Cookie Cutter Doesn't Cut It

I was on the phone with a sophisticated client a few days ago. She remarked that the solution she was looking at was just pulled off the shelf and could equally apply to any [company]. She said that was bad consulting. I have to agree. Thankfully, that consulting was not ours.

When I started in the business, back in prehistoric times, the modus operandi that many of us were introduced to included answer the phone, do the work, record your time, and someone will bill the client for it. Complaints appeared to be limited.

Things got more complex. The booming economy in our business created by the Reagan-era bull markets and the Tax Reform Act of 1986 was a veritable full employment act for consulting actuaries. Employers of those actuaries needed all the quality staff they could find and clients needed all the support they could get.

Things changed. As processes got automated and later, as companies began to exit the business of sponsoring pension plans, this once highly valued actuarial service became more of a commodity. Whether it was true or not, consulting actuaries who could deliver actuarial valuations were viewed as being a dime a dozen.

How did the best differentiate themselves? They began to provide more and more customized solutions. They began to understand the client's business needs. There was a sudden shift in the order of necessary skills. The key ability of being able to do things was replaced in the pecking order by the ability to listen and then to thoughtfully react.

Somewhere around the same time, our society seemed to become far more litigious. The answer to many problems became finding some other party who could be found to be at fault and exacting a price from that party. Some made the observation that in response to this, there were a number of consulting firms that developed solutions that everyone should bring to each of their clients. In fact, I can recall professional friends of mine complaining that they needed to be able to "check the box' for each of their clients even if they felt as if that meant they were providing less than the optimal answer. In other words, they were being encouraged, or even required to pull the answer off the shelf or some might say, to deliver a cookie cutter solution.

Put yourself in the corporate shoes. Your adviser that you have worked with for years brings you a solution that they label best-in-class. A few days later, you find yourself at a gathering with your peers from other local companies. Alas, they have all been brought the same solution.

How is that possible? The companies aren't the same. Their plans aren't the same.

It's then that you remember that you had agreed, based on a referral, to a meeting the next day with some consultant you had never heard of. You wondered if she would try to sell you on the same best-in-class solution.

She didn't. After the initial niceties, she asked you a bunch of questions. And after each question, she listened to your answer and reacted accordingly by asking a follow-up, more probing question. She remarked that she was surprised that you weren't pursuing [pick your favorite strategy to fill in the blank] instead of the not best-in-class one that your longtime adviser had brought you.

You wanted to to business with her, didn't you?

When Did We Stop Being Inquisitive?

I can still remember much of my childhood, so most of my readers should be able to remember theirs, as well. Childhood has its phases. There is the "no" phase which usually occurs somewhere around age 2 or 3 in which it doesn't matter what our parents say, we answer "no." A bit later on, there is the "why" phase in which in doesn't matter what our parents tell us to do, we ask "why?"

At the time, I'm certain that all of those whys were very annoying to our parents and for those of us who have been parents in our own right, they were annoying to us too.

Sometimes.

Sometimes, asking why is a good thing, perhaps not to the extent that a 5-year old might do it, but oftentimes asking why gives us perspective into what we really need to do.

This extends itself into the benefits world as well.

Let's consider a not particularly made up hypothetical situation. A client informs their consultant that they want to change their 401(k) plan to make it a safe harbor or to make target date funds their QDIA. Or, on a different topic, they say that they need to move to a high-deductible health plan. If we, as consultants don't ask, but the client chooses to volunteer some information, we might learn that they read about the increasing popularity of whichever of these that it was or they heard about them at a conference.

There are several approaches that a consultant can take to that request. Sadly, the one that we often jump at is 'we can help you with that' as we salivate knowing that we just sold a new project. So, we're going to do what the client asked us to do not what the client needs us to do.

Let's suppose.

Let's suppose that we asked why.

Why do you want a safe harbor plan? Why do you want to use target date funds? Why do you want a high-deductible health plan (HDHP)?

Perhaps upon hearing the client's answer, we'll know that they are headed in the right direction. On the other hand, perhaps they are not. Because everyone else is doing it is not always a good reason.

Suppose we focus for a moment on the high-deductible health plan (I haven't written about health care for a while). When we ask why, the client tells us that her company's health care expenses have increased to rapidly and that they need to reduce that cost. Introducing an element of consumerism, she tells us, will make employees part of the buying and spending decisions and save the company money.

Strictly with respect to the health care plan, I expect that she is correct. In total, she may be correct. But, if cost is the issue, isn't it important that she understands the secondary and tertiary savings and costs?

Some data on HDHPs suggests that employees in those designs are more likely to skip certain medical procedures. In some cases, that's good. The procedure might not be necessary and not having it performed will save money at no personal risk to the employee. On the other hand, the procedure might truly be advisable. But, since the first $5,000 of cost may be borne by the employee, he may decided that is not money that he wants to spend. He chooses to forgo the procedure.

