I concluded a few years back that rates based on time at work only help to put you into a pigeon hole so that HR and Purchasing can easily classify you. Knowledge professionals are not pigeons.
I have noticed a tendency over the past decade to push wages and fees down. Some may say it’s just the supply and demand conditions of the market. I think it’s the idea that human labour is a cost and it’s best to keep costs down, especially when CEO’s are still focused on increasing shareholder value. Short term objectives rule in this type of market. I recently spoke with someone who had left a large corporation after 30 years. He said that the constant pressure to keep increasing sales, year over year, was too much. The executives were only focused on the spreadsheets.
Large consultancies ensure that when they do work it is wrapped in large documents with fancy presentations so it looks big. But the value is not in big. The value for consulting is actionable insights. Can and will the client do something after the consulting engagement? If not, it was a waste of time. Sometimes the advice appears to be very simple, and therefore appears to be of no value. But master practitioners often make their work look simple.
My wife is an artist and a crafts-person. For example, she can make the creation of a unique garment look simple. People don’t want to pay what it is worth because they do not understand the craftsmanship. How many people can create a perfect-fitting custom-designed garment? Most people do not have a clue how many skills and how much experience this takes.
I have frequently provided advice that has saved clients many of hours of work or hundreds of thousands in expenses. The advice often did not take a long time for me to provide, but it took a long time to learn. What the good consultant provides is not visible but it has great value. Charles Proteus Steinmetz, the Wizard of Schenectady, made this clear to Henry Ford over 100 years ago.
“Ford, whose electrical engineers couldn’t solve some problems they were having with a gigantic generator, called Steinmetz in to the plant. Upon arriving, Steinmetz rejected all assistance and asked only for a notebook, pencil and cot. According to Scott, Steinmetz listened to the generator and scribbled computations on the notepad for two straight days and nights. On the second night, he asked for a ladder, climbed up the generator and made a chalk mark on its side. Then he told Ford’s skeptical engineers to remove a plate at the mark and replace sixteen windings from the field coil. They did, and the generator performed to perfection.
Henry Ford was thrilled until he got an invoice from General Electric in the amount of $10,000. Ford acknowledged Steinmetz’s success but balked at the figure. He asked for an itemized bill.
Steinmetz, Scott wrote, responded personally to Ford’s request with the following:
Making chalk mark on generator $1.
Knowing where to make mark $9,999.
Ford paid the bill.”
Time is not money. Value is getting actionable insights. Ford was able to take action on Steinmetz’s insights.