices or the standard.
3. Suggest what actions need to be taken to increase the performance in that area of the organization.
4. Evaluate the success of the project by comparing the performance of the improved area to the best practices or standard.

The guidelines for choosing which model to use are similar to the guidelines for choosing which strategies (or “interventions”) to use when working to improve an organization. See the section:
How to Choose Which Strategies (Interventions) to Use for Change

There are numerous models available when working to improve an organization. These two models are particularly straightforward to use. The topic Example Application of a Diagnostic Model for a Systems Analysis explains how to use the two models.

• Systems-Based Model to Diagnose For-Profit Organizations
  
• Systems-Based Model to Diagnose Nonprofit Organizations

A life-cycle model also is quite clear because it can suggest what types of actions are needed to bring the team or organization up to the next level. See:
Basic Overview of Life Cycles in Organizations (often include standards and recommendations)

Here is a more complete list of models to consider:
Various Organizational Change Models

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Research Planning

Focus Your Research – Choose Research Questions

Do not be alarmed about the word “research”. It need not be a highly scientific and laborious activity during this phase. The more realistic that you make it, the better. Ideally, the research conducted by you and your client would be useful to everyone in your client’s organization. However, without a clear and specific focus, the research can quickly become a demanding and wide-ranging set of activities that can produce a tremendous amount of seemingly disconnected information – information that can end up being useful to no one.

Therefore, it is extremely important to get as much focus as possible before you and your client start the research. A useful way to focus your research is to identify one overall question that the research must answer, for example:

1. How can we stop the recurring cash shortages in the client’s for-profit organization?

That question invites a few more, including:

1. So what does an ideal for-profit organization do to ensure strong financial and organizational sustainability? What are the typical best practices? A diagnostic model about high-performing, for-profit organizations will often suggest those best practices. In our example, let’s use this diagnostic tool: Systems-Based Model to Diagnose For-Profit Organizations.
2. How is the organization performing those best practices now?

Identify What Data to Collect and How

A good diagnostic model will also suggest what data to collect. In our example of the recurring cash shortages, our chosen diagnostic model looks at the entire system of an organization. When we read about the model, it suggests that recurring problems with cash are often caused by problems with poor financial management. It also suggested that the recurring problems could be caused by poor business planning, which can be caused by unrealistic strategic planning.

So, to be sure that we are focusing on the true cause of the recurring cash shortages — and not just its symptoms, we decide to look at the best practices in each of those three major functions. Here are some overall types of data to collect regarding common functions in an overall organization.
Some Common Types of Data to Collect

Here is a convenient, free organizational assessment tool. We’ll use this in our example of the recurring cash shortages.
For-Profit Organizational Assessment Questionnaire

Data could be collected by using a variety of methods other than — or in addition to — the above assessment tool. See:
Overview of Research Methods

This site explains a bit more about each method:
Basic Research Methods

If you choose to design your own tools, then consider:

• Designing Assessment and Evaluation Tools
  
• Selecting from Among Publicly Available Assessments

Develop a Research Plan

The plan should specify the primary research question to be answered and any associated questions. It should also specify the data that is needed, sources of the data, how it will be collected, when and by whom. It should be a very relevant, realistic and practical plan. Do not worry about your plan being perfect. You will learn more about what is really needed as you implement it. The client should review the drafted plan as well to be sure it is understandable and acceptable to them. See
Planning Your Business Research

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Collecting Your Data

Before collecting your data, you will need to have the research announced to the participants. You also will need to prepare them for providing the data. Also, you should be prepared if you encounter any surprises, such as unethical or illegal practices. See: Conducting Research With an Organization

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Analyzing Results of Research

In our example of the recurring cash shortages above, we selected a diagnostic tool and an organizational assessment tool. The diagnostic tool suggested that we look especially at the best practices in financial management, business planning and strategic planning. Our organizational assessment tool evaluated the quality of the best practices in each of those three functions. So in our analysis of the data from the assessment, we need to analyze how well the organization is doing in those three functions. Our key question is:

• What are any differences between how the client’s organization is doing financial management, business planning and strategic planning now, as compared to the best practices suggested by the assessment tool? Any differences that we find are the types of issues that our consulting needs to address.