What are the non-primary effects of that decision? Here are a few potential ones:

• The employee should have had the procedure and develops a more severe condition later on that is far more expensive to treat.
• The employee, when that more expensive procedure becomes absolutely necessary, will be out of work for an extended period of time generating another significant cost to the company.
• The employee may become disgruntled with the employer because this new plan design "forced" him to not have his advisable procedure. Disgruntled employees are usually either less productive or they quit, or both.

These are all meaningful costs, but they are not ones that we can truly predict. We know that some of them will occur, but, in my opinion, the best that we can do is to model some scenarios and see where they might fall out. Perhaps understanding the full picture will help our client to better understand the decision she is considering.

But, we'll never know how to paint that picture if we're not inquisitive.

Don't forget to ask why.

Consulting With the Flavor of the Month

I've worked for several firms in my career and had the privilege of serving a large number of clients.Different consultants have different ways of serving their clients and different firms have different expectations of their consultants. Some of these practices generate what is to me a problem. Consultants bring their clients the flavor of the month, or worse yet, they bring them last month's flavor of the month.

What do I mean by that?

Suppose you or I are a consultant with a firm that tends to generate its ideas out of a centralized practice. As consultants in that practice, we find ourselves essentially required to talk to each of our clients and "check the box" saying that we had a conversation with them about January's flavor. I've been in that situation. And, while there are definitely right ways and wrong ways to do this, a consultant could easily find himself in a competing situation.

Consider that the January brainchild is a really cool and innovative idea around health plans. There will be companies that this idea is right for, but the idea is complex and therefore, probably a good idea only when a company's employees are particularly active participants in their own health outcomes and where they are financially savvy enough to know how to play the game, so to speak.

Because of this, I as a consultant working for one of those firms (I have, but I currently do not) may have competing goals leading to a conflict for me. Suppose I bring this idea to each of my clients as I am told. One of my clients, hypothetically, is a large chain of fast food restaurants that sits mostly along interstate highways in rural areas. The employees of this company, generally, earn minimum wage or just a little bit more, so they are not financially savvy. Additionally, most of what they eat is fried food and what I have learned over the years is that they really don't understand their own health.

My main contact, the Vice President of Human Resources absolutely loves my firm's idea. She took this position as a step up in her career after being a Benefits Manager at a large pharmaceutical company. There, the employees did take a role in their own health outcomes and the sophisticated group of scientists did have enough financial acumen to understand any pitfalls of this new design. I am left with competing interests:

1. I can do right by my client and tell them that I just wanted to let them know what some other companies are doing, but that this idea might not be right for them and here's why; or
2. I can sell the assignment because it will go a long way toward helping me to meet or exceed my goals.

I'd like to think that when faced with this conflict that I have always taken option 1. But, even if I have, I know people who have not.

There is something far worse than the flavor of the month consultant, however. Consider the consultant who pitches the flavor of last month, or even worse, the flavor of last year. This is the person who learns through the grapevine that the reason that his client base is gradually leaving him is that he didn't bring them any new ideas. So, he goes back to the handouts from meetings he attended earlier in the year and starts to pitch those ideas. He doesn't really understand them, but he is practicing (poorly, I might add) defensive client management. 

As an example, without going into great detail, Curtis O'Nsultant learned at the annual meeting of the Really Smart Consultants of America of a great new idea that works very well in a rising interest rate environment. Back in 2013, Curt lost a few clients because other companies marketed this idea to his clients. He wasn't aware of the idea then and he still doesn't understand it. But Curt knows that failing to bring the idea to his client base was costly, so he decided to bring it to his remaining clients in late 2014 to seemingly ensure that the rest of his client base would be safe. If he is lucky, or perhaps unlucky, enough to sell this idea to any of his clients, we know how that story will play out.

I'm thrilled to say that I don't have to deal with that now. I work with some really smart and creative people who come up with some great ideas. But, rather than telling me that I need to bring those ideas to my entire client base, I am asked to consider what an appropriate client would like and which of my clients fits that definition of appropriateness. Those are the clients that I will bring this new idea to.

Think about it.

The Recommended Pension Contribution

For years, I have seen in many pension plan actuarial reports a line item that the actuary or the actuary's firm refers to as the "recommended contribution." When reviewing these reports, that item has always been an anomaly to me.

Sometimes, what it represents is spelled out in the report; sometimes, it's not. But, when it is seemingly well-defined, where does it come from? Many times, it is equally to the minimum required contribution under ERISA. Other times, it looks like the actuary through a dart at a sequence of numbers between that minimum required amount and the maximum amount that the plan sponsor can deduct on its corporate tax return.

I'm not saying that an actuary should not recommend a particular level of contributions. But, what I am saying is that it's not so simple. It's certainly not based on the same formula for every plan. In fact, there are lots of elements that should go into that recommendation.

This is where we might see a difference between an Enrolled Actuary who happens to label himself or herself as a consultant and an excellent consultant who is also an excellent actuary. The consultant will focus on the client's business needs in working with the client to develop a recommendation. Some very key questions to which the consultant needs to understand the answers might include these:

• Where will the money come from to make any contributions? Will they come out of free cash flow? Will the sponsor need to borrow. If so, at what rate? Will that borrowing cut into the company's borrowing limits to the point that it may encumber their ability to run their business?
• Do the potential tax deductions with respect to these contributions have value to the company? Is the company paying income taxes currently? There are a variety of reasons that it may not be. The company may not currently have positive net income. It may already have sufficient deductions to offset all of its income. Does the company have what are often referred to as NOLs or Net Operating Loss carryforwards?
• Will the company be better positioned to make contributions in excess of the minimum required amount in some future year than it is this year? Perhaps this year, the cash would be better used elsewhere, but the company's forecasts indicate that it will have free cash flow to make up its funding deficit in 2016. 
• How will any of this affect the company's risk management strategy? What sorts of risks are in that strategy?
• How will various stakeholders react to a large, but not legally required contribution?
• Will the effects on financial accounting expense (ASC 715 for those who care) matter? Sometimes, the decrease or increase in pension expense attributable to making or not making additional pension contributions (actually the return on those assets) looks like a big number. However, when we look at that change divided by the number of shares of company stock outstanding, the effect does not move the needle enough to change the company's reported earnings by share by even a penny. In other words, it goes away in the rounding.
• How about loan covenants? Oh, Ms. or Mr. Actuary, do you know about those? Does the company have any? (I'm pretty sure they do.) Do any of them relate to the pension plan? Maybe they do; maybe they don't. 

And, finally, the plan sponsor needs to act in the best interests of plan participants. While it doesn't seem likely that making any contribution to the plan at least equal to the ERISA minimum required amount would fail to meet that requirement, those interests need always be top of mind for the individual or committee making such decisions.

This is by no means an exhaustive list of the issues that the plan's actuary should consider, but it's a start. When your actuary "recommends" a contribution amount, have they made sure that they understand the answers to questions like this?

If not, perhaps we need to talk. If not me, then contact one of my colleagues.

Connecting Executive Rewards

After all these years, I find it amazing. Consideration of executive rewards is still split up into pieces. And, those pieces are handled by different internal functions and by different consulting constituencies.

In a fairly typical case, cash, long-term incentives and equity are handled by the executive compensation function and by the executive compensation consultants. Executive retirement programs are typically handled by the retirement function and by the retirement consultants (frequently actuaries).

This is not a problem. The problem lies in the fact that the left hand and the right hand don't communicate with each other. And, they don't have compatible methodologies.

Let's look at retirement first. Traditionally, executive retirement packages have been designed to replace some targeted percentage of the executive's base plus bonus in their last few years before retirement. That methodology is not wrong. In the typical executive retirement study, consultants are asked to benchmark the plan design. Does it align with current trends and practices?

Consider executive compensation. Here, consultants look at such this as total cash compensation and total direct compensation. They benchmark this against the organization's peer group regressing (adjusting) for differences in size (and sometimes complexity). They develop medians and percentiles. That methodology is not wrong.

Suppose a Board chooses to pay its CEO at the 60th percentile. Perhaps they feel that their is complexity to their organization that belies its size. Suppose they also have an executive retirement program that their consultants say is pretty mainstream. I am going to tell you that almost to a degree of certainty, the retirement consultants have not considered the level of the CEO's pay in determining that the retirement program is mainstream. Isn't deferred compensation a part of compensation?

What would happen if we used the same approach for retirement benefits as we do for other forms of executive compensation? Suppose we calculate an annual value for such benefits and add it to other forms of compensation before doing that regression. Something tells me that the results might be surprising. In some cases, it might justify that rich SERP for which the proxy analysts have such disdain. In other cases, we might find that the company is perhaps inappropriately inflating TOTAL compensation -- the sum of the value of the entire rewards package.

In order to make this work, the executive compensation people need to talk to the retirement people and conversely. They need to speak each other's languages. Today, there are many gaps. There just aren't enough of us who are bilingual in this regard.

Perhaps we need to be.

The RFP Process -- Full Disclosure or Not?

Some people send out lots of requests for proposals whether it's in their business life or in their personal life. Others respond to a lot of them. Recently, I was in that first category for a change, but far more often, I am one of the people responding to a request for proposal (RFP).

My most recent endeavor in requesting a proposal was in my personal life. My wife and I needed to engage a painting contractor for our home. We sought bids from several firms.

In each case, we told the salesperson or proprietor what type of paint we planned to use. In this case, it was a particularly high end paint that is designed to last, even in the hot and humid Atlanta weather where torrential summer thunderstorms are the norm. A keen observer should have learned something from that. We also told each potential bidder which contractors we were talking to. In my opinion, the smartest contractors took the opportunity to compare and contrast their own services with those of their competitors. Obviously, they slanted the analysis in their own favor, but we learned things about each potential vendor in the process that we would not have learned had we not been honest and open on our side.

I also get my fair share of RFPs that I have to respond to. Usually, I will ask for a lot of information. I want to know who I am bidding against.

