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When to Hire a Consultant Instead of an Employee

Business Consultants

When to Hire a Consultant Instead of an Employee

Consultants are expensive, so why not hire somebody internally instead? We take a look at when it makes sense to bring in a consultant rather than hire a new employee.

You've finally admitted that you can't do it all, so you've decided it's time to bring in someone with more experience and expertise.

Smart move. But now you're stuck agonizing over whether to hire a new employee or start looking for a business consultant.

Unfortunately, there isn't a one-size-fits-all solution to your dilemma. In some cases, hiring a consultant is the best move you can make for your company, while in others it might make more sense to make a direct hire. But if you're leaning toward hiring a new employee, you might want to consider the following scenarios in which a hiring a consultant is the way to go.

Scarce expertise. Consultant hires are usually motivated by a scarcity of expertise in a narrow business area. Could you hire a permanent employee who has similar credentials and industry experience? Sure, but you have to ask yourself whether you'll need that kind of specialization on a go-forward basis. If not, a consultant is the better choice.
Short-term projects. Limited, short-term projects are the kinds of scenarios consultants live for. With the parameters of the project clearly defined, the consultant comes onboard for a predetermined, limited timeframe and then moves on to his next client. You get the benefit of cost containment without the risk associated with a permanent hire.
Third-party input. Another scenario in which consultants thrive is when the owner recognizes that the business needs an objective opinion, even when you're convinced you are on the right track. When your leadership team is divided, a consultant can deescalate the passion surrounding a decision and guide the process to a more rational outcome.
Uncertain outcomes. Let's say your business is on the brink of an innovation that has the potential to catapult the company to a whole new level. If the innovation sticks, marketing will play a much greater role in your business activities. If not, you're going back to square one. Rather than rolling the dice on hiring a full-time marketing director, you can hedge your bet by hiring a consultant now and then bringing someone on full-time after the company achieves sustained growth.
Tight resources. On an hourly basis, you'll pay more for a consultant than you will for a direct hire. But when resources are in short supply, you can limit exposure by hiring a consultant until you can free up enough resources to hire a permanent staff member. Be upfront about your intentions and negotiate the contract accordingly.