The Ethics of Consulting

picture-of-business-ethics

TLAC caught up with Steve Shu, well-known management consultant and Assistant Professor of Marketing at Irvine University, for an interview on one of the least discussed topics of consulting—business ethics.

TLAC: How do you define ethics from a business perspective?
STEVE: On the surface, ethics means “doing the right thing”. It means doing things that are both legal and consistent with moral values and principles of the stakeholders. Situations may not always be clear-cut, but if one maintains integrity and follows a diligent method for dissecting cases, these are great steps for walking the right path. In an ethics framework I recently taught, the first dimension to look at is to determine whether something is legal or illegal first.

The next thing is to look at the ethical versus unethical dimension based on *each* of the following: company code, personal values, business, and societal norms. Each dimension should be rated separately because one can have take actions that are legal-unethical, illegal-ethical, etc. Alternatively, actions may be ethical from a company point-of-view, but one may have personal qualms. Once one has determined where things land, one can move on to evaluating options and determine what actions to take.

TLAC: What types of ethical situations might arise in a consulting practice?
STEVE: I’ve never done a comprehensive analysis of ethical situations that can arise in consulting situations, but a couple come to mind surrounding 1) peer consultant gossip and 2) how project findings are analyzed and framed.

On peer consultant gossip, these situations can arise more often in consulting situations due to the short-term nature of projects. Whereas teams in corporations may be more stable, consulting engagement teams are often fluid and have members that may only work together once in a while. Things like informal feedback on peer consultants, especially when feedback may be negative, can cascade rapidly and consultants should be extra careful because observation periods may be small and people may not know each other as well as they would in an ideal world.

As for how project findings are analyzed and framed, I’ll only address one type of situation. Having most recently worked in the capacity as a management consultant within a large, equipment vendor company (as opposed to a pure consulting company), one of the questions that often came up was whether a consultant’s recommendations could be viewed as neutral. Would the consultant be biased towards his or her own company’s equipment?

I estimate that 2/3 of client prospects would not use a management consultant from an equipment vendor, regardless of either the ethics of the vendor, the skills of treating the management consulting practice like forensic science, or ability to weigh out of situations that pose a conflict (e.g., vendor selection as opposed to general business strategy and business case). Management consultants who are neither aware of their biases, transparent with their biases, nor work to eliminate biases and conflicts will have a short life in consulting.

TLAC: What are the best ways for a consultant to handle a client who appears to have unethical practices?
STEVE: Fortunately, I have not been posed with many situations that are obviously troublesome. One area that comes to mind, however, is when a client asks a consultant to perform competitive intelligence, especially when soliciting for primary market information. Let’s say that a client has asked you to masquerade as customer and try to obtain information on a competitor (e.g., on pricing). Some company codes of ethics would strictly disallow this, as would many people’s personal ethical value system.

What I would try to do in these circumstances is to rework the problem statement and methods with the client. For example, perhaps the problem statement may be more about getting higher confidence in prospective pricing levels that the client is looking to put in the market as opposed to getting the exact pricing levels from the competitor. With the problem statement refined, you may find opportunities to solve the client’s problem in a more palatable way, such as through running focus groups with customers or industry distributors, conducting benchmarking studies, and other approaches.

TLAC: Alternatively, when should you drop a client whom you suspect of unethical practices?
STEVE: First, put things in perspective. On the one hand, there is the severity of the unethical practice and the law. A consultant may not be an expert in either one, so you may need to seek advice from other management and peers, perhaps counsel in extreme cases. A consultant also needs to think about what his or her real role in a client organization is (often a consultant is not brought in to fix a client’s ethics).

Also, when dealing in international settings, it can be particularly difficult to calibrate oneself because many value systems are in play (your own, your company, client company, country culture & social norms, etc.). One of my former consultants relayed a story to me about how it was customary for a manager in one client environment to slap their subordinates in the face when they were out of line. May be bizarre in some environments but perhaps such a practice is more accepted in other parts of the world.

TLAC: What kind of ethics guidance would you provide to people who are new to consulting? How can they be sure their practice is ethical?
STEVE: Presuming that you have built up a set of skills that enable you to practice consulting as a science (e.g., getting financial skills, recognizing inherent managerial biases and blind spots from organizational behavior training), the next steps are to dive in. For people new to consulting, gluing the consulting deliverable and practice of the craft together is something that one needs to learn from mentors in the field.

As you get into the engagements, when ethical questions come up what I would suggest is that you follow the chain of command properly. Circumstances may allow you to solicit information from peers, but you should try to work first with the workstream lead, then the engagement manager, then the principal, or partner director for the project. The reason for following the chain of command has to do with some of the reasons I’ve suggested above—many times ethical situations on a client project can be addressed by directly refining the problem statement for the project. Things that cannot be solved via adjusting the problem statement would need to be addressed by those that have more ownership of the client relationship (e.g., engagement manager, principal, or partner).

TLAC: Thanks Steve for tackling this difficult issue!


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