Why?

Here are a few reasons:

• The group of potential consultants from whom the prospect has chosen to request a proposal tells me something about the company's mindset. It may even tell me that I don't want to bid because it's clear that I have no shot at winning, but have simply received the RFP as a courtesy.
• Ultimately, if I win the bid, I want my client to be happy with the services they receive. For this to happen, it's helpful if I can compare what I have to offer to what my competitors likely have to offer. Of course, I am going to try to use this to my advantage, but my competitors can and should as well. But, from the client's standpoint, this should help them to make a better and more informed choice of consultants.
• I may even make a statement to the prospect to the effect that if they are looking for what I am going to refer to here as style #1, they would be best off with Consultant X, but if style #2 is a better fit for them, then we would have a very good relationship with each other.

The client wins as well. The eventual successful bidder knows things about their client up front. They don't have to burn time and money on the learning process. Because of that and because consultants will be able to make more educated selling decisions, something else important happens that is of benefit to the client.

What's that?

If the consultants who are bidding think they understand the process and really go after the opportunities that they think are the right ones, they will price them more aggressively. That's right; consultants want the work where they know they are the right fit and they will bid more aggressively.

So, with full disclosure, the consultants (or other vendors) win and the clients win. Everybody wins. Isn't that the best result?

Boilerplate Burns -- Why The Low Bidder May Not be the Right One

How do you choose your consultants? Your attorneys? Your accountants? Your other advisers? Price matters, doesn't it? In fact, if you are in the public sector, price is likely the single most important component in your buying decision.

Now put yourself on the other side of the equation. Suppose you are the potential vendor, be it consultant, attorney, accountant, or other adviser. You understand the importance of price in your potential client's buying decision. Therefore, you strive to make one of the lowest bids. Now that you have made that low bid and gotten the work, how are you ever going to make money on the assignment?

Frequently, the answer lies in the dreaded boilerplate. If your prefer, pull something off the shelf. For those of you who abhor consultant-speak, what I'm saying is that the consultant will re-use a document that was already used for another client. Or, worse yet, that consultant will provide you with the same solution that they or a colleague used for another client.

Why would they do this? It saves money. Suppose you have two possible ways to produce a presentation. In the first method, you think long and hard about your client and about your assignment and develop a document that is customized to your client. In the second method, you use one that you used six months ago and change a bullet point here or there to justify your assignment. Which do you think costs more?

Which delivers a better value to your client?

In most cases, I think that the customized solution is the winner from a value standpoint. No two sets of circumstances are the same. And, it's rare that a well-done assignment has cost anywhere near the value of what the vendor is consulting on.

I remember a scandal at one of the large consulting firms back in about 1994 or 1995. It broke when someone internally notified the Wall Street Journal that its consultants in a particular practice were delivering the same work product (with just minor modifications) to every client. It made front page news. If you were on the client side and you hired that firm because the price was right, do you think it was a wise buying decision?

How about the law firm that gave you the lowest bid on drafting plan documents? Don't you think that they have a template that they start from? Suppose what you need is a creative solution and that solution doesn't fit the template? Will the attorney advise you to stick with a solution that fits the template? Or, will they work with you despite their low bid?

Finally, I consider M&A due diligence. That's the process during which a company uses many of its internal resources and engages many outsiders as well at significant expense to ensure that there are no gotchas (at least none for which they are not reasonably compensated) in the company they are buying. How would you choose someone to help you with that process?

To help answer, consider a home buying decision. In some regards, that is like a corporate acquisition. You are negotiating a deal and you are hoping nothing is wrong. To assist you in ensuring that nothing is wrong, you probably engage a home inspector. In the process of deciding which inspector to use, you have some key questions that you want to ask each prospective home inspector.

While not quite a question, here is one that I personally like: "Tell me about deals that you have killed in your home inspection career."

Killing deals takes guts. It doesn't necessarily make either party happy. But, that person is much more likely worth their fee, even if they are not the low bidder.

Tunnel Vision Doesn't Always Work

I've been a consultant for a long time now. While I probably don't read as much of it as I once did, I still read a lot of IRS guidance (I know, that makes me a boring person, but somebody has to do it). In fact, in this business, a lot of us read a lot of IRS guidance, so I guess we are all boring people. But, the point of this post has nothing to do with being boring, it's about solving problems.

You see, lots of IRS guidance is extremely complex. So, there are two ways of reading that guidance -- you can either know the 20% that applies to 80% of the problems, or you can learn the other 80% as well that might apply to the other 20% of the problems.

We get accustomed to solving problems using that first 20% and that's what I am referring to as that tunnel vision. But, for those of us who have learned the rest of the guidance, sometimes we have to look outside that tunnel for a solution.

I've faced such a situation in the last day or two and for obvious reasons, I can't disclose the details. But, without going into any detail, I'll provide an overview.

