January 2003

Question

I am thinking about starting a multicultural organizational development consultancy. I am wondering how current economic woes have affected the prospects for consultants who focus on multiculturalism.

Answer

In general, this seems to be a difficult time for consultants of all types. If you are just starting out, I would not quit my day job just yet. There are many things you can do to ensure success. First get yourself a couple of guaranteed clients before you launch out. Be sure you have completed your business plan and that should be a complete assessment of who would use your services, how much they would pay, where they are located, what you would expect each contract to net, how much consulting you are capable of conducting. Remember, if you are just starting any new business you should have six to twelve months cash in the bank while you market your business.

Question

What are the options for flexible compensation? We often see that two types of work offers are not easily distinguished from each other: Freelance consultants, and part time workers. What should be the criteria for the compensation: The intellectual capital of the consultant versus the level of responsibility involved? Since it seems like freelance or part-time workers feel less pressure and take less responsibility then full time employees they should be paid less than full time employees.

Answer

I hesitate to answer this due to the differences between our countries. However, I will present a view based on my experience. First, let's leave part time employees out of the equation and just compare employees to consultants. You assume that consultants do not take responsibility. I must disagree here. Consultant absolutely MUST take responsibility for completing work with high quality and on time or they will not be hired back. Employees' jobs are typically more stable than consultants. Consultants take a risk with every job. Are consultants worth more money than employees? I think there are at least four reasons they are. 1) Consultants often have the experience, expertise and time that employees may not have. 2) Consultants provide flexibility since they can be brought in for short-term projects. Unlike employees who will require ongoing paychecks, benefits and severance packages, consultants serve their purpose and are gone. 3) Consultants offer a fresh, objective point of view. 4) Consultants are more efficient since they bring experience and do not need to deal with the organization's internal politics, staff meetings, paperwork, and other tasks.