T
troymason
I am not sure how to post something on here my question is why do quality consultants get paid so much why are they so exspensive?
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Can you give an example of what you feel is too expensive--type of consultant, what the consultant is expected to do, etc.?
D
David DeLong
Quality consultants are highly paid when compared to a Quality Manager or a person in Quality engineering. Here is why.
Their fee is made up of salary the same as a person working for the company, benefits including covering the cost of unsteady employment, overhead, etc and usually comes in as double the salary. There also is a profit component beyond that.
If a consultant can keep working relatively steadily, they could make a good living but most do not do that, especially, in this financial climate. Most only try consulting until they get a "real" job but there are quite a few that make a good living at it. In the late 90's, most consultants were doing quite well but in the last few years, it has been lean to say the least.
Hope this answers your question.
Their fee is made up of salary the same as a person working for the company, benefits including covering the cost of unsteady employment, overhead, etc and usually comes in as double the salary. There also is a profit component beyond that.
If a consultant can keep working relatively steadily, they could make a good living but most do not do that, especially, in this financial climate. Most only try consulting until they get a "real" job but there are quite a few that make a good living at it. In the late 90's, most consultants were doing quite well but in the last few years, it has been lean to say the least.
Hope this answers your question.
Helmut Jilling
Auditor / Consultant
For the same reason that plumbers, doctors, electricians, lawyers, accountants....etc. get paid so much. We are running companies. The day fee may be higher than the day fee for a Q. Manager, but you get paid for every hr. If we get very good at it, and have a large client base, we can have a nice income. But, it works out similar to having a manager position at a company for most.
I once calculated I could double my income if I could bill for all the hours I spend sitting in airports and travelling.
I would recommend the better way to look at it, is whether the benefit you recieve is greater than the cost of the service. Hire good professionals, not cheap ones - the net benefit may be free.
Wes Bucey
Prophet of Profit
David clearly states the dynamic of how a consultant's fee rate is derived.
I might add that different consultants charge higher or lower rates depending on market conditions and their skill levels.
The basic answer to troymason's question as to why they are paid so much is that the guy writing the check feels he has gotten his money's worth. The consultant probably delivered his service as agreed, otherwise there would be a lot more lawsuits for breach of contract.
I began a thread about consultants some time back.
Consulting – Is it in YOUR Career Future?
Reading it might give troymason an idea that many, if not most, consultants are worth what they get. A lot more are underpaid than overpaid.
Another thing to consider - what would be the cost to the company to hire (and retain) their own full time employee to do the task?
Mikishots
Trusted Information Resource
Consultants are typically hired for a short term, to accomplish a specific task. If there was a full time person that could do the job satisfactorily, there would be no need for a consultant; but would there be an adequate amount of necessary work for that full-timer?
A portion of the fee structure is due to the fact that the consultant is very aware that the hiring company is unable to do a necessary job effectively themselves. Rock and a hard place....
Wes Bucey
Prophet of Profit
This was always a sticking point when small (less than 100 employees) companies started looking for Six Sigma Black Belts - worthy projects are soon done with a competent SSBB person, but soon a proliferation of less competent SSBB folk came along with dubious credentials and scant experience and effectively flooded the market.
Many competent SSBB moved over into consulting and contract employment because they knew they would soon run out of projects at small to medium sized companies.
The incompetent ones? Who cares?
J
JaneB
'Too high' compared to what? More details please.
Typically, when people complain about consultants' fees being high they simplistically look at the hourly (or daily) rate, compare it with their own salary, and then immediately decide consultants earn 'far too much' and are too highly paid. Your average manager or business owner understands better how to compare.
A much more accurate thing would be to at least double the employee's salary (if you're using that as a comparison), because typically that's what an employee will cost the company, by the time you add in:
Another comparison: look at what an experienced consultant can deliver to a company in let's say 50 hours all up, compared to, say, an employee with no prior experience of implementing a QMS. First, you'd have to send the employee to a course on ISO 9001, and also perhaps an audit course. Then, you'd have to factor in the time it would take them to find out what to do and how. Figure on months - overall, it's going to take your employee one heck of a LOT longer.
And then, do you really need a FT employee after it's done? One of the benefits of the consultant is that you don't keep us on (and we don't want to be kept on). We work on your job and move on. Suits both of us.
As a consultant, I get paid only when I work and for what I deliver. No sick leave, no holiday leave, no leave for training. I don't get paid for the business development/marketing calls I make, or for the time I spend on the phone with people asking me questions like 'what is ISO 9001 and how do I get it?'. I don't get paid for the proposals I write or doing estimates for work. I only get paid when I work.
And yeah, I spend a lot of time sitting around in places I'd rather not go to, not getting paid for it. If I go on any training course, it costs! I forego 'billable time' + pay for the training. I pay taxes, book keep, do the marketing, accounts payable and receivable, manage the staff, etc etc. Yes, if I work 60 hours a week and don't take holidays, I will earn well. But few consultants can or want to or are able to sustain such a pace.
I'm not complaining - I enjoy being a consultant and far prefer it to being an employee. But as consultants, we run a business. It's much easier, in many ways, to just sit back, be an employee, and let someone else do all the worrying. And complain that consultants' fees are 'so high'.
Typically, when people complain about consultants' fees being high they simplistically look at the hourly (or daily) rate, compare it with their own salary, and then immediately decide consultants earn 'far too much' and are too highly paid. Your average manager or business owner understands better how to compare.