For help in organizing and analyzing your data, see:
Analyzing, Interpreting and Reporting Results

So what types of issues might we be finding in those three management functions?
See:

• Potential Types of Issues That Might Be Found in For-Profit Organizations
  
• Potential Types of Issues That Might Be Found in Nonprofit Organizations

These sites might also be useful to deepen and enrich your analysis:

• Systems Thinking (see recognize overall patterns, cycles, themes in the data)
• Critical Thinking (for more robust analysis of data)
• Problem Solving (for means to make conclusions, etc., from data)
• Maximum Performance — Different Things to Different People

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Generating Recommendations Based on Results of Discovery

Traits of Useful Recommendations

Recommendations should be focused on the client’s priority (problem or goal), match the culture of the client’s organization, be doable within their current or near-term resources, and focused on the what needs to be done and not on the how that it needs to be done. (The how will be determined during the upcoming action planning phase). They should also be prioritized for implementation.

The recommendations need not address all of the issues that were found. Because your client’s organization is a system with many integrated parts, you and your client can often make a significant difference with recommendations that affect only a few of those parts. Then, as those parts become healthier, they positively affect the rest of the organization.

In our example of the recurring shortages of cash, our analysis might have found that the functions of financial management, business planning and strategic planning all need to have certain best practices implemented within each of them. The diagnostic tool also suggested that the improvements be made in the general order of strategic planning, then business planning and then financial management practices. Of course, improvements might be made to all of them together, depending on the expertise of the consultant and resources of the client’s organization. It might be useful to also see:

• Common Recommendations to Improve For-Profits and Their Order of Implementation
  
• Common Recommendations to Improve Nonprofits and Their Order of Implementation

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Sharing Findings and Recommendations With
Clients

See a video about roles and goals of a facilitator, structures of groups, managing meetings, when and how to intervene, maximizing participation, group decision making and group conflict. From the Consultants Development Institute.

The Feedback Meeting

Now that you and your client have generated findings and identified recommendations based on the findings, both of you are now ready to share that information with the rest of the members of the organization in what is often referred to as a feedback meeting. The manner in which you share that feedback can greatly influence how others in the organization will accept and implement the recommendations.

If you have been working in a highly collaborative fashion with your client, now is the time that collaboration will really pay off. There will be few surprises when hearing the results of the discovery activities. The sharing of the recommendations is often done in what is called a feedback meeting. The primary outcome of the meeting should be that leaders in the organization select which of the recommendations to implement.

Common Mistakes to Avoid

A common mistake is to allocate far too much time to discussion about the problem, the research and its findings. People assume that the more the participants know about the problem, including all of the dynamics of its causes and effects, the more likely they will be to successfully solve it. That assumption is not valid because problems rarely have simple, rational causes that can be fully understood. Delving into the background of the problem usually results in participants feeling deep despair and anxiety. Besides, most members of the organization usually are already aware that the problem exists – they want to move
forward to solve it as soon as possible.

Suggested Agenda for the Meeting

Here is a reasonable agenda for that meeting.

1. Welcome and brief introductions (10 minutes)
2. Review the agenda, goals of the meeting and its ground rules (3)
3. Describe the project, including your role and the role of the research (2)
4. Describe the focus of the research and its research methods (3)
5. Explain that issues are from broken systems, not from broken people (2)
6. Describe the overall findings discovered from the research (20)
7. Describe the overall recommendations from you and your client (30)
8. Decide which recommendations to follow (30)
9. Specify next steps (10)
10. Evaluate the meeting (10)
    Total Time 120

The next phase of consulting, Action Planning Phase of Consulting, will be about developing specific action plans to implement each of the recommendations that were approved during the feedback meeting.

Some Useful Resources for Sharing Feedback and Recommendations

Reminder: See a video about the discovery phase, including finding real causes, performance standards, focusing research, collecting and analyzing data, sharing recommendations, and getting agreement. From the Consultants Development Institute.

• Meeting Management (if recommendations shared in a meeting)
• Group Facilitation
• Presenting
• Sharing Feedback
• Managing Group Conflict
• Handling Difficult People
• Negotiating

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Also See These Closely Related Topics

• Guidelines and Resources for Action Planning Phase of Consulting
  
• Guidelines and Resources for Implementation Phase of Consulting
  
• Guidelines and Resources for Project Evaluation Phase of Consulting
  
• Guidelines and Resources for Termination Phase of Consulting
• Overview of the Field of Organization Development
  
• Guidelines, Methods and Resources for Organizational Change Agents
  
• Competencies and Resources for Organizational Change Agents

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Additional Library Resources in the Category of Organizational
Change and Development

• Related Library Topics
• Recommended Books

Guidelines and Resources for Contracting Phase of Consulting

Much of the content of this topic came from this book:

• © Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Sections of this Topic Include:

• Description
  
• Goals for This Contracting Phase
  
• How to Do the First Meeting With Your Client
  • Guiding Principles for This First Meeting
    
  • Questions to Pose to the Client
    
  • Identify to Yourself, Who is the Direct Client Now?
    
  • What Does the Client Consider to Be Success?
  • Now, Assess if the Client is Ready for a Project
    
  • If Client is Indeed Ready, Share Information About How You Work
    
  • Learn More About Client’s Organization
    
• How to Do Consulting Proposals and Contracts
• Also See These Closely Related Topics

Strongly Recommended Pre-Reading

All About Consulting – Types, Skills and Approaches
Collaborative Consulting for Performance, Change and Learning

Description

See a video about the contracting phase, including introducing yourself, client’s perceptions, identifying the direct client, evaluation preparation, learning client’s organization, ensuring client is ready, and writing a contract/agreement. From the Consultants Development Institute.

Audiences for This Topic

This phase is useful for internal and external consultants, although the scope of how contracting is done often differs between the two. Externals often have a more comprehensive, written and formal agreement with clients. Internals, while also in consulting roles, often have more focused and less comprehensive agreements, sometimes implied rather than written.

Critical Importance of This Phase

This phase is usually where the relationship between you and your client starts, whether you are an external or internal consultant. Experts assert that this phase is one of the most – if not the most – important phases in the organizational change process. Activities during this stage form the foundation for a successful consulting project. The quality of how this phase is carried out usually is a strong indicator of how the project will go.

Occasionally this phase needs to be repeated, for example, if a new problem arises in your client’s organization and, therefore, a new project design and plan are needed. On other occasions, you and your client might decide to do a separate contract for certain phases of an overall project. For example, you might contract to finish an assessment and then contract to guide your client through implementing the recommendations from that assessment.

(Note that the information in this section refers to “your client,” even though, in the early activities of this phase, your potential client and you might not have formalized an agreement to work together on the project yet.)

Here are some other perspectives on the contracting phase:

• IOD – How Contracting for Results Works in Organization Development
• Journey of a Consultant 2 of 7 – Entering and Contracting

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Goals of This Contracting Phase

See a video about knowing your consulting style, biases, emotional intelligence, “lens” on organizations, and how you share feedback and conflict. This is very useful to know about yourself in first meetings with your client. From the Consultants Development Institute.

Goals of this phase include the following and in the following general sequence:

1. Exchange introductions, including information about how each of you prefers to work in a project, and about your values and style.
2. Clarify who the official client is. Also identify who direct and indirect clients might be.
3. Get a description of your client’s need for a project (the presenting priority).
4. Scope the project, identifying the major problem to be solved and/or its preliminary goals, when the project should start and stop, and to whom you need access in the project.
5. Understand how the project can be coordinated and administered, including how project decisions can be made and how communications can occur.
6. Get some sense of your client’s and your own readiness to undertake the project.
7. Decide whether both of you want to work together now on a project or if any additional activities are needed, such as another meeting, follow-up proposal or references check.
8. Gain agreement on the overall approach to the project, including a collaborative approach to further discovery, action planning, implementation and evaluation.
9. Arrange a formal agreement, for example, a letter of agreement or contract, and decide what terms should be included in the documents.
10. Obtain information for you to understand more about your client’s organization.

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How to Do the First Meeting With Your Client

See a video about interpersonal skills to build trust and collaboration, including listening, authenticity, sharing feedback, working with diversity, managing interpersonal conflict and managing resistance. From the Consultants Development Institute.

At some point in the project, you will have your first face-to-face meeting with your client, usually scheduled during an initial telephone call. The following guidelines will help ensure that your first meeting is highly productive. They will also be useful during the initial telephone call.

• Interviewing
• Listening
• Non-Verbal Communications
• Questioning
• Building Trust
  
• Appreciative Inquiry

Guiding Principles for This First Meeting

See a video about planning and managing meetings, and ensuring maximum participation and effective decisions. From the Consultants Development Institute.

Clients often hire consultants based on how well the client believes that the consultant actually listened and understood their situation. Therefore, focus especially on understanding the client’s situation now, not on “selling” yourself.

Use your interpersonal skills to hear their story. The more effective your
skills are in these areas, the more likely that you and your client will have a firm foundation from which to share complete and accurate information, thereby resulting in a more successful project.

