There's been a lot of discussion about leading PR firm Edelman's involvement in something that transgressed many people's sense of ethics -- creating a blog consistently favourable to Wal-Mart without disclosing Wal-Mart's (or Edelman's) involvement.
For example, noted industry observer Paul Holmes, comments on this (and other similar situations):
There's no doubt in my mind that Wal-Mart is as sincere about its commitment to use every dirty trick in the book to win its public relations battle as Edelman is about its commitment to set high ethical standards. ... So what happens when a PR firm with high standards works for a company with a win-at-any price philosophy? The answer is not as obvious as it sounds -- there are PR firms who do great work for morally dubious clients -- but often the tone is set by the person paying the bills, and we get Hill & Knowlton's work for the tobacco industry in the 60s and the Kuwaiti government in the 80s, Ketchum's more recent troubles involving its work for the Bush administration, and countless other examples.
As I read about all this, I reflected on the number of other occasions that I've seen my clients (advertising agencies, investment banks, law firms, consultants, accountants and all the others) clearly working for people they neither respect nor trust, doing deals they didn't believe in. In all professions, it seems, most providers are guns for hire. (Actually there's a ruder word.)
I have discussed this a thousand times with professional providers, but very, very few think they are "allowed" by their firms to walk away from a paying customer because they didn't like what he or she was doing.
I like to make a sort of game of it:
Would your firm walk away if you didn't like the client?
What if he or she was trying to do something you didn't believe in?
What if he or she was doing something unethical?
Socially irresponsible?
Illegal?
The answers are close to uniform: most individuals inside most firms feel an overwhelming pressure to ignore all these considerations but the last -- and many will play games with "I didn't know what was going on" on that one too.
Notice that what people are telling me is how their FIRMS are run. Most tell me they would make different choices if they were solo like me.
And you know what? I believe them! I can impose my own standards of whom I want to work for. It is (and always has been) the reality of my solo work life that I only work for clients I like personally and whose cause I can wholeheartedly serve. It was like that from the beginning.
Yet, the very minute I joined an organisation, I know I would sacrifice that ability to apply selective criteria of taste, meaning, ethics and (maybe even) legality. I would have to apply someone else's selection criteria, not my own. And the bar would almost certainly be set pretty low.
I've been told over and over again that business organisations cannot afford to be selective. Public or private, they feel they are under immense pressure to grow, and cannot turn away business. But notice, I'm in business, too. It's not being in business that drives you to the compromises, it's being in an organisation!
The fascinating thing is that I know LOTS of CEOs and managing partners. as individuals they are usually people of taste, honour, integrity and all the rest of it. But they believe in their bones that they are not allowed to apply the same criteria in their organisational roles that they would if they were working only for themselves. They feel as trapped and as compromised as the most idealistic junior does.
I think part of what is going on is this. It's all about trust. If I knew that all my colleagues, bosses, partners, owners, etc., shared a common set of standards, then I would have the courage to make selective decisions based on those standards. However, if I think they do not share my values, ideologies, principles and preferences, then I will not take the risk and expose myself to criticism by turning away cash under any circumstances. And the organisation's decision-making gets driven to the lowest common denominator. We'll shoot at anything that moves, serve anyone with anything, as long as they pay.
Does anyone want to explain all this to me? Are organisations (professional firms) incapable of being selective? Does everyone inside a firