The Complex Ethical Issues of Business Consulting
...roject ahead. The phrase is: ˇ§It is easier to ask for forgiveness than to ask for permission.ˇ¨ In the context of business consulting ethics, however, this is a poor model to follow. In fact, when dealing with ethics said model serves best when reversed it: ˇ§It is better to ask for permission than to ask for forgiveness.ˇ¨ The reason is the stakes in behaving ethically in business are excessive. One sees weekly, if not daily, in the news media report how one individual made a unfortunate ethical choice that caused tragedy in a company. One choice may impact hundreds or thousands of employees and customers. With the results of ethical decisions that magnitude, it is better to ask for permission before one acts. As mentioned before, business consultants are expected to continually do what is in the best interest of the client company as well as what is ethical. CASE STUDY: ANDERSEN Andersen employs approximately 65,000 people in 48 countries. Numerous consultants flock to this Big Five firm because it serves several large, well-respected clients, and because it a commands a hefty price for its work. Andersen's national recruiters must fill 4,000 to 6,000 consulting slots each year in the United States. Approximately 65% of these are entry-level positions; the rest are in senior management. In the novel "Final Accounting: Ambition, Greed and the Fall of Arthur Andersen," Toffler and co-author Jennifer Reingold tell the story of a company that rotted from within as it chased auditing and especially consulting fees. That drive turned employees into back-stabbing rivals and put the firm in competition with its successful sister, Andersen Consulting, which had spun out from the accounting firm. Toffler tells of pressure to overcharge clients or to push unnecessary services. She tells of Andersen employees vying for the same fees, seeking to undercut one another's presentations before prospective clients. Toffler describes the common practice at Arthur Anderson of pressure to overcharge clients or to push unnecessary services. She relates paints a picture where Andersen employees, vying for the same fees, seeking to undercut presentations of fellow employees before prospective clients. This practice, though common between businesses, is almost unheard of within a company. This intrinsically unhealthy approach to business consulting clearly contributed to the woe experienced by Andersen. THE NEED FOR A CONSULTANTˇ¦S CODE OF ETHICS Some evidence that business consultants need to have a formal code of ethics is evidenced by Senate Bill 220, Nevada State Senate's Committee on Commerce. This bill proposed that all management consultants be required to pass an ethics exam and to pay a licensing fee to the state. Any consultant who failed to comply and who was caught consulting without a license would be subject to a fine levied by the state (Nevada Law Library). Though this may simply be a ploy for the state to pull in additional tax revenue on a business process occurring in the state, similar to the concept of ˇ§legalizingˇ¨ and ˇ§licensingˇ¨ prostitution, it is unlikely that the bill was written without some degree of consumer complaint. If a code of ethics is so important, why hasn't a group of consultants simply mobilized and established one? "Consultants are not joiners by nature," explains Tom Rodenhauser, a veteran consultant watcher and publisher of the Rodenhauser Report, an industry newsletter. He continues to explain, ˇ§Industry associations have never taken off, because a CEO of a major corporation knows that he does not need an corporate permission in order to have lunch with someone from IBM.. Rodenhauser also notes that there are hundreds of thousands of consultants in the world, but no single association represents more than 3% of them; which, in and of itself, is a sign that consultants are as hard to manage as a herd of cats. (Chadderdon) What would one hope to gain from developing a busin...