Focus on hearing about – not solving – the client’s problem. It is important not to start giving advice about how to solve the problem now. Even if you are convinced that you know how, you still have not conducted sufficient discovery to be sure you clearly understand the situation. Also, you do not want to prematurely commit yourself to a solution with your client that might soon change after you have done discovery.

• How do you approach the first meeting with a potential client?
  
• How to completely rock your first client meeting

Questions to Pose to the Client

Ask useful questions to clarify your understanding now. Ask, for example:

• Why do they want to address the situation now?
• What did they see or hear that brought them to that conclusion?
• What will happen if nothing is done?
• What has been the effect of the problem on rest of the organization?
• What have they done so far about the situation?
• What happened as a result of their efforts so far?
• How did they conclude that they needed a consultant now?
• Respectfully and tactfully ask, what might be their role in causing the problem?
  • Freelance Consultant’s Guide to Client Interviews (Questions + Process)
    
  • A First Set of Questions to Ask Your Potential Client
    
  • Best Questions to Ask Consulting Clients

Identify to Yourself, Who is the Direct/Current Client Now?

It is important to know who the official decision maker is regarding whether to hire you or not (the official client). However, it is as important to recognize who seems to know the most about the situation now (the direct or current client). That will indicate to whom to direct your types of questions. That kind of interpersonal acuity will get you the most useful information. It also will convey to the direct/current client that you are sensitive to the different roles that each of them has. This kind of sensibility will be very important during the upcoming implementation phase when different people will be your direct/current client — they will have the most useful information for you then and often will have the most influence in helping the project.

• Types of Clients (this helps answer the critical question: “Who is the current client?”)

What Does the Client Consider to Be Success?

There are many different definitions of success in a consulting project. In addition to solving the problem, it might be as important — or more — to not exceed any deadlines or the budget for the project. It might be to not break any norms in their culture. Ask them about these aspects.

• Defining Project “Success”

Ask them to list two to three things that are needed in their organization for the project to achieve that success. Mention that these are often considered to be critical success factors.

Now, Assess if the Client is Ready for a Project

Ultimately, this decision is up to you as the consultant, although the client might have reservations now after having answered your questions. Consider, have they allocated sufficient funds for the project? What obstacles might they see in participating in it? Have they used a consultant before, and if so, how did that work out? What was their role? What did they learn? What might they have done differently? Are there any people or activities that are off limits for access during the project? If so, then that could be a warning about the extent of their cooperation and involvement in the project. Are there people who might be uncomfortable with this project? What is the evidence that top management supports the project?

If you believe that the client is not ready, then share your opinions now and explain your reasoning. That would be one of your greatest gifts to them. They are much more likely to be ready for a project later on  – and they will greatly respect you for being so honest with them.

If Client is Indeed Ready, Share Information About How You Work

See a video about principles for effective and ethical consulting, and defining “success” in a consulting project. From the Consultants Development Institute.

Mention your personal values, mission in your work and primary goals in how you work. Highlight your expertise and explain your approach to consulting. Explain the collaborative approach to consulting, its benefits and the roles of the consultant and client. Mention any boundaries in your work, for example, that you offer guidance, materials and support, but it is up to the client to implement your help. If the client asks how you will solve their problem, tell them that you want to give it the thought that it deserves and that you will respond with a proposal. Mention that your fees will be specified in that document.

Learn More About Client’s Organization

Ask for information that you otherwise could not get from the organization’s literature, for example:

1. How do you like to make decisions and solve problems?
2. What is unique about the culture of your organization?
3. How can a consultant best work in that culture?
4. How do you prefer to communicate? In-person? In writing?
5. What is your approach to situations, for example, do you refer to “problems” or “opportunities”?
6. Do you talk most about the “business” side of the organization or the “people” side?
7. What do you know about change management? How would you like to learn?
8. What is the personality of your meetings?

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How to Do Consulting Proposals and Contracts

How to Do Proposals

It is very useful to provide a proposal of some kind, even if they do not ask for one. The activity of developing a proposal ensures that you give careful thought to the desired outcomes, tangible outputs, kinds of services and deliverables, roles and timing for the project.

• All About Business/Consulting Proposals
  
• How to Write a Proposal: The Last Guide You’ll Ever Need
  
• Guidelines for Writing Project Proposals
• Anatomy of a proposal
• How to Write a Proposal As a Consultant

How to Do Contracts

If there is indeed a match between you and the client, and you agree to work together, then you will always want to formalize an agreement. Ask the client if they have a preference for the means to do that. Share how you formalize agreements, as well. The information in the following links is not to be understood as legal advice.