Client X is reviewing certain of its benefits and compensation programs. They have a very specific problem and they have a pretty good idea what the optimal solution looks like. So, I went back to the law and thought about what its original purpose was. From there, I concluded that if the regulations matched at all with that original intent, then while we might not hit the optimal solution, there should be a big improvement.

Voila, there in the regulations, it looks like there was an answer. But, it wasn't in the 20% that lots of people know. It was in the other 80%. In fact, it was buried about as deeply in the other 80% as one could put it.

Not all of us take the time to read and understand the other 80%. But, if you do, you might as well take the opportunity to use that additional expertise. Perhaps we might say it's where we get by taking a different route -- outside of the tunnel.

HR People and Consultants Can Learn From the Casey Anthony Trial

I know. You read the subject line of this post and the only reason that you made it into the body of the post is you were curious to see just how I have lost my mind. 

I'm not nuts. I swear to you that I have, in fact, not lost my mind. This trial was an exercise in communications. Two teams of attorneys and their various witnesses were communications consultants. They were each communicating to twelve people. And, unlike, you, me, and tens or hundreds of millions of other Americans, those twelve people didn't have any additional communications consultants -- all the talking head attorneys and attorney-wannabes on the various television and radio networks. These twelve clients, if you will, were held captive, largely in front of the communications consultants, for six weeks. They literally lived and breathed this trial.

Let's get back to benefits and compensation -- human resources issues. If you look at the HR press these days, you can find survey after survey about things like employee engagement, dissatisfaction with managers, cuts in benefits that are untenable to employees, workforce reductions, and many more. I say that the companies who score particularly low in these surveys suffer from the same malady as Linda Drane Burdick and Jeff Ashton, the two lead prosecutors in the Casey Anthony case.

Let's consider. [WARNING: There may be lots of cliches in here]

You only get one chance to make a first impression. In the Casey Anthony trial, there were lots of first impressions. There were the opening arguments. There were the beginnings of testimony by witnesses, both fact witnesses and expert witnesses. I heard a litany of legal experts say what a great job the prosecution did of wrapping up the case. I heard that Linda Drane Burdick put the nail in the coffin. Let's go from the courtroom back to the corporation. The jurors (the employees) were so disengaged by then that they already had one foot out the door. 

Consider this. The prosecution put forth more than 400 items of circumstantial evidence. The jury deliberated for about 11 hours. In reality, though, the jury deliberated for less than 6 hours. I say this because they all returned for the second day of deliberation dressed differently. They had their verdicts. They just wanted to be sure.

Let's reconsider. 400 items. 349 minutes of deliberation. That is less than 53 seconds per item of circumstantial evidence. 

Their minds were made up long before the closing arguments. The fact is that once a manager or consultant (prosecuting attorney) has failed to keep an employee (juror) engaged (on their side), that employee (juror) is likely lost.

The defense did not have a great case. The prosecution told us so. They told us that their experts were more believable. They told us that only Casey Anthony had a motive to kill Caylee. But, the case was lost by then.

If you didn't follow the trial at all, you may get a bit lost now, but I will try to tie it together (for all I know, you may be lost already, but I hope not).

The prosecution delivered a long and eloquent opening statement. Nobody quotes from it. Nobody remembers it. Whatever they said, they didn't link everything to their opening statement.

Jose Baez, the lead defense attorney, is not experienced. He began practicing law in 2005. To my understanding, this was his first murder case. His opening statement was not eloquent. But, as hokey as this is going to sound, Jose Baez did something different and, in my opinion, it stuck with the jury because, ultimately, he built his defense around it. He said. "Follow the duct tape."

From a communications/HR/marketing perspective, do you know what he did, on Day One, and thereafter, and constantly? He branded the defense. The defense's brand was simple: Follow the duct tape. The jury could understand this.

The prosecution case was all-encompassing, or overarching if your game of choice is Buzzword Bingo. It went from here to there to everywhere. They presented evidence upon evidence, all sadly circumstantial. But, they didn't have a theme. They didn't have a brand. Their first impression got lost and they didn't reinforce it. 

Much like many modern managers, they knew they were right, and therefore, the messages they were delivering didn't matter. The facts were so compelling that during the defense's closing, prosecutor Jeff Ashton could assuredly snicker.

A friend of mine went through an acquisition recently. Her company was acquired by another company. And, as she told me, right from the get-go, it was all about the new company. It was never about her ... or her colleagues from the old company. That was all ancient history. She got lost on the first impression ... and so did the acquisition.

OK, smart guy. You've written paragraph on paragraph, what would you have done differently [speaking to self]?

This was a circumstantial case. Everybody knows this. So, of the 400+ pieces of evidence, many (let's say 100) pointed to Casey Anthony as the killer with a very high degree of certainty -- for the sake of argument, let's say 95%. Frankly, though, a 95% likelihood that Casey Anthony murdered her daughter probably should constitute reasonable doubt.

