Are Consulting Firms Compromising Their Integrity?
by David Maister 2002
A reader of my website (www.davidmaister.com) recently posed the following question:
“Do you think many professional firms are compromising their integrity in favor of money? The more competitive their environment and the larger their firm, it seems the pressure to maintain or increase revenue, is just too great. Are professionals in such firms, just high-paid technicians, if the driving force from the firm is to make money even if this means risking reputation. In a post-Enron professional world, what is your take on this? Please be brutally honest.”
While I believe in being honest at all times, being brutally honest has gotten me into a lot of hot water, so I’ll try to be respectfully and delicately honest.
There clearly are those firms out there that send a clear message to their people “It’s about the money, stupid: do whatever it takes.” I have experienced first-hand consulting clients who create such pressure to meet short-term financial goals that their people are led into faking orders, padding bills, neglecting client service and beating their staff to a pulp. In fact, if you read the bulletin boards on the internet about consulting firms (especially the one with the unprintable name) you can easily conclude that such behavior is more common than not. If this is true, (particularly since the web makes whistle-blowing so easy) the question is: why does it happen? Is such behavior truly beneficial to the health of the firm?
It’s difficult to provide hard science, but my twenty years of watching consulting firms leads me to believe that, in consulting, you can’t get away with a lack of integrity (or ethics) for long. I’d risk the generalization that the consulting firms that have flourished the longest, have the best brand-names and (over time) have the highest profits clearly have more vigorously enforced values, standards and principles. My book, Practice What You Preach, provided solid evidence that the highest performing professional businesses were led by mangers viewed by their staff as being people of the highest character, integrity and standards. Similarly, Collins and Porras, in Built to Last, showed that the most successful US corporations combined a vigorous pursuit of profit with a purpose beyond profit.
If all this evidence is valid, why then is excessively risky short-term behavior reported to be so common? Why do we keep hearing of managers “forcing” their people into behaviors that, at its kindest, can be described as “cutting corners,” and at its worst, as unethical?
The most important point to make is that you don’t have to be unethical to be dumb. As my questioner put it, firms are doing things to make short-term profits that put their reputation at risk. That’s not necessarily a lack of integrity, it’s just stupidity. And, at some level, it’s even understandable stupidity. A slightly compromised reputation might hurt you tomorrow, or the day after that, but, hey, that’s the future, and you wouldn’t believe the discount rate we apply to profits in the future compared to today! (And we’ll have a year or two to make up for it, won’t we? And maybe the clients will forget that we weren’t that great two year ago!) Call this the short-termism excuse.
There are others. I have sat in strategy meetings where firm leaders acknowledge the future cost of compromising reputation, but argue that, by the time it hurts the firm, they will have made their pile and cashed out. These people aren’t really short-termers, they’re just selfish and greedy.
Then there are consulting firm leaders who don’t really believe their own mission statements, vision and strategy. They say that they believe that a reputation for excellence is worth its weight in gold, but they are not willing to actually put the proposition to the test. For example, how many firms that preach a dedication to outstanding client service are willing to give an unconditional client satisfaction guarantee? These people are not being excessively short-term thinkers: they are cynics and unbelievers. They don’t really think that building or sustaining a reputation is worth sacrificing any amount of short-term cash.
Let’s keep going. There are firm leaders who are not short-term thinkers, are not greedy, are not cynical: but they are scared and lack courage. They’d really like to accept a short-term hit to stick with their strategy and standards, but they are frightened to take such a risk, either because they think their partners will rise up and revolt (which is actually quite possible) or (if they are publicly held) that Wall Street will wipe a substantial chunk of their market value out overnight if they miss a quarterly target (also distinctly possible, maybe even very likely!)
A final group make short term compromises and acts of expediency because they actually don’t have ambition. To accept a short term adverse consequence, you’ve got to have a passionately held ambition to get somewhere. Otherwise, why would you make sacrifices? Yet many firm leaders are more concerned about “not messing up” than they are about “going for the gold.”
So what have you got to be as a person to “do the right thing?” You have to have integrity, AND really believe in your strategy, mission and values AND have a dream, fervently desired, AND have the patience and courage to bet on the long term, AND resist palpable pressure from the constituencies you serve AND be willing to accept the short-term consequences of your actions. This all takes a level of self-discipline that few of us measure up to.
I guess that’s why it’s not common. And I guess that’s why they call it leadership.
Copyright 2002 David H. Maister. Published in CONSULTING, May, 2002.