About Keeping Consultants Honest
This article was written by Ori Carmel, Founder and CEO at Sowen. With over 20 years of executive and leadership experience, Ori applies his passion for problem solving and data driven decision making to helping organizations and companies drive meaningful impact at the intersection of doing good and doing well. He consults as Data Lead at Bloomberg Philanthropies, and previously held leadership positions at Twitter, American Express, and King’s College of London.
TL:DR
In our client engagements, it's not uncommon for partners to request a detailed hourly rate breakdown during the scoping phase. Typically, this stems from internal financial protocols necessitating such granularity. However, this request often signals a starting point where transactional value and limited trust are prioritized. Understanding and navigating this dynamic is critical for fostering a successful collaboration.
Our experiences align with industry observations. Often, consultants fail to deliver meaningful impact due to poorly scoped projects or an overemphasis on billable hours. It's a familiar scenario: the initial engagement leads to a transfer to less experienced teams, resulting in outputs that lack practical application or relevance. We've all witnessed the proverbial 500-page report that never transitions from theory to practice.
The underlying issue is rooted in the behavioral economics principle that the method of compensation can significantly influence priorities, behaviors, and even personality. This phenomenon has been extensively documented in the fields of Game Theory and Behavioral Economics, with notable contributions from thinkers like Daniel Kahneman and Dan Ariely. Rutger Bregman, in his book "Humankind," provides contemporary examples demonstrating this effect across various sectors:
CEOs fixated on short-term quarterly results at the expense of long-term strategic initiatives.
Academics pressured to prioritize quantity over quality in publications, leading to subpar research.
Educational systems emphasizing standardized test scores, sidelining critical thinking and other less quantifiable skills.
Healthcare professionals continuing treatments beyond their necessity due to financial incentives.
Bankers motivated by bonuses to engage in risky financial practices detrimental to the economy.
Social media executives prioritizing engagement and ad revenue over content quality.
These examples underscore a broader trend where compensation models can inadvertently undermine the quality and integrity of work.
While providing an hourly breakdown of our project costs is sometimes unavoidable, our primary goal transcends mere financial transactions. Our philosophy centers on driving meaningful impact and solving real-world problems. If this core ethos is not mutually recognized and valued, the transition from a vendor relationship to a true partnership may be jeopardized. In such cases, it becomes apparent that our approach may not align with the potential partner's needs or expectations.