• Protect Yourself: How to Structure Your Consulting Contracts
  
• Sample Contract for Consulting Services
  
• How to structure a consulting contract even if client admits deliverables or outcomes may change
  
• As a Consultant, Know When You’re Giving Away Too Much
• Sample Agreement for Services (much of what goes in a proposal is also in the agreement)
• Benefits of Developing a Written Contract
• Sample Consulting Agreement
  
• Sample Contract for Consulting Services
  
• Independent Contractor Agreement for Consultant (for IC)

Also consider
Business Contracts

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Also See These Closely Related Topics

• Guidelines and Resources for Discovery Phase of Consulting
  
• Guidelines and Resources for Action Planning Phase of Consulting
  
• Guidelines and Resources for Implementation Phase of Consulting
  
• Guidelines and Resources for Project Evaluation Phase of Consulting
  
• Guidelines and Resources for Termination Phase of Consulting
• Overview of the Field of Organization Development
  
• Guidelines, Methods and Resources for Organizational Change Agents
  
• Competencies and Resources for Organizational Change Agents

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Additional Library Resources in the Category of Organizational
Change and Development

• Related Library Topics
• Recommended Books

All About Consulting – Guidelines and Resources

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC

Much of the content of this topic came from this book:

Many people have the mistaken impression that consultants are people who primarily give expert advice to solve problems for their clients. However, a much more accurate description is given by Peter Block in his seminal book, Flawless Consulting. Block explains that a consultant is someone in a role to help another person, team or organization to change, but who has no authority to make them change. Thus, a consultant can be an advisor, trainer, coach or facilitator.

This topic provides the guidelines and resources for doing consulting. However, you cannot develop skills in consulting, unless you actually practice applying that new information.

Sections of This Topic Include

Internal / External Consulting

• What is a Consultant, Really?
  
• Continuum of Roles
• Types of Consultants
• Overall Goals of Consultants
• Professionalism in Consulting

Different Approaches in Consulting

• Phases in Consulting and Solving Complex Problems
  
• Examples of Phases in Consulting and Solving Complex Problems
  
• How Consultants Customize Their Approaches
  
• Example of an Approach to Consulting: Collaborative Consulting

Resources for Externals Starting a Consulting Business

• Resources for Starting a Consulting Business
  
  • Are You Really an Entrepreneur?
    
  • Developing Your Organization
    
  • Marketing Your Services, Getting Clients
    
  • Proposals and Contracts
    
  • Some Challenges in a Consulting Business

Test Your Knowledge of the Field of Consulting

Take this online quiz.

Also consider
Related Library Topics

Glossary of Consulting Terms

Learn More in the Library’s Blog Related to Consulting and Hiring Consultants

In addition to the articles on this current page, also see the following blog that has posts related to Consulting and Hiring Consultants. Scan down the blog’s page to see its various posts. Also see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog. The blog also links to numerous free related resources.

Library’s Consulting and Organizational Development Blog

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PROFESSION OF CONSULTING

What is a Consultant, Really?

See a video about overview of methods of advising, coaching and facilitating; which methods to use and when; when to switch methods; and major myths about consulting. From the Consultants Development Institute.

Misunderstandings About Consultants

As mentioned above, a consultant is someone in a role to help another person, team or organization to change, but who has no authority to make that change happen. There are many myths and misunderstandings about consulting, the most common of which is that consultants always provide expert advice to solve “problems”.
Actually, a consultant might use many different styles, approaches and methods, depending on the nature of the client and focus of the consulting project.

• 10 Myths of Management and Organizational Consulting Part 1
• 10 Myths of Management and Organizational Consulting Part 2

Continuum of Roles of Consultants

Roles can range along a continuum from that of an expert who gives ongoing advice to that of a coach or facilitator who supports a person or group with ongoing reflective questions to bring out their own wisdom and apply it.

Thus, consultants can act in the role of (alphabetically):

• Coach – helping individuals to clarify and achieve a goal by helping them to bring out and apply their own wisdom.
• Collaborator/partner – working with another to benefit from the mutual relationship.
• Educator/trainer – helping others especially to develop new knowledge, skills and insights.
• Expert – providing specific information and expertise in specific areas.
• Facilitator – helping members of a group to clarify their desired goals and how they want to achieve them — and then helping them to bring out and apply their own wisdom to achieve the goals (thus, a coach who is coaching a group also works in a very facilitative manner).
• Problem solver – helping others to clarify their problems and then helping them to “solve” them.
• Researcher – collecting, organizing, analyzing and reporting information for others.

