Nov 27, 2010

Top 10 Mistakes Made When Hiring Consultants

Consultants play a part in the ongoing activities of many businesses. They come from a wide range of backgrounds and need to be evaluated carefully. Below are 10 of the common mistakes made when hiring a consultant.
  1. Not having a contractual agreement. Make sure to have the parameters of the relationship, specifying the agreed work and the timeframe in which the work needs to be completed, in an agreement signed by both parties. For more information, check out a sample consulting agreement.
  2. Not checking the consultant's background. Consultants vary widely in their skills and abilities. Some are at the top of their field, while others have more recently jumped on the consulting bandwagon. Some due diligence, which includes checking references, will help you discern the pros from the wannabes. For more information, see Where Can I Run a Background Check? For a sample background check permission form, see the AllBusiness.comEmployee Hiring form section.
  3. Failing to make sure that someone in-house cannot do the job. A common mistake is not taking into account the various skills of your own employees before hiring a consultant. Business owners often spend more money than necessary instead of taking the time to re-read the resumes of their staff.
  4. Not checking the compensation scale. A major mistake many companies make is hiring a consultant without checking the going rate in the industry. You need to do some research to find out the pay range for the services you require before overpaying.
  5. Not establishing who pays for expenses. Beyond the consultant's fee are various expenses that he or she may expect to be covered. These should be discussed in advance so they do not come as a surprise when they appear on the invoice.
  6. Not making sure of the consultant's availability. A consultant that takes on a job and disappears for three weeks to do another job is typically not a benefit to your business. Make sure the consultant is available to work on your project.
  7. Not conducting a thorough hiring interview. It is a common mistake not to take the interview process as seriously with consultants as is typically done with fulltime employees because they are not "on staff." Big mistake. If they will be involved in the future of your business, it is imperative that you conduct a comprehensive interview. For more information, see Interviewing Prospective Employees of Your Small Business. For a list of questions to consider asking future employees, see the Employee Hiring forms.
  8. Not having them sign a letter of confidentiality. Since contractors are free agents, you need to keep in mind that they may work for your competition after completing your project. Therefore, having a signed letter of confidentiality is important. Check out the Confidentiality and Non-Disclosure section of for sample confidentiality agreements.
  9. Not clearly describing the project. Lack of clear communication is a common mistake. Too often contractors and employers are not on the same page from the start, which leads to numerous complications later on.
  10. Failing to introduce the consultant to your staff. Before other employees start questioning who this person is and why they are asking for files or about certain projects, you should make sure to introduce the consultant to your regular employees, especially those with whom he or she will be working. 
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