Consulting & human capital: Questionable ethics
The ongoing talent war in Middle East consulting requires ethics, not just aggression
When Executive asked Joe Saddi, senior partner in PricewaterhouseCoopers’ premium consulting arm Strategy&, and before that global chairman of predecessor firm Booz & Company, if there was a shared greatest challenge for Arab companies, he answered without a hint of hesitation: “There is. It is capacity building.”
Our subsequent research into the defining challenges of consulting firms working in the Middle East and North Africa (see story page 16) led us to conclude that there was a more than slight whiff of irony to that answer. As evidenced by the regional consulting industry’s ongoing talent war — which is a symptom of a shortage in human capital — the strengthening and development of human capital appear to be still an enormous need not only for the average Arab corporation but also, and perhaps more crucially, for any player in Big Consulting attempting to cover the region with competent services.
In a second finding of our brief research into regional consulting, we can again confirm that Lebanese talents, trained at our business schools and universities, rank with the top, if not totally at the top, of the region when it comes to supplying native management consultants across the entire advisory industry in the MENA region.
At the same time, however, as Executive encountered evidence for the need of improvement in human capital standards and ethics across the region’s consulting ranks, a Lebanese element to these problems seemed unmistakable. When checking social networks for regionally based seniors and juniors of all consulting levels who had recently defected from Booz — by its own claims the region’s dominant premium consulting firm — the resulting list of names reads like something from a directory of Lebanese university graduates, stretching from Abou Jaoude to Khoury and from Matar to Ziade. If a greater than usual human capital battle has recently been playing out behind the scenes of the regional consulting industry, Lebanese, it appears, were right at the center of the fray. The two basic findings of our investigation highlight a number of needs: first, the need to address the still persistent deficits in the number of superbly qualified local decisionmakers in regional corporations. This need requires that companies accelerate the formation of native Arab human capital.
But the fact that consulting firms appear to be embroiled in a regional talent war is also a reminder of more fundamental needs, beginning with the imperative that even wars need ethics. It would be silly to assume simple good vs. bad, black against white categories for antagonists in a talent war among top consulting firms. Consulting firms operate in the capitalist system and are subscribing by default to capitalist ideals of self fulfillment and gratification of greed amidst harsh competition, not to monastic ideals of denying world and self or socialist theorems preaching ‘from each according to his abilities, to each according to his needs’.
Seeking control of vital resources is integral to the contemporary capitalist environment and all protagonists will follow the ‘survive and succeed or be swallowed’ logics of competition, including talent poaching and headhunting, and use every trick in the book of how to win clients and bring competitors down.
Even under those paradigms, however, rules of conduct and proven best practices must be respected if one does not want to lose the real war by destroying one’s own assets of credibility and reputation. For example, if a consulting organization in the Middle East describes the audit conflict — the problem that destroyed huge economic value in the United States some 15 years ago — as mainly a matter of the jurisdiction where you operate and thus not applying to many countries in this region which don’t have the requisite laws against overlapping consulting and auditing, the occurrence of a MENA Enron or Tyco case sounds like just a matter of time.
Under such a scenario, the self destruction of any implicated double provider of auditing and consulting would be pretty much guaranteed and not be a question of laws but of failure to learn existential business lessons.
The negative consequences of ethical failures apply by necessity to both organizations and individuals and the higher the visibility, the greater the consequences. A consulting organization will risk facing incredulity if it, for example, proposes to instruct a client company in employee training and talent retention, but cannot demonstrate a track record of providing a career path that motivates its own consulting workforce.
And by way of other purely hypothetical examples, management consultants who massage their own career histories can certainly teach lessons to managers. But will these be the right lessons? Strategic consultants who have a totally superior view of themselves and who calculate their billable time based on their own inflated sense of importance can also certainly convey messages on profit maximization and impart such lessons to corporations. But can such strategies be sustainable?
Consulting organizations of high repute of course swear by their ethics. For one pertinent example, the historic parent of both Booz Allen Hamilton and Strategy& had a code of ethics which, according to company timelines, was first written up in the 1930s. As one of its 10 points, this code required its undersigned to have “willingness to subordinate one’s personal interest to that of the firm,” said several promotional publications of the Booz Allen Group from different time points in the last decade.
Given that such a demand implies that a firm sees itself — and not a larger purpose beyond itself — as the principally desirable ‘ greater good’, it is in itself worthy of critique, and ever more so if the demand for self subordination is not balanced by an equal emphasis on the firm’s ethical commitments to society, environment and crucially, every single employee.
If a corporation, consulting or otherwise, affirms that human capital is its greatest asset, a very similar need for cautious examination arises. The term human capital is a value statement that is totally meaningless without affirmation of ethics and unalienable human dignity. If ‘ human’ is not the ruling element in the concept’s DNA, then this word combination is just a hollow euphemism and buzzword for the practice of deploying human beings as dehumanized parts of the economic equation.
The consulting profession has dealt in human capital before almost any other profession. It was a consultant at McKinsey who popularized the term ‘talent war’ first, back in the 1990s. Frankly though, it appears that the number of ethical failures in strategic and management advice throughout the first 100 years in the history of consulting can fill volumes of moral and economic bankruptcy stories.
One urgent, albeit hardly new, need for the future validity of the highly concentrated Big Consulting and correlated Big Auditing industries is that the dominant players in this space have to become credible models for the insights and recipes they propagate.
A correlated need is that premium consultants are well advised to make every effort for building up stronger values that qualify them on universal terms and not only from business performance angles and profit principles.
Finally, from the knowledge that consulting will be in regional demand in the foreseeable future and that Lebanese can be a key current and future resource in regional consulting, business schools and stakeholders in such education are advised to prepare our young talents ever better for consulting career opportunities — and do that both in technical terms and by equipping them more abundantly with the moral tools that will assist them in future wars for their talents where they will face myriad black and white decisions.
HUMAN CAPITAL IS A VALUE STATEMENT THAT IS TOTALLY MEANINGLESS WITHOUT AFFIRMATION OF ETHICS