Foundations of Consulting — Part 5: Internal and External Consultants

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    Welcome to this six-part series on the foundations of consulting. If you have not been following along with us, then we encourage you to read parts 1-4, referenced from the bottom of this article. Part 1 establishes the basis for the series by using Peter Block’s definition of a consultant as someone who is trying to change another person, process or organization, but who has no direct control over what they are trying to change. (We highly recommend his book “Flawless Consulting.”) This article describes the many commonalities between external and internal consultants.

    Most of the literature about consulting applies to external and internal consultants — they have much in common. An understanding of the roles of each helps externals to more fully understand those whom they work with in organizations. It helps internals to appreciate and apply the many guidelines for consultants, as well. Here’s an overview of each role, including what they have in common and what is different between each.

    What Is an External Consultant?

    An external consultant is someone considered not to be an official, ongoing member of the organization. The relationship of the consultant to the organization is determined usually by a project’s contract or Letter of Agreement. He or she is paid on the basis of a particular project having certain desired results and deliverables from the consultant. Payroll taxes are not withheld from the person’s paycheck – the person pays their own payroll taxes.

    What Is an Internal Consultant?

    An internal consultant is someone considered to be an official, often ongoing member of the organization. The relationship of the consultant to the organization is determined usually by a job description and various personnel policies. He or she is paid on the basis on their ongoing role in the organization. Payroll taxes are withheld from the person’s paychecks.

    Differences Between Internal and External Consultants

    The extent of differences between both types of consultants depends on the type of consulting provided by the consultants and how the consultants choose to work. For example, technical consultants are often perceived as having highly focused and credible skills that are seldom questioned. They often use similar skills and tools to get the job done. The results of their services are often quickly determined. Thus, members of an organization might perceive little difference between this type of internal and external consultant.

    In contrast, consultants focused on organizational and managerial development usually have to establish their credibility over time. Their skills are sometimes highly questioned – members of the organization might even be skeptical of the need for any change in the organization. Results of the consultant’s work can take months or years to realize. Consequently, members of an organization might perceive huge differences between these types of consultants.

    Official, legal and administrative differences are often easy to distinguish. However, for several reasons, the differences are disappearing between consultants guiding organizations through change. Internal and external consultants are learning similar kinds of best practices and approaches for change. Both types of consultants often focus on highly facilitative approaches to working with clients. Both types of consultants, if they are committed professionals, adopt similar overall goals and working assumptions as consultants.

    Traditionally, internal consultants are considered to be members of an organization whose primary job is to assist other people working in other areas of the organization. Often these internal consultants are in large organizations and from training and development or human resource departments. The typical small business usually does not have the extensive range of resources that warrants having an internal consultant.

    Traditionally, an internal leader would not be considered an internal consultant. However, that perception is changing. With recent emphasis on the importance of using a highly facilitative and collaborative leadership style when guiding change, leaders are beginning to operate more like internal consultants for change then ever before. Consequently, some would consider leaders in the organization to sometimes play the role of internal consultants.

    See the following table for a concise comparison between external and internal consultants.

    Look for the articles in this series, including:

    1. What Do Consultants Do?
    2. How Do Consultants Work?
    3. Most Important Goals and Working Assumptions of Consultants
    4. Major Types of Consultants
    5. Internal and External Consultants
    6. Good Reasons – and Poor Reasons – to Hire Consultants

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    For more resources, see the Library topics Consulting and Organizational Development.

    Information in this post was adapted from the book Field Guide to Consulting and Organizational Development by Carter McNamara, MBA, PhD. For training on consulting skills, see the Consultants Development Institute. For more resources, see the Free Management Library’s topic All About Consulting .

    Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 800-971-2250 Read my blogs: Boards, Consulting and OD, and Strategic Planning .