So, what should the prosecution have done differently? I have an opinion, but you already knew that, didn't you. The prosecution needed to brand it's case as "The Sum of All Parts." In their opening statement, they should have said that this was a circumstantial case (I think they did). They should have said that the jurors (employees) were about to hear 400+ pieces of evidence that each, with a high degree of certainty, tie the murder to Casey. Of them, maybe 100 of those 400+ would each tie to Casey with about 95% certainty.

So, let's explain, in our opening statement, to the jurors how the Sum of All Parts works. 95%. That's 1 in 20. That is the same as me asking you to pick a number that I have in my head between 1 and 20 and guessing correctly. That's reasonable, isn't it? It might happen.

OK. So you got the first number correct. Now do it again. Hmm. That's pretty tough, isn't it? Now, let's see you do it 100 times in a row. Is it reasonable to think that you could do that 100 times in a row. We're going to bring on an expert later to show you just how difficult it is to do that 100 times in a row. That means that the likelihood that someone else could have done this is so small (it's a number with a decimal point followed by approximately 130 zeroes before you get a non-zero digit) that it fails to constitute reasonable doubt.

Back to my brand -- the Sum of All Parts. 

So, you start out with a brand, or a message, if you prefer. You explain in the beginning how it is going to work. And, you enforce it. And, you reinforce it. And, you make it believable.

If your brand relates to a wellness program, sell it on Day One. And, keep the message going. Don't let it leave the minds of your employees (jurors). Don't confuse them with a can of stink (if you're not familiar with the trial, that won't make sense) or with the pay raises that you plan to give when the company returns to profitability. 

Look at all the most powerful brands. They never leave their messages. Coke has been "the real thing" for years. UPS asked us "what can Brown do for you?". In it's most golden years, FedEx told us "if it absolutely positively has to be there overnight." Nike just gave us its swoosh.

Linda Drane Burdick and Jeff Ashton gave the jurors lots of powerful evidence, but it wasn't tied together. Jose Baez didn't give the jurors a whole lot, but he did give them a brand. In my opinion, that brand sat in their subconscious and he didn't let it go. Way back in May, he asked them to "follow the duct tape" and that was his case. It planted reasonable doubt that the prosecution, having the means to overcome, unwittingly chose not to.

So, Casey Anthony walks. And, if you (the employer) don't communicate any better to your jurors (employees), so will they.

Writing and Speaking Properly

How is your English language usage? I'm not asking about when you are speaking with your kids, your spouse, or your significant other. I'm talking about when you are doing business. Would your 8th grade English teacher be proud of you? Or, in 2011, when people text things to each other like "2 kewl" and "h r u", does it just not matter?

I was an attendee at a training session at a conference for experienced consultants about 18 months ago where the both of the key presenters were heads of procurement for large, but not gigantic companies. Each was asked the question [paraphrasing], "When you receive a proposal, does the quality of the writing in that proposal matter?" One said that it did not; the other said that it does matter. The one that said that it does matter said that while she tried not to make it a big differentiator, she knows that she scores well-written easy-to-read proposals higher than ones with particularly cumbersome language usage. Further, she said that she has disqualified proposals that have been, in her judgment, poorly written.

When I spoke with her one-on-one after the session, she expounded a bit. She told me that she was somewhat offended when an e-mail to her from a prospective vendor started with the salutation "Hi Mary [not her real name]." In her mind, you say hi to your friends, you say hi to your family, you say hi to people you know, you don't say hi to a prospective client that you have never met. Further, she told me that although she really would prefer not to give higher scores to a very well written proposal than to just a well written one as it's generally not a proposal for writing services, she probably unconsciously does do exactly that. In other words, to her, the quality of writing matters, and bad writing doesn't have a chance.

I also spoke with her co-presenter, Mike [not his real name either] after the session. Mike was not as adamant about business writing and being addressed professionally. He insisted that he really doesn't care that much about the quality of writing in a proposal. I pressed him on that issue. He finally admitted that while it may not be as big of an issue for him as it is for Mary, the quality of writing does matter, even if it's just one of many factors, or sometimes just a tiebreaker.

How about use of the spoken word, does it matter? I think it does. Who would you rather use as your business consultant? Would you choose Arnold Jackson [yes, the one portrayed by Gary Coleman] who questioned. "What you talkin' about, Willis?" Or, would you prefer Alex P. Keaton [portrayed by Michael J. Fox] when he said, "Now that is a problem. Surely, we can find a solution."

I don't think that people in the business world are offended by less formal speech than we used to use. But, when things get too informal, I fear that what your audience remember is that you tried to sound too cool. They may have loved your demeanor, but they have no idea what you actually said. You may have won the personality battle, but you may have no credibility.

Perhaps, being somewhere in the middle is best. Maybe it is best to be a little bit less formal, but still proper. To me, that is in the eye of the beholder and has much to do with the comfort level of the speaker. However, if you are in the very informal group, give it a try. Consider adding a little bit of polish to your writing and  your speech.

You wouldn't show up for that sales final in dirty, torn jeans and tennis shoes, would you?

Are Your Consultants Getting It Right? Ask Another Consultant to Check for You.

