Professionalism and ethics in consulting

acceptance. There are various views and practices regarding required consultant competencies and the conditions of entry into consulting. The borders of consulting and its relationships to other professions are flexible, permeable and mobile and have recently undergone many important changes. Even now, and even in sophisticated business cultures, virtually anyone can call himself or herself a management or business consultant and offer services to business clients without any diploma, certificate, licence, credentials, recommendations or registration. This is the reality of the business and some observers feel that this loose and liberal framework has actually been beneficial to the growth of consulting and has enabled its flexible and fast adaptation to changing environments and client needs.

We can call management consulting an emerging profession, a profession in the making, or an industry with significant professional characteristics and ambitions, provided that we are aware of the gaps that need to be filled and improvements that need to be made. After all, it may not be so important to decide whether consulting is a profession. Consulting has demonstrated that it can exist and prosper without any such decision. More important are the quality and other standards applied by consulting firms and individual consultants, who can demonstrate their professional values and behaviour without waiting for the sector to achieve recognition as a fully fledged profession.

We will comment on these issues in the following sections, showing how the professional level and quality of management consulting can be increased.

6.2The professional approach

What then are the salient characteristics of a professional approach in management consulting? Some of them can be found, in succinct form, in the codes of ethics or conduct adopted by the membership organizations of management consultants; others are set out in information pamphlets of consulting firms. These are the norms held collectively, i.e. by the members of a consultants’ association or of a consulting firm that has formally declared what its ethical rules are. However, in many situations it is not possible to refer to a formal declaration of norms defining professional and ethical behaviour. In such cases the consultant has to be guided by a personal code of professional ethics and behaviour – his or her own conception of what is proper and improper practice, and what is beneficial to the client and the community and what is not.

The consultant is in a position of trust; the client probably believes that certain behavioural norms will be respected without their even being mentioned. Many clients believe that consultants would never use false credentials, and some clients are even unable to evaluate the consultant’s technical competence. The consultant may be in a position of technical superiority and possess knowledge and information that the client does not have. The client may then be in a position of weakness, uncertainty, and even distress (box 6.1).

Any consultant who seeks to act in a professional manner must clarify his or her own conception of ethics and the norms to be observed in working for

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Box 6.1 The power of the professional adviser

The “technical superiority” of the management consultant, and his or her “power” over clients, are often different from what can be observed in some other professions, e.g. in medicine. There are two main reasons for this. First, if there is a knowledge and experience gap between management consultants and their clients, this gap can be quite small. To many clients, management consulting is not a “black box”. Both the consultant and the client may have the same educational background and similar practical experience. The client may be quite well prepared for deciding to use or not to use a consultant and to accept or reject the consultant’s advice, and for controlling the consultant’s work during an assignment. Clearly, this is not the normal position of a patient who turns to a physician, or of a layperson who seeks legal counsel and in certain situations must retain a lawyer even if he or she would prefer not to. Second, management consulting is not a closed and highly protected profession. In most countries there are no jobs that are reserved to management consultants. The consultant’s and the client’s roles can even be interchangeable. Someone who is client today can be consultant tomorrow, and vice versa.

There are two typical situations where the consultant’s ethics are clearly put to the test: first, if the consultant does enjoy technical superiority because he or she works for an uninformed or technically weak client; and second, if he or she works for a client whose judgement has been impaired by distress and difficulties and who desperately needs help. Such clients may be very vulnerable and easy to manipulate, and the choice of the terms of the consulting contract, the intervention methods and the changes proposed can be very much in the hands of the consultant. Even if a participative consulting method is applied, the client may be subdued, not self-confident and a weak participant.

clients. This applies equally to external and internal consultants, as well as to anyone who intervenes in a consulting capacity.

Technical competence

The consultant’s technical competence is the basis of his or her professional approach. Above all, consultants must possess the knowledge and skills needed by particular clients. As a general rule, they must be able and willing to assess critically their own knowledge and skills when considering a new assignment or when reaching a point in a current assignment where different competencies are required. A professional consultant will never misrepresent himself, pretending that he can do a job that is beyond his competence, even if he is short of work and keen to get any assignment. The consultant who wants to tackle a new sort of problem (experience cannot be increased except by trying out something new) will discuss this openly with the client.

