Do Ethics Still Matter in Management Consulting?

By: Dwight Mihalicz

What is happening in our world? Are Ethics even a thing anymore?

A name once synonymous with excellence has been tarnished. And it has stained at the same time the global profession of management consulting. McKinsey and Company agreed to pay a US$573 million settlement for its role in the American opioid crisis. For almost a century McKinsey has been a leader in helping their clients be more successful. The Economist reported that the McKinsey moral compass has gone haywire most likely because of “the lure of lucre”.

McKinsey, as does any consulting firm, sees itself as building on a platform of trust. To provide effective services to clients, clients must trust the professional they have engaged. Clients must believe that the management consultant who is providing them with guidance and support has their best interests at heart.

This is where abiding by a code of professional conduct and ethics gets difficult. McKinsey reportedly continued to advise Purdue (the maker of OxyContin) even after Purdue pled guilty in 2007 to federal criminal charges that it had been misleading the public about the risks of OxyContin. One cannot argue that a management consulting firm must create added value – revenue and profits – for its clients. But should it do this at any cost? Do ethics stop at the profit and loss statement, or do they extend to the end-result of the intervention?

As the Chair of the International Council of Management Consulting Institutes (ICMCI), the global membership body for Institutes of Management Consulting, I can attest that our code of conduct as professionals, which includes ethics, is critically important to us.

Every management consultant that joins an Institute must sign a Code of Professional Conduct, which includes ethical behaviour. In my own accrediting Institute, in Canada, my first accountability is to the public. Then to my profession. Third to my professional colleagues. Then, finally, to the client. Of course, I cannot pick and choose to which I abide. I am accountable to my peers in my Institute to abide by them all. It is not an accident, though, that “Public Protection” is very high on the list.

Is “the lure of lucre” undermining those things that we hold dear in terms of how our actions impact on others? Bear in mind that the opioid scandal events were unfolding roughly in parallel to the banking scandals where banking institutions paid out billions of dollars for misconduct allegations. As a quick reminder – banking financial advisors were selling unneeded financial instruments in order to meet their sales quotas.

Did any CEOs or Executives in the banking industry wake up one morning and decide to defraud their customers? Of course, not. But decisions in terms of revenue and profit targets must ultimately impact the organization’s clients.

These decisions result in real world consequences. Executives drive sales targets throughout the organization. Financial advisors resort to unethical means to generate sales. Clients end up with unnecessary products and unnecessary fees. In early 2020 Wells Fargo, one of the largest banks in the US, agreed to pay US$3 billion to settle in civil and criminal probes. The CEO of the day, Charlie Scharf, was banned from ever again working in banking and paid a personal penalty of $US17.5 million.

So, are Ethics still a thing?

These two examples are extreme but reflect increasing numbers of scandals that have a negative impact on increasing numbers of people. There seems to be a growing perspective that material success is important at any cost.

I cannot speak for all professions, but I can speak for mine.

Management consultants have a very important role in the value-chain. They can help client organizations be more successful by providing them with access to best practises, support in implementing sustainable change, and in general helping CEOs and owners drive sustainable success.

As a profession, our code of professional conduct is fundamental. Each professional management consultant is accountable to all the peers in the Institute for professional conduct in all ways. Those of us who go on to become Certified Management Consultants (CMCs) must demonstrate our competency through experience, training and demonstrated success with clients. In fact, our vision as a global organization says as much about our society as it does about the profession:

ICMCI will be the leader in the development of
management consulting as a profession that drives social and economic success.


 

Certainly, we are about the improvement and success of the profession, but only in the context of driving social and economic success. This is reflected in our Code of Professional Conduct and must be reflected in every project we undertake with our clients.

If you are a client organization, select a consultant who is a member of an ICMCI Institute, or even better, a Certified Management Consultant. This designation is portable around the world. It is recognized in every country of the world, through either a land-based Institute or the virtual Global Institute.

We cannot let “the lure of lucre” determine which projects we will take, and how we will support clients.

As professionals, we need to weight not only the good we can do for a client, but also the impact it will have on our society.

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About the Author — Dwight Mihalicz

Dwight had been a management consultant practicing in Canada and around the world for over 20 years. He has volunteered extensively in his career, having served as Chair, UNICEF Canada, as Treasurer and Chair of the International Council of Management Consulting Institutes (ICMCI), and a number of other national and international bodies.

Dwight has founded and is President of Effective Managers™, a management consulting firm based in Canada, providing services globally. The firm uses The Resilient Organization Program™ help Owners and CEOs find and fix root cause problems that hinder success.

Dwight can be reached through: www.effectivemanagers.com