Other roles might include analyst, synthesizer, impartial observer, critic, friend and mentor.

NOTE: The manner in which consultants works in these roles can vary widely.
See How Consultants Customize Their Approaches.

When Consultants Should Facilitate, Coach or Train

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Types of Consultants and Their Services

See a video about definitions, types of consultants, primary goals of consultants, identifying real clients, and differences between internal and external consultants. From the Consultants Development Institute.

It is useful to know the general types of consulting services because they are often used to categorize, for example, in advertisements, catalogs of training programs and tracking statistics about consultants. Consultants might use roles ranging from the expert to the facilitator in any of the following categories depending on the nature of the client and focus of the consulting project.

Types of Services

Private Practice Consultants

They focus on professional services, for example, counseling and coaching, that include helping others with individual and professional development. They work in a highly facilitative and collaborative manner with their clients, and in a highly confidential relationship, as well. (The term “private” is often used to suggest that the consultants are working as independent consultants. However, it can also apply to the strong requirement for confidentiality in the nature of their work.)

(Note that the above use of the terms counseling and coaching refer to services that are delivered in a carefully designed relationship in order to accomplish significant personal goals with the client. This is in contrast to an informal counseling and coaching activity in which a person offers advice or thoughtful questions in a spontaneous conversation.)

Technical Consultants

They provide highly specialized content and expertise regarding certain specific systems and processes in the organization, for example, information technology and business analysis. The types of services provided by these consultants are often referred to as technical assistance.

Management Consultants

They help leaders and managers to be more productive in the practices of planning, organizing, leading and coordinating resources in the organization. For example, they can help with practices in strategic planning, financial management and personnel management. They might work in an expert role while training others about best practices and then in a facilitator role when supporting others to apply those practices.

Organizational Development Consultants

They help organizations to improve performance in a significant portion of the organization or in the entire organization itself. They might use a wide variety of approaches, for example, training about best practices in accomplishing successful change, facilitating groups of leaders to plan the change, and informal coaching conversations to maintain momentum during the change.

Many people assert that there is a difference between the phrases “organizational development consultants” and “Organization Development consultants.” They would use the latter phrase to refer to consultants who consider themselves to be working in the field of Organization Development.

Types Can Overlap

Each type of consultant might be needed at various times in a project. For example, an organizational development consultant might work with various groups to identify the most important problems to address in an organization. Then management consultants might train various managers about the best practices needed to address the problem, for example, strategic planning, management by objectives and supervision. Concurrently, a professional coach might coach the chief executive officer through the challenges of dealing with a major change.

• Overview of the Field of Organization Development
  
• Competencies and Resources for Organizational Change Agents
  
• Guidelines, Methods and Resources for Organizational Change Agents

Nature of Expertise

Generalists and Specialists

Whether the consultants are generalists or specialists depends on the nature of their services. The more specific the nature of their services, for example, information technology or market research, the more likely they would be referred to as specialists.

Many people would consider private practice and technical consultants to be specialists. They have rather unique and extensive expertise, such as in medicine, counseling and coaching — even though they can often vary widely in how they provide their services.

Many people would consider management and organizational development consultants to be generalists, although both types might use a mix of specialist and generalist expertise, especially when working on complex projects.

Context of Their Services

An external consultant is not a full- or part-time employee of the client’s organization and instead works independently to serve a number of different clients. In contrast, an internal consultant is a part- or full-time employee in the client’s organization. It is very useful to know the typical differences between the two, especially in terms of how they are viewed by their clients and the different parameters in their roles.

Internal Compared to External Consultants

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Overall Goals of Professional Consultants

To know the overall, recurring goals of professional consultants, regardless of their type, we again defer to Block. He suggests that the following goals be primary for professional consultants, especially if they are often working to help others accomplish significant change.

1. Establish a collaborative relationship with your clients.
   As a consultant, you should work with your clients as if you are peers working as a team. Working in a collaborative fashion with your clients helps you ensure that recommendations — generated from you and/or the client — are accurate, that clients follow the recommendations and that they adopt the necessary changes as needed.
2. Solve problems so your clients can solve them later themselves.
   The approach to solving the problem in the project should always involve your client’s learning about what is being done and why, so your client can very likely repeat the approach as much as possible after you are gone.
3. Ensure equal attention to solving the problem and your relationship with your client. The quality of the relationship between you and your client is a reliable predictor of the quality of the outcome from the project. Clients often judge projects, not only by their outcomes, but also by the quality of their working relationship with the consultant.

