Con­sult­ing & hu­man cap­i­tal: Ques­tion­able ethics

The on­go­ing tal­ent war in Mid­dle East con­sult­ing re­quires ethics, not just ag­gres­sion

Executive Magazine - - Contents -

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

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