In the years following the 2008 recession, businesses are regaining their momentum, and the economy has begun flourishing again. In the wake of the most ferocious financial earthquake of the last 80 years, society continues to feel its tremors. Is this a sign of evolvement and growth? Or is it a warning of a more catastrophic phenomenon on the horizon? Unemployment is down and a majority of economists are optimistic about the future. Organizations are expanding globally, and leaders are striving to attach their names to their companies’ successes. But is this enough? Is success and welfare the only measures of success? Do leaders of organizations decide in favor of the well-being of their enterprises, or do they follow their own narrow ambitions? The pursuit of personal interests is the initiator of a capitalist economy, but that does not justify actions that harm organizations, the people they serve, or society as a whole. So the “do no harm” business ethics debate rages on, expanding and infecting the “trusted advisers” of the consulting industry.
Consultants Should Do No Harm
In management consulting, executives and consultants are primarily responsible for creating value and safeguarding the interests of their clients, however they should also protect society by pursuing their goals in an ethical manner. Of course, they focus on their clients’ businesses making sound profit, shareholder equity and continuous growth, but it is also their responsibility to align the interests of their clients with the general good.
They have an obligation to recognize that there are multiple stakeholders, customers, employees, society and the environment, not just shareholders and management. They should act with the utmost integrity, and serve the greater good, with an enhanced sense of joint accountability. It is vital to realize that their actions have profound consequences for everyone, inside and outside the organization, now and in the long run. Consulting companies, should focus more on ethical guidance, as they hold significant influence over many companies’ strategy and plans.
Consulting companies (strategy, management, accounting, etc.) have an obligation to advise their clients on how to build their successful enterprises on a solid foundations, and to help them achieve sustainable economic, social, and environmental prosperity. It is their responsibility to not distort or hide the truth behind facts, but to explain the truth and promote transparency. They must also demonstrate to their client’s ethical ways to achieve their goals. But is this what is happening today? Human Resources
Double-dealing, Fraud, Corruption, Insider trading and that’s just the tip of the iceberg
If we take a close look at incidents that have occurred in the recent past, we find a rotten record of behaviors in the management consulting industry. Numerous examples exist of partners and employees of major management consulting firms being involved in illegal and unethical scandals, in efforts to retain clients and to harvest personal gains. This is a common among people who put their profits before customers.
An example of the crisis we face in consulting is that of a former partner of a global consulting firm, who was sentenced to prison for 21 months because of his involvement in insider trading. This executive was a liaison between the consulting firm’s auditors and the audit team of the clients. He had access to non- public information, such as planned or potential acquisitions, quarterly earnings, etc. From 2006-2008 he illegally used inside information for personal and family market gains. Finally, after the scandal was revealed, the SEC brought charges and the firm sued him. He ended up paying significant penalties and being sentenced to prison time. Shouldn’t the consulting firm have been aware of its employees’ actions, and made an effort to instill ethics in them?