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Pay Me More

As the consulting firm grew, I hired more consultants, both full- and part-time. They were paid a percentage of billable time. In the boom times, I paid consultants 50% of our hourly fee. That was really too much. Most professional service firms do 1/3-1/3-1/3. One-third for the sale. One-third for service delivery, and one-third for overhead and profit. When our outplacement business slowed down because the economy improved, we reduced consultants' compensation to 40% of the hourly fee. Under this system, hardworking consultants could still earn $100,000-$125,000 per year.

In 1995 we had a windfall year. The price of oil was at an all-time low, and one of our oilfield clients in Houston laid off several thousand employees. I hired Nick Guiscard, a departing human resources executive from the client company, to work for us as a consultant. He delivered so much business we opened a Houston office. Our ads declared, "We tried to stay small--but failed."

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February 19, 20—

Nick Guiscard
Vice President
CareerLab
11603 Banner Drive, STE 1600
Houston, TX 77500

Dear Nick,

This is a response to the events of the last several weeks, and to your e-mail requesting a change in your compensation.

As promised, I spoke with management consultant Mike Gaggenau about the issue. Mike helped me get the company started in the early 80s, and he has helped me with business planning issues ever since.

I don't know the details of Mark Hamilton's situation—if he's made a personal investment in the company—possibly he did. In any case, Roth & Gjelten is a 59-year-old company with 55 offices worldwide, and they're in an entirely different industry. Their fees are also double what ours are (30% of first year's compensation). They are certainly better capitalized than we are.

A more fair comparison would be with our competitors. How much do DBM consultants make? Contractors make $30-60K. Consultants earn $45-90K. At least that's what I'm hearing.

CareerLab is an S-Corporation. That means we don't retain earnings. We spend our revenues in salaries and improvements to the company. We don't build assets the way a C-Corporation does. This is perfectly normal; in fact, an S-Corporation with a high net worth is considered to be poorly managed. And this is how most professional firms are structured. They exist primarily to pay salaries to the professionals in the firm.

Regarding your salary: You said Mark Hamilton must have been a better negotiator than you. I don't think so. First of all, we don't know 100% of his contract—what pound of flesh they've extracted. I believe we only know part of the story.

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25 Reasons I love consulting.
by William S. Frank

Brand. You are your own brand, and you can define it any way you want. For many years, I provided outplacement to the ex-employees of Schlumberger, the world's largest oilfield service corporation. When departing employees left the company, they didn't request outplacement in their severance package. They said, "I want Bill Frank."
Demand. The world will always be full of terrible problems that need solving.
White Hat. I can be a helper and get paid for it.
Pay. I can be paid to do things I'd gladly do for nothing.
Variety. Every day is different.
Happiness. At this stage of my career, I only work for people I respect and care about. If a client micromanages me or is otherwise no fun, I complete the assignment and replace them.
Talent. I'm using 110% of my talents and stretching myself to the max.
Change. I can change my focus any day I want. If you're a McDonald's franchisee, you don't say, "Hey, I've got this great idea for a meatball sandwich—let's try it out today." In consulting you can adjust your focus hour-by-hour, as long as your clients still understand and appreciate what you do.
Income. No one else would pay me as much as I pay myself.
FUN. I can't think of anything I'd rather be doing.
Retirement. I can write and consult as long as I am physically and mentally capable. Peter Drucker worked into his 90s, and when asked which book was his best, he said: "My next one."
Job Security. Although clients come and go, no one can come into my office and say, "Pack up your stuff . . . You don't work here anymore." In 29 years, I've only had one employer: ME.
Travel. I don't have to travel unless I decide to. I travel if it's both FUN and profitable—or at least FUN.
Commute. I live five minutes from my office, a corner office in an upscale six-story tower. In winter, I leave a heated garage at home and drive to an underground heated garage at work. There's seldom time to hear even one song on the radio.
Vacation. Consulting is more fun than vacation (except on Wailea Beach in Maui).
Friends. I have developed hundreds of close acquaintances and several lifetime friends.
Time. I can work as much or as little as I like: four-hour days or 18-hour days. (Of course, my income will reflect that.)
Employees. I can work with employees, subcontractors, partners, or alone—I've done it all.
Passive Income. I've developed several products that provide "mailbox money." I earn while I'm sleeping.
Ethics. I've never had to violate my values or personal code of ethics. I've never had to lie, purposely deceive or harm others, or promise things I can't deliver. I go to bed with a clear conscience. That doesn't mean there's never any conflict. But the conflict is conducted according to generally accepted business practices.
Virtual. My career is fairly portable. With the Internet, e-mail, cell phone, and FedEx, I can work nationally, even internationally from my office—or anywhere in the world.
Purpose. I make a difference in peoples' lives every day. I see it in their faces, hear it in their voices, and read it in their thank-yous.
Experience. Every painful or joyful life experience makes me a better consultant. So does every person I meet or book I read. Grey hair can be good in consulting.
Structure. I have to work very hard, and the clients expect superb results—but I get to structure my days, weeks, months, and years.
Boss. Most of the time, I love my boss.

As I was posting these letters online, I realized I want to communicate my love for consulting. It's just a great business. The single letters, taken together, may create a picture of enjoyment, but in a burst of creativity I listed some of the reasons consulting is such a good fit for me—and perhaps for you, too. They are not prioritized; this is just how they came out.