The Importance of Business Ethics in Operating a Business Consulting Firm
By Mark Williams
October 26, 2011
I
have a good friend who operates a very successful international
consulting practice based in Columbia, South Carolina. His company
motto, which is displayed on every email and on his company letterhead,
is “It’s better to lose money than trust”. This is quite a profound
operating mantra that I’ve always respected. The operating mantra of my
firm, Strategic Development Group, Inc. (“SDG”) is similar. Our
primary goal is to make an “ethical profit”.
Indeed my friend’s firm and SDG operate in an ethical manner because that is part of our core set of values. It is my belief that, from a pure business perspective, if one desires to operate a successful and profitable consulting practice for the long-term, they need a key foundation of repeat clients and clients that consistently make favorable referrals. This is accomplished by achieving a client’s trust through honesty, ethical practices, and value generating services. For entrepreneurs considering the formation of a business consulting firm, it is recommended that that they should develop simple guiding principles related to operating ethically.
Business ethics in education has been all the rage for years as students are “taught” the rights and wrongs in operating ethically in today’s working world. In practice, operating ethically requires more thought and consideration than one might think. There are numerous gray areas and complex linkages between clients that can be problematic and must be considered carefully. Further, in practice, business variables can make assignments difficult to complete.
The following are key principles that I believe lead to operation of an ethical business practice and in fact create a foundation that stimulates growth in sales and profits.
Key ethical operating principles include:
1) Avoiding Conflicts of Interest
Consulting firms often encounter situations where working for one client may inhibit, compromise, or create concern about working for another client. My definition of a conflict is simply being retained by one client to provide a service or accept compensation that in some way impedes your ability to provide the highest level of value and service to another client.
For example, our firm is retained to conduct unbiased site searches for our clients. Our goal is to make recommendations for site locations that provide the greatest operation and financial benefit. We cannot be influenced by other factors such as accepting compensation or a commission based on a site we select. This practice could very well deter us from selecting the best site for our client’s needs because we believe that practice constitutes a conflict of interest.
2) Always Tell the Truth
An inescapable fact when serving clients is that sometimes you have to deliver bad news. Circumstances may change or project assumptions may have been incorrect. It is important that a consultant always tells clients the truth about circumstances and outcomes that are not positive. A good consultant is always ready to provide recommendations that redirect efforts to ensure the best outcomes for clients.
3) Do What You Say
A key element of every project scope developed by a business consultant is a summary of deliverables that define key items or services that the consultant will deliver to the client.
Sometimes project dynamics make delivery of project commitments very difficult, if not impossible. It is important in these cases to make every effort to complete the agreed upon scope of work or reach consensus with the client regarding alternate scope items that are more appropriate. It is not appropriate to simply avoid tasks that have become too difficult.
Following these simple principles should help an entrepreneur operate a business consulting practice in an ethical manner and will serve to generate even more business and profit in in the long run.
Mark Williams is President of Strategic Development Group, Inc., a firm that specializes in site selection and negotiation for large manufacturing and headquarters facilities. Strategic Development Group has conducted projects across the U.S. and has significant experience with both U.S. and foreign clients.
Mr. Williams has been writing a series of essays for MidlandsBiz targeted to entrepreneurs considering startup of professional business consulting practices. This series of essays began publication in January 2011 and this is the eighth essay. The next essay will address the most efficient ways to communicate with business consulting clients.
October 26, 2011
I
have a good friend who operates a very successful international
consulting practice based in Columbia, South Carolina. His company
motto, which is displayed on every email and on his company letterhead,
is “It’s better to lose money than trust”. This is quite a profound
operating mantra that I’ve always respected. The operating mantra of my
firm, Strategic Development Group, Inc. (“SDG”) is similar. Our
primary goal is to make an “ethical profit”.Indeed my friend’s firm and SDG operate in an ethical manner because that is part of our core set of values. It is my belief that, from a pure business perspective, if one desires to operate a successful and profitable consulting practice for the long-term, they need a key foundation of repeat clients and clients that consistently make favorable referrals. This is accomplished by achieving a client’s trust through honesty, ethical practices, and value generating services. For entrepreneurs considering the formation of a business consulting firm, it is recommended that that they should develop simple guiding principles related to operating ethically.
Business ethics in education has been all the rage for years as students are “taught” the rights and wrongs in operating ethically in today’s working world. In practice, operating ethically requires more thought and consideration than one might think. There are numerous gray areas and complex linkages between clients that can be problematic and must be considered carefully. Further, in practice, business variables can make assignments difficult to complete.
The following are key principles that I believe lead to operation of an ethical business practice and in fact create a foundation that stimulates growth in sales and profits.
Key ethical operating principles include:
1) Avoiding Conflicts of Interest
Consulting firms often encounter situations where working for one client may inhibit, compromise, or create concern about working for another client. My definition of a conflict is simply being retained by one client to provide a service or accept compensation that in some way impedes your ability to provide the highest level of value and service to another client.
For example, our firm is retained to conduct unbiased site searches for our clients. Our goal is to make recommendations for site locations that provide the greatest operation and financial benefit. We cannot be influenced by other factors such as accepting compensation or a commission based on a site we select. This practice could very well deter us from selecting the best site for our client’s needs because we believe that practice constitutes a conflict of interest.
2) Always Tell the Truth
An inescapable fact when serving clients is that sometimes you have to deliver bad news. Circumstances may change or project assumptions may have been incorrect. It is important that a consultant always tells clients the truth about circumstances and outcomes that are not positive. A good consultant is always ready to provide recommendations that redirect efforts to ensure the best outcomes for clients.
3) Do What You Say
A key element of every project scope developed by a business consultant is a summary of deliverables that define key items or services that the consultant will deliver to the client.
Sometimes project dynamics make delivery of project commitments very difficult, if not impossible. It is important in these cases to make every effort to complete the agreed upon scope of work or reach consensus with the client regarding alternate scope items that are more appropriate. It is not appropriate to simply avoid tasks that have become too difficult.
Following these simple principles should help an entrepreneur operate a business consulting practice in an ethical manner and will serve to generate even more business and profit in in the long run.
Mark Williams is President of Strategic Development Group, Inc., a firm that specializes in site selection and negotiation for large manufacturing and headquarters facilities. Strategic Development Group has conducted projects across the U.S. and has significant experience with both U.S. and foreign clients.
Mr. Williams has been writing a series of essays for MidlandsBiz targeted to entrepreneurs considering startup of professional business consulting practices. This series of essays began publication in January 2011 and this is the eighth essay. The next essay will address the most efficient ways to communicate with business consulting clients.