A much more accurate thing would be to at least double the employee's salary (if you're using that as a comparison), because typically that's what an employee will cost the company, by the time you add in:
- on costs - costs of finding and recruiting
- training costs - start up/induction and ongoing
- government taxes (eg, there's payroll tax here)
- statutory costs (eg, there's a compulsory Workplace Health and Safety levy here)
- other costs (such as insurance)
- holiday pay (plus any other loadings, eg long service leave? parental leavel etc)
- sick leave
- and so on - accommodation, management costs, performance reviews, etc etc... the list just goes on!
Another comparison: look at what an experienced consultant can deliver to a company in let's say 50 hours all up, compared to, say, an employee with no prior experience of implementing a QMS. First, you'd have to send the employee to a course on ISO 9001, and also perhaps an audit course. Then, you'd have to factor in the time it would take them to find out what to do and how. Figure on months - overall, it's going to take your employee one heck of a LOT longer.
And then, do you really need a FT employee after it's done? One of the benefits of the consultant is that you don't keep us on (and we don't want to be kept on). We work on your job and move on. Suits both of us.
As a consultant, I get paid only when I work and for what I deliver. No sick leave, no holiday leave, no leave for training. I don't get paid for the business development/marketing calls I make, or for the time I spend on the phone with people asking me questions like 'what is ISO 9001 and how do I get it?'. I don't get paid for the proposals I write or doing estimates for work. I only get paid when I work.
And yeah, I spend a lot of time sitting around in places I'd rather not go to, not getting paid for it. If I go on any training course, it costs! I forego 'billable time' + pay for the training. I pay taxes, book keep, do the marketing, accounts payable and receivable, manage the staff, etc etc. Yes, if I work 60 hours a week and don't take holidays, I will earn well. But few consultants can or want to or are able to sustain such a pace.
I'm not complaining - I enjoy being a consultant and far prefer it to being an employee. But as consultants, we run a business. It's much easier, in many ways, to just sit back, be an employee, and let someone else do all the worrying. And complain that consultants' fees are 'so high'.
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Wes Bucey
Prophet of Profit
In fairness, Jane, the OP said "so high" versus "too high."
Another point to consider, which you hinted at, is that the consultant has knowledge and experience TODAY - knowledge and experience which only hold value for an organization for a short time until the project is complete.
As I wrote earlier:
The basic answer to troymason's question as to why they are paid so much is that the guy writing the check feels he has gotten his money's worth. The consultant probably delivered his service as agreed, otherwise there would be a lot more lawsuits for breach of contract.
I began a thread about consultants some time back.
Consulting – Is it in YOUR Career Future?
Reading it might give troymason an idea that many, if not most, consultants are worth what they get. A lot more are underpaid than overpaid.
Here is a pertinent excerpt from that thread, first written FIVE YEARS AGO:I began a thread about consultants some time back.
Consulting – Is it in YOUR Career Future?
Reading it might give troymason an idea that many, if not most, consultants are worth what they get. A lot more are underpaid than overpaid.
Like many professions, consultants get judged and paid by RESULTS. Without successful results, folks lose confidence and won’t hire unsuccessful consultants. This means consultants have to be like good poker players and know “When to hold ‘em and when to fold ‘em”, leaving FUBAR [google the term if you don’t know it] organizations in their rear view mirror, rather than become associated with a failure. Almost ANY organization can be salvaged, but not by every consultant – it often takes a very special talent to deal with some situations which are FUBAR to the average consultant.
Let me add TODAY:
The monetary value to an organization to hit the ground running and avoid all the false starts and blind alleys of inexperienced employees feeling their way is often worth far more than DOUBLE the cost of an employee on the payroll (including all the ancillary costs listed in Jane's post.).
The very best consultants also teach employees of the organizations how and what to do once the consultant is gone. Sometimes, the organizations bring the consultant
Often, the BEST part of what a consultant brings to the table is being able to help the top managers learn to do their part (something which employees seldom are able to do without risking unemployment because bosses rarely want a subordinate to hold that power of "leading the boss.")
In my own thread (
there will be many situations to which I can add value.
Here are some "should have" criteria for the target organizations:
The last sentence is usually the goal of EVERY consultant worthy of the name [and pay!]Here are some "should have" criteria for the target organizations:
- I deal with chief executive and/or Board of Directors directly and interact with any or all staff as necessary
- organization should be in self-perceived "crisis" due to pressure from time, regulators, or customers
- I don't do work by myself, but will "mentor and advise" existing staff to do it so they can continue when I am gone (for example, I don't "perform" Gap Analysis by myself, but will help personnel learn how to do it themselves, keyed to the organization's circumstances, and will review and suggest modifications as required)
- There is no minimum term for the assignment - some issues could be resolved in as little as one or two days, but still be important to the organization and pertinent for my book.
- the maximum term might be as long as a year, but would involve my full time presence for only a fraction of the time to help personnel learn to do a task, returning from time to time for evaluation and suggestions for improvement
- organization may be any size, from small business to transnational giant.
- seeking registration to a Standard due to outside pressure
- "re-engineering" an organization which needs major Kaizen events to become competitive in its market
- "assimilating" a recent takeover of an organization with a different culture
- "fairness opinions" when selling an organization or creating an Employee Stock Ownership Plan (ESOP) or Initial Public Offering (IPO)
- Complying with Sarbannes-Oxley Act for public corporations
- new product introduction (production and marketing)
- achieving government certification in a regulated industry
- negotiating with aggressive customers
- negotiating with banks, financiers, equity investors
- adopting and assimilating new technologies (such as Electronic Document Management or Customer Relationship Management)
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