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10 things independent HR consultants can get wrong and how to avoid them.
By Ruth Cornish, co-founder and director of HRi
Independent HR Consultants usually begin working for themselves after a successful in-house HR career. However going it alone, and being responsible for everything, feels scary and fear can often stop you from listening to your intuition and developing a successful business.
Most HR Independent consultants have two main fears. Firstly that they won’t get or keep any clients. And secondly that when they do, they will get something wrong. The worst fear for everyone is an unhappy client. If someone alleges you’ve given the wrong advice, been negligent or haven’t done what you agreed to do they can make a claim against your Professional indemnity insurance. As an HR Independent consultant, you can feel very exposed at first.
A Telegraph article has reported the unwelcome fact that 60 per cent of new businesses will go-under within three years, and 20 per cent will close their doors within just 12 months.
It’s important to remember that businesses fail for many reasons but the more you know the less likely this is to happen to you. In this post we will cover the main pitfalls & provide tips on what to focus on to ensure that you have all bases covered to develop your business, find and keep new clients, and avoid the chances of anyone making case of a claim against you.
Top tips for every HR consultancy business owner
HR skills simply aren’t enough to run a successful HR practice. Running your own business is a big step and getting it wrong can have a huge impact on your families, finances, personal happiness, etc. Any public mistakes can also impact on your reputation, profit and client relationships. This checklist helps you focus on the right things to run a thriving HR practice.
- Starting your business before you are set up properly. When you start your own HR business the thing that most people get excited about is choosing a name and a logo or brand. Yes this is important but it’s critical to also cover the following areas: Structure and Running of your practice, GDPR and data and how you manage cases, records and projects. You need a business plan and a goal at the very least. But are you aware of the four core areas that you need to focus on? HRi standards
Understanding your own strengths and expertise is powerful so that you are crystal clear about what work to pursue and what work is not right for you (because you don’t have the right experience or understanding of what is involved). Remember that things that worked well internally as part of a large organisation may not naturally transfer to the client you are targeting.
- Miscommunicating with your clients. Don’t confuse your clients by using HR jargon that they don’t understand. Acting like you are in-house, when you are an external resource will confuse potential clients who are looking for you to simplify the crazy world of employment and employment legislation. Speak in plain english unless you are dealing directly with HR professionals. If a client does not understand what you are saying, they are unlikely to want to work with you. For example, an SME client may understand ‘pay and benefits’ better than ‘reward or remuneration’ but a professional services client would speak a different language. Make sure you speak the same one as the client you are talking to.
- Making the pitch all about you rather than your prospective client. Tony Robbins the personal coach is quoted as saying “Quality questions create a quality life. Successful people ask better questions, and as a result, they get better answers.” When you meet a new prospect, it is tempting to create a slide deck and tell them all about you can do for them. But how do you know what you can do, until you find out more about them and what they need. Makes sure you listen more than you speak and if you never share the slide deck it may be aa positive. Many is the time that I have taken a slide deck away and totally redrafted it , before sending it the prospective client as a follow up demonstrating I’ve listened to and understood their needs.
- Mishandling Requests for Proposals. Having a fixed format can create a rabbit hole that you may fall down. A common mistake is trying to fit the client’s needs into your existing services rather than the other way around. ‘When organisations issue a request for proposal (RFP) they’re looking for responses that are brief and concise, that explain pricing clearly, and that provide an appropriate level of detail about the implementation of the proposal and the HR consultant’s specific action plan. And they are looking for solutions tailored to their needs’, said Daniel Bowling, former head of HR for Coca-Cola Enterprises, Inc. By all means have a template you work from as a starting point, but make sure you really tailor this to the client, clearly articulating how you propose to respond to their needs. One of the benefits of working with an external HR consultant is our flexibility and innovation, rather than simply offering a one size fits all approach that some of the bigger players focus on.
- Offering retained services without any due diligence. It is always energising to be asked to quote for a retainer. Take care to ensure you know as much as possible about the client and ideally perform a full HR audit so you can shine a torch in every area of their business before you quote any figures. Be very clear about your scope of services and understand what you are agreeing to do and what is extra or out of scope. Clients hide things! I discovered this the hard way when I first started out. An aggressive but extremely charming CEO negotiated a fixed monthly retainer after she had presented a very rosy picture of her business to me. The moment I started I realised the opposite was true and for a company with only 60 staff, the fact they had 7 outstanding Employment Tribunal claims set many alarm bells ringing!
- Confused or no pricing strategy. A common question for new HR Consultants is what should I charge? There are a few things to think about here. Firstly what are your plans for your business. Do you want to build a business that you can sell or is it just about doing a few hours here and there? Are you positioning yourlsef as an Interim or consultant? The biggest decision you will make is whether to charge by the hour as you immediately limit your capacity unless you take on associates or staff. But also what are you worth? If you charge a higher rate, clients will expect more of you. Can you deliver? Here is a link to some data on pricing. Where do yours fit in?
- Trying to appeal to everyone, anyone & anything. It’s tempting but it’s not going to carve out your name or reputation. Why you? What makes you different? Would you really work with everyone? Can you describe your ideal client and do they know you exist or are you a well kept secret? Do you know who you couldn’t work with? The clearer you are, the more likely you are to find them.
- Not having a sales or marketing strategy. Most HR Consultants love working with clients but feel uncomfortable around the selling side of things. Marketing is often a new area and this is limited to posts on Linkedin. Although it is important to repeat the same message many will only post once. Think about how you can package products up. Be clear what you are selling. Plan events to showcase your own expertise. With another consultant another related provider like an Accountancy firm or Recruitment agency. Networking is critical for your pipeline. Never allow yourself to run out of work. This is an area where many of us have had to push ourselves out of our comfort zone but it you are going to succeed, you need to get yourself out there.
- Failure to leverage from your reputation. Your existing or dormant clients are key to new clients. Understand how to communicate to them about what you are doing and what you have done. They are the ambassadors for you and your business. Don’t forget about them!
- Consultancy is all about relationships – You need to make the time to focus on these. Working on your business as well as in it. Loving your clients, anticipating their needs, and solving problems they don’t know they have. Making them feel valued individuals.
In a recession outsourcing always grows. Make the most of the growth opportunities ahead for you and get working on your business. As every HR professional knows, continuous development is the key to everything. Create an action plan of what needs attention in your business and schedule time in your diary to address it. Don’t let something go wrong that is avoidable. Take care of all the right things and watch your business grow! Becoming a member of HRi will provide support and guidance around how to set up and profitably develop your practice. By applying for platinum membership, we will run through an assessment of where you business currrenty is against the HRi standards to help you identify key areas of focus and identify what help and support you need.