Are your retirement plan consultants doing a good job? How do you know? Are the fees they are charging you fair? How do you know?

The answers to those questions, in reality, for most companies, are probably a consistent "I don't know", or "I hope so." The fact is that much like relationships with audit firms prior to Sarbanes-Oxley, the typical company has no way of knowing. Oh, they know if there is a disaster, but beyond that, they really don't know if they are getting quality service or high value for the fees that they pay.

Do you? I didn't think so. I bet that you would like to know how to find out.

Perhaps, in the long run, you will save money and get better value from your consulting relationship by engaging a consultant to monitor, or at least review your consultants. Sounds counterintuitive, huh? It is, but if you really think about it, it makes sense.

Essentially what you are doing is finding a consultant who will agree to not seek your ongoing work, but whose purpose is to review the quality and the value of the work that you are actually getting from your actual consultants. If done properly, such a review should be able to answer these questions:

• Are your consultants following accepted professional standards of practice?
• Are they holding to their fee agreements with you?
• Are their fees fair?
• Is the work that they do for you accurate and complete?
• Is the work technically sound? Have any consulting letters explored all the issues, or simply given you the same solution, packaged very slightly differently, that they give to all their clients?
• Are appropriate levels of consultants servicing your account? In other words, is the team too top-heavy, too bottom-heavy, or about right?
• Is the relationship still fresh? Often times, teams that have seen no change do not bring you new ideas?
• What are their other clients saying about them that is particularly good or bad? Would you agree with the good things? Have you seen the bad things? If not, are they not present on your account, or are they just doing a good job of hiding them?

Based on feedback from clients, you see much more variability with the larger firms. Are you getting the A team or the C team? Don't you think it's time you found out?

3 Options ... Not Quite

I take you back to 1988 or 1989. Corporate travel budgets were higher. Webcasts were a pipe dream. Training was done in groups, in person. Personal interaction was valued.

I was attending a class at an old employer that had the words "consulting skills" in the title. It was a grueling class. That I recall, it started on a Wednesday and ended Saturday at noon. Yes, you read that correctly, it ended SATURDAY at noon. It had lots of role-playing, lots of videotaping and lots of humbling moments.

The last day or so went like this. Early afternoon on Friday, we were broken into three teams and given an assignment (the same assignment was given to all three teams). We received a mock RFP (request for proposal for those who don't know the lingo) for a consulting assignment. Each team was to make believe that they had made the finals and make their pitch to a mock Board of Directors on Saturday morning. Interestingly, our mock Board had a real live CFO on it.

Back to the three options, though. And before I give them to you, let me say that this is the single best thing that I have ever learned in a training class.

There are three distinct component to any consulting assignment (in alphabetical order):

• Price
• QUALITY
• Timing

The client can have any two of the three that they want, so long as one in particular is one of those two. I bet you can guess which one is which.

The Price is Right

What is the right way to price a competitive bid? Do you know? I sure wish I did. Sometimes, I get it right and sometimes I don't. I wouldn't be surprised if you feel the same way.

I think back to the TV show with Bob Barker. There, you had to come closest to the right answer without going over. Does that hold any water in pricing consulting or brokerage work? If a prospect has $X budgeted, is it best to bid X, something barely less than X or something much less than X (I'm assuming that in a competitive situation, it is rarely correct to bid something more than X).

I don't know the answer, but I wish I did. If you really low-ball, does the prospect wonder if you understood the assignment? If you bid just a little bit less than X and somebody else really low-balls, are you out of the running? Why can't all prospects just hire me at the price that I would like to charge? That sounds like a great idea.

I think that the right answer varies by the type of work. Rarely is it right to be the high bidder. For commodity work (think actuarial valuations), I think that if there are 5 bidders, 2nd lowest has the highest likelihood of being right. If there are 6 bidders, 2nd or 3rd lowest feels about right, and maybe even 3rd highest if you are not too far off the others. On the other hand, for work that is viewed as more strategic, I think it's more about credibility. Are you viewed as being best for the job? If you price it too low, can you possibly be best?

In any event, I'd love some more opinions.

Two Key Words

I got my idea for this post from here: http://www.advisorperspectives.com/newsletters10/Two_Words_that_Get_Prospects_Attention.php

As I went through this article, I thought to myself: what could those words be? Since it was in an article that seemed to be focused on assets, I thought about things like rewards and return, alternatives, hedge, benchmarks, and the like.

Clients can run their business during the normal course of things. If they couldn't, they wouldn't be clients for long because they wouldn't have businesses to run for very long. Most of them are faced with risks in their business that they struggle with. Why do they struggle? Many of them are in "areas" in which they have no internal expertise. Sure, they can handle the risks related to the perhaps cyclical nature of their business. That's a core competency. It's not what keeps them up at night. For example, if cold weather is bad for their business, they know it will eventually get warmer.

But, what about compliance risks? What about benefits and compensation risks? What about accounting risks? These are not the areas where they are looking to make money. By themselves, these areas are not the key to success. But, avoiding failure in any of those areas may be a key to success. Avoiding failure may be the key to success.