The difficulty is that in management and business consulting there is a lack of reliable and objective benchmarks for assessing competence to do a

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particular job to the client’s satisfaction. Consulting associations have attempted to define a common body of knowledge of professional consultants, and the type and minimum duration of experience which is a condition of association or institute membership or certification (see section 6.4). These, however, are general and rather elementary criteria of admission or certification, which cannot show whether a consultant is competent for a given task. They are not applied to consultants who are not members of associations or who do not seek certification. In addition, the work on developing a generally recognized body of knowledge for the consulting profession is far from being completed. The documents that are available from various consulting associations are useful, but cannot be regarded as normative texts establishing the knowledge base of the profession (see also Chapters 36 and 37 dealing with the careers and development of consultants).

Avoiding conflict of interest

During an assignment and within the limits of a consulting contract, the consultant’s competence and time are made available to the client, with the objective of achieving the best possible results in the client’s interest. Unfortunately, it is not always obvious what “client’s interest” means or what the client really expects from the assignment. There is often a conflict between the client’s short-term and long-term interests, or between interests of various groups within a client organization, but the client may not see this until the consultant brings it to his or her attention. In agreeing to serve a client, the consultant must be sure that his or her interests do not conflict with those of the client.

Avoiding a conflict of interest is one of the most delicate and critical issues of professionalism and ethics in consulting. There may be many reasons for this, including the complexity of business ventures and transactions in which consultants become involved as advisers or intermediaries, the multidisciplinary structure of many larger professional firms and the rather liberal interpretation of the meaning of conflict of interest in some cultures and countries.

Box 6.2 lists some situations where conflict of interest may not be obvious at first glance. Conversely, certain instances of conflict of interest are blatant and may be explicitly mentioned in codes of conduct. Thus, consultants may be required to disclose, prior to assignments, all relevant personal, financial and other business interests which could not be inferred from the description of the services offered. In particular this relates to:

●any directorship or controlling interests in any business in competition with the client;

●any financial interest in goods or services recommended or supplied to the client;

●any personal relationship with any individual employed by the client;

●any personal investment in the client organization or in its parent or any subsidiary companies.

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Box 6.2 Is there conflict of interest? Test your value system.

●An international consulting firm is an adviser to a government on a privatization project, although it has long-standing work relationships with a potential foreign buyer of the public enterprise to be privatized, and is actually executing, through another branch office and a different team of consultants, an assignment for this potential buyer.

●An auditor suggests that a client should turn to the consulting division of his professional firm with a specific problem that surfaced during the audit, although there may be other consultants who could do the same job better or for a lower fee.

●A consultant keeps an eye on a client’s staff and does not miss an opportunity to offer a job to the most talented among the client’s people, especially if there is dissatisfaction in the client organization and the consultant can offer a better salary. Another consultant pursues the same objective but waits several months after the end of the contract before approaching any candidate.

●A client does the same in respect of the consultant working for him.

●A consultant is pursuing an assignment step by step, rigorously respecting the work plan defined in the contract, although it is almost certain that she will get nowhere and the proposals will never be implemented.

●A consultant is a leading professional expert in a particular sector – textiles, automotive industry, machine tools, etc. This implies working simultaneously or successively for competing firms, which may or may not know about it. What is the difference between providing the best sector-related expertise to every client, and leaking information from one competitor to another?

●A consultant who has been adviser to a number of public sector companies to be privatized participates in establishing an investment fund, or becomes adviser to an investment fund which takes a financial interest in these companies during the privatization process.

It should be noted that other professions and their public regulators are also concerned about issues of conflict of interest. In the accounting profession, relationships and activities that can impair auditor independence and generate conflict of interest between auditors and their clients have been debated for years. The debate has been difficult and definitive solutions that would be regarded as fully satisfactory by all interested parties have yet to be found (see box 6.3).

The question whether to “empower” a client by sharing expertise, transmitting know-how, and providing training in conjunction with advice, is another complex issue in which conflict of interest may arise. In the previous chapters we have said that a professional consulting approach has a strong learning dimension. To “help clients to learn to help themselves” is a fundamental objective. However, a general declaration of a noble principle is not enough. The consultant must be sure that the assignment is so designed, and the client so involved, that the consultant will pass on to the client knowledge and expertise.

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