Question from a reader --
Occasionally, a client asks me to do something that is against the best interests of their business. I already charge retainer-like, value-based fees, so thankfully this doesn't happen often, as clients usually view me as a trusted advisor and consigliere. They'll rarely pull rank and strong arm me into performing a task if I advise against it, which is nice (this happened much more often when I was on hourly rates).So, at the start of an engagement, I've been considering implementing a flat fee that gets charged when a client wants to pursue something against my strategic advice (say, $500). For higher priced clients, this fee wouldn't apply (as they already recognize my value, and follow my advice). But if I've given a discount at all, the tendency to pull rank rears it's ugly head. I'd still like to work with some of these clients, so the key, I think, is getting them to feel a little pain when they want to do something strategically inadvisable. What are your thoughts on this? Assuming you like the idea, what's the best way to frame it?Before I go any further, I've got to say I find it very interesting that I haven't had the word "consigliere" used in email to me since... well, a quick search shows my last "consigliere" reference was January 10th, 2011. And -- get this -- I got it referenced twice in the same day yesterday.
Is there a Godfather Series marathon on AMC or something?
But alright, let's get down to the faccenda at hand.
Everyone does stupid things. Some obvious, some subtle, some minor, some egregious. And worse yet, we all have our ego and vanities and areas we refuse to recognize that on.
Here's a quick answer to a complicated question --
1. Do you understand their motivations?
Let's say a client of yours wants to make a risky investment that offers a high return, but too high of a chance of busting in your opinion. You argue and argue and argue that it's a bad move to make. Nothing gets through. You get back, "I think it's a good investment," or whatever, even though your client isn't running the numbers.
This is frustrating, but especially so if you don't understand your client's motivations.
A lot of people want more thrill and excitement in their life. In Ramit Sethi's book I Will Teach You To Be Rich, his first chapter is titled, "Would you rather be rich or sexy?"
Aggressive investments, crazy schemes, well-branded things tend to be sexy. Lots of people want sexy, they want to be bold, they want to "make moves," or some such.
As a consultant looking out for your client's best interest, these "moves" might horrify you. You want to stop them. But that's impossible if you don't recognize their real motivation.
Here's the wrong way to progress that discussion:
CLIENT: I want to invest in this 3rd-world-government's high interest bonds.
YOU: It's a bad investment. Look at the historical default rates. Their government is about to fall over. Their banks are a mess. Their tax yields are low. Their debt is high. You'll likely lose your money.
CLIENT: I still think it's a good investment.
YOU: (more arguing -- which is well-intentioned but fails)
Better:
CLIENT: I want to invest in this 3rd-world-government's high interest bonds.
YOU: Why?
CLIENT: I think it's a good investment.
YOU: Interesting. Why?
CLIENT: Well, it's an exciting economy. Lots is happening there. I see it in the news. You've got to make risky moves sometimes to win.
YOU: I see. So you're looking for some excitement?
CLIENT: Well...
YOU: No, it's cool. As long as you're honest with yourself. Are you willing to suffer through it if their government falls out, can you handle that mentally or is it going to stress you out and take your mind off your business and making good moves there?
CLIENT: Hmm. Maybe not. I'll think about it some more.
Practical guidance: Ask why before you start answering. Find out real motivations. People are rarely driven by cold analytical analysis. (I love people who are, but they're maybe 1 in 10,000).
2. Are you disagreeing on the level of goals and strategy -- or tactics and execution?
Similar to the above, you need to figure out your client's motivation. Then, figure out on what level you're disagreeing.
Let's say you're in disagreement about the proposed budget for marketing in Shanghai. There's a huge difference if your client thinks Shanghai isn't a profitable opportunity vs. thinking that the budget was comprensive for doing everything possibly valuable in the Shanghai market and anything else would be a waste.
This is big, so look at that last paragraph again if you didn't get it.
There's a huge difference between your client disagreeing that an opportunity stands to be profitable and worthwhile, as opposed to disagreeing how to seize the opportunity.
Some companies, strangely, don't care very much about morale and retention and development of key staff.
Odd, I know, but good luck making headway with someone who is purely a cost-cutter on the value of making smart investments in developing and retaining the talented people they have. You're talking past each other in that conversation.
Figure out what level the conversation is on. Do you disagree about the relative value and merit of doing something, or do you disagree about how best to get there? It's good to slow down the conversation and say, "Hold on... I think Shanghai is a top 3 opportunity right now. What do you think?" If they disagree, you explain your rationale and let your client make the final judgment. Tactics disagreements are usually easier to resolve quickly than strategy disagreements, or at least to agree to disagree.
3. Are you handling the politics well?
I used to be bad at politics. I won't say much about it here, but people need to be in charge of their lives, feel good, look good, save face, etc. If your client likes to have their own ideas put into action (most but not all people do), then you'd better get client feedback early in designing plans and then build your interventions around their best ideas. If you can get 10-20 ideas when you're very early in the process, it's easy to put the best 5-10 into practice.
4. How much is at stake here?
If it's not a net-negative -- if it's simply a slightly inferior option that will still produce positive results -- then commit yourself to it after agreeing to disagree, and do excellent work.
If it's a net negative, you can draw a hard line -- something I rarely but occasionally do -- and say, "I believe this is against the best interests of you and the company, and I can't be part of it." In my experience, if you truly understand their motivations, if you know what level you're disagreeing on, and you give them the opportunity to save face, this will be received well. You run the risk of getting terminated or not engaged further if you do so this, but in my experience it's always been positive and it's a sign of good moral character.
As for charging them $500 to go against your advice? I think it communicates the wrong things. You should have clients go against your advice at least somewhat often, because if you've got a great dialog going, you can look into every element that's crucial to them, bring up provocative opinions, and challenge them even on core held tenets. This means getting into disagreement and still having a great, honest relationship after that. Some disagreement is healthy.
Final thought: Don't ever dig your heels in. Give your opinions and evaluations honestly, let the client know your relative certainty and confidence in your opinions, be firm when your certainty is high, but remember that by being flexible and exploring all options, sometimes you'll find a third way or fourth way that works -- or even notice that maybe the plans you didn't like at first are actually viable. We're all wrong occasionally, eh?