So, if you are a benefits consultant or a compliance specialist, your client is not looking for a home run at the risk of striking out. They want a singles hitter who makes good contact every time. In other words, keep them out of trouble. If you are recommending anything with attendant risks, make sure they understand those risks.

1. What is the ultimate downside?
2. What is a likely downside?
3. How likely are both of those occurrences?
4. Can anything be done to mitigate those risks?

If the answers to those first two questions are unacceptable, then you better be able to answer the fourth one. If the ultimate downside is ruin, but the likelihood is near zero, it still may be worth considering how you can mitigate that risk.

Think about it. Would you take a risk that could produce a very good result, but 1 time in 1000 would put your family out on the streets? How about 1 in 100? 1 in 10? Wouldn't you like that 1 in 1000 a lot better if you could make it 1 in 10000? Your client would as well.

The next time you are about to propose a risky solution, think about this. Think about the financial crisis. Which financial services companies took huge risks? Which ones did their best to avoid those risks? And, of those two groups, which group remains standing?

OK, tell me now, which way are you going to consult?

What is Valued From a Benefits Consultant

I'm going off topic a little bit here, but I think this is useful. Chances are that if you are reading this, you fall into one or more of a few categories:

• You are a benefits consultant of some sort
• You engage benefits consultants, at least occasionally
• You are an internal plan administrator
• You work with a firm that administers plans for others
• You manage or help to manage plan assets
• You are an attorney or an accountant in which case this may apply to you as well
• You are bored
• You just like my blog and enjoy reading it (I just thought I'd throw that one in on a lark)

Fact: I've never hired a benefits consultant. So, what do I know about what I would value in a benefits consultant? That's not the point here. I've worked as one and I've gotten feedback from clients and prospects.

Here are a few points that I have heard consistently over the years as being important.

• We want experts. We do not want people consulting to us who have the same level of knowledge that we do. We want people who have deep knowledge and understanding in an area and can use that to bring us a better solution.
• Don't miss deadlines! As a consultant, you often just don't know how critical this is. I think back to a very large former client of mine from a prior life, so to speak. I always thought we were doing well in this regard. The client was very demanding. We missed deadlines very rarely. I was having a periodic discussion with one of our key contacts to find out what we were doing well and what we could do better. She said (and while I am using quotation marks here, I am going from memory): "You are not bad at meeting deadlines." I was dumbfounded. I thought we were doing well. She went on, "You usually make your deadlines, but barely. If you promise me something on Thursday, I usually get it on Thursday ... evening. How come you never beat a deadline?" Ouch! That hurt, but it was instructional.
• This next one applies to consultants, but to attorneys as well. We want people who understand the rules, but will help us to run our business. We don't want people who will only tell us what we can't do, we want business partners who will tell us what we can do.
• We want communicators. As one CFO told me, "I am smart enough to learn this stuff, but I don't have time or the inclination. I want someone who can translate all this crap into my language and discuss it with me on my terms."
• We want integrity.
• We want creative solutions that cater to us. We don't want the same recycled solution that you gave to our competitors.
• And finally, GET IT RIGHT.

So, there you have it. I could write more, but then you would all fall into that category of being bored. If any of you have ever used me as a consultant or should choose to in the future, I hope that I follow these guidelines.

Time to Give a Few Thanks

After 25 years in the consulting business, I'd like to take a few minutes as Thanksgiving approaches to thank some colleagues -- past, present, and perhaps future -- for some important things I have gained from my work experiences from them. I'm sure that I am neglecting some who are deserving, but after all this time, I can't remember everything.

Those who know well may be surprised by some of these, but then again, they may not.

And, before I go any further, let me re-iterate that this is for people I have worked with; if I were to include others, I would have to start with my family.

• Thanks to Jim Donofrio, a colleague for many years and a friend, who taught me that it's not always good enough to answer the questions that the client is asking, but to always be sure to answer the questions they should be asking.
• Thanks to Steve Harrold for teaching me that the client is always right, but that any business decisions have to focus on BOTH sides. In other words, they need to be geared toward serving the client and toward promoting and ensuring profitability.
• Thanks to Jim Durfee for teaching me how to think about technical issues and how to communicate them. Jim was a master at his craft and I hope that he is enjoying the rocking chair that he said he was retiring to.
• Thanks to Brian Dunn and Rich Sternhell for instructing me in "Basic Consulting Skills" back in 1988 or 1989. Hardly a work day goes by that I don't use something that I learned in that class.
• Thanks to Tom Terry and to Don Segal for teaching me how important it is to support our wonderful profession.
• Thanks to Steve Gould for teaching me the value of continuing to learn about everything I could that can ever help me in consulting (the same would go for life, but Steve didn't teach me that).

Funny thing is, I would bet that if any of these people were to read this, they'd be surprised to learn what they are being thanked for. And, again, I know there are people that I have left off. Hopefully, the next time that I give professional thanks in writing, I will remember them as well.