What Should Be Primary Goals of Consultants?

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Professionalism in Consulting

Professional consultants should always adhere to certain principles and ethics in their work, as well as continually developing themselves as individuals and consultants. The following resources provide numerous guidelines to help you as a professional.

See a video about principles for successful consulting, defining “success”, principles for ethical consulting, managing risks and liabilities, and knowing when to leave. From the Consultants Development Institute.

• Are You a Professional?
  
• Professional Development
  
• Developing Your Professional Mission and Values
  
• Working on Ourselves, as Consultants
• Principles for Effective Consulting
• How to Maintain Proper Boundaries
  
• How to Minimize Legal Liabilities and Risks
  
• Guide to Ethics Management
  
• How to Work in Multicultural Environments

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DIFFERENT APPROACHES IN CONSULTING

Phases in Consulting Projects

All Consultants Follow General Phases in Their Consulting – Just Differently

All professional consultants tend to follow a general design, or framework, in their consulting that includes a general sequence of cyclical and highly integrated phases. Phases often include, for example, a start-up or contracting phase that clarifies the project’s goals and roles, then specifying the actions to achieve the goals, then implementing the actions and then doing a final project evaluation.

Very Different Styles in Going Through the Phases

However, different consultants might go through the same general phases very differently along a continuum of styles. At one end are consultants who prefer clearly delineated beginning and ending points for each phase, as well as specific kinds of sequential deliverables within them. They might see themselves as leading in all aspects of the project. Technical consultants often prefer this kind of approach to ensure that the project activities closely conform to the steps needed to successfully install the technical systems or practices, such as installing computer systems and conducting market research.

At the other end, are consultants who, along with the client, co-create the content within each phase as well as the activities within each. They might not see themselves as working within phases, at all, but rather engaging in a highly collaborative dialogue in which the goals, roles and actions are continually unfolding from the relationship itself. Examples along this half of the continuum might include coaching,
process consultation, Dialogic Organization Development, collaborative consulting, whole systems change and Theory U.

The various styles in going through the phases depend on a variety of factors that are explained in the next section, “How Consultants Customize Their Approaches”.

Examples of Phases in Consulting

• Five Phases of Consulting
  
• The Phases of Consulting
  
• Five Phases of Organization Development
• Management Consulting Cycle
  
• Consulting Process Models

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How Consultants Customize Their Approaches

Depends on the Type of Consultant

If they are private practice consultants, then they probably are specialists in their particular profession, which often requires certification or licensure in the profession. However, they very often use highly collaborative and facilitative approaches with their clients.

If they are technical consultants, then they probably are specialists whose work is often highly specific and procedural in nature. Thus, they might mostly offer expert advice and be rather predictable in how they work.

If they are management and organizational development consultants, then they probably are a mix of specialists and generalists. They might use a variety of approaches ranging from offering expert advice to conducting spontaneous coaching conversations.

Depends on Their Training

Their approach to their work depends on their training in a certain philosophy and associated model. For example, coaches might use a specific model focused on life coaching or performance coaching. Trainers might use a certain model to design their curriculum, such as ADDIE or SAM. Managerial consultants might specialize in a certain practice, such as leadership development or strategic planning. Organizational consultants might focus on a certain organizational performance model, such as management by objectives or the Balanced Scorecard.

Depends on the Nature and Needs of Their Clients

However, all professional consultants should be able to accommodate the nature of the individual client and the culture of the client’s organization. For example, some clients learn especially from frequent interaction with the consultant. Others prefer frequent time alone to reflect and re-energize themselves.

Some organizations are clearly and consistently structured in how they operate, including how they make decisions and solve problems. Decisions require extensive communication and formal approval. Other organizations are more adaptable and decentralized. Decisions require discussions and consensus.

Also see How to Choose Which Strategies (Interventions) to Use for Change .

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Example of an Approach to Consulting: Collaborative Consulting

The collaborative consulting process is based on the work of psychologist Carl Rogers, Peter Block and others. It is not a specific model as much as a mutual way of working through the general process for the consultant and client during a consulting project. This type of process is widely used in consulting to solve complex problems and achieve major goals in organizations.
Collaborative Consulting for Performance, Change and Learning

One version of the process includes the following general sequence of phases. They are highly integrated and often cyclical in nature.

• Guidelines and Resources for Contracting Phase of Consulting
  
• Guidelines and Resources for Discovery Phase of Consulting
  
• Guidelines and Resources for Action Planning Phase of Consulting
  
• Guidelines and Resources for Implementation Phase of Consulting (see Note 1)
• Guidelines and Resources for Project Evaluation Phase of Consulting
  
• Guidelines and Resources for Termination Phase of Consulting

Note 1. If the focus of the consulting is on accomplishing significant change in an organization, then the Implementation Phase should be embellished with
Guidelines, Methods and Resources for Organizational Change Agents

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Resources for Starting a Consulting Business

This topic assumes that you already have some expertise that you could provide to clients in exchange for a fee and that you also have a good understanding of a consulting process as described in this overall topic, and that you also are thinking about starting a business to be a professional consultant. The guidelines in this topic are focused on helping you to start a new organization or expand a current organization.

Are You Really an Entrepreneur?

• Are You Really an Entrepreneur?
• Preparation for Starting a New Venture
• 10 Tips To Become a Small Business Consultant
• So You Want to Be a Consultant?
  
• How to Become a Consultant: 9 Steps to Doing it Right
  
• 10 Steps to Become a Self-Employed Consultant

Developing Your Organization

Starting a New One?

• Should You Start a For-Profit or a Nonprofit?
• Starting a For-Profit Organization
• Starting a Nonprofit Organization
  
• How To Get Started In Consulting

Planning Your New Organization

• Preparation for Starting a New Venture
• Strategic Planning
• Business Planning

Deciding the Legal Structure of Your New Organization

U.S. Enterprise Law — Forming Organizations

Or Expanding a Current Organization?

Business Development

Or Starting a New Product or Service?

Product Development

Marketing Your Services, Getting Clients

Marketing Your Organization, Product or Service

• Social Networking
• Need Clients? The 5 Best Ways to Market Your Consulting Business
• How to Promote Your Consulting Business
• Word of Mouth Marketing for Consultants
• 5 Common Myths About Marketing Your Consulting Business

Sales — Getting and Keeping Clients

• Sales
• Close More Business (Get More Clients)
• Customer Service
• Customer Satisfaction
• Close More Business (Get More Clients)
• Bouncing Back After Losing a Big Client
• How to Successfully Hire and Work With an Excellent Consultant

Proposals and Contracts

Responding to Request for Proposals

You might develop a request for proposal (RFP) and provide it to many potential consultants, asking them to respond with proposals. This section will be helpful when developing an RFP.

• Best Standard Process for Responding to RFPs
  
• 10 Things You Need to Know When Responding to an RFP
  
• How to respond to an RFP with no fear
  
• Red-Hot Tips on How to Respond to an RFP and Win that Deal

Proposals

Consultants usually respond to RFPs with a proposal that specifies how they can meet the requirements in the RFP.

• How to Write a Proposal: The Last Guide You’ll Ever Need
  
• Guidelines for Writing Project Proposals
• Anatomy of a proposal
• How to Write a Proposal As a Consultant

Contracts

See Guidelines and Resources for Contracting Phase of Consulting

Some Challenges in a Consulting Business

Fees and Getting Paid

• Set Your Consulting Fees Using These 5 Tried-and-True Methods
• How to Make Sure You Always Get Paid as a Freelancer or Consultant
• Is It Time to Consider a Fixed Fee for Your Consulting Services?
• Consultant’s Crack the Billable Hour Ceiling

Dealing With Clients

• Types of Clients (to answer critical question: “who is current client?”)
• How to Fire Bad Clients
• Defining Success Between Consultants and Clients

When to Bail from a Project

When to Bail from a Consulting Project

Minimizing Risk

• When Should Consultants Buy Liability Insurance?
• Minimize Consulting Liabilities and Risk
• Risk Management

Staying Centered as a Consultant

• Work-Life Balance
• Personal Wellness

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Test Your Knowledge of the Field of Consulting

Take this online quiz.

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To Develop Your Consulting Skills

It is not enough to just have strong interpersonal and technical skills to be a highly competent consultant. You also need consulting skills.
Why Consulting Skills?

There are many resources from which consultants can start and market a consulting business. However, there are very few programs in which consultants can further develop their skills to solve problems or achieve goals in the clients’ organizations. Consider the following resource, the
Consultants Development Institute

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For the Category of Organization Development:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources.

Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

• Related Library Topics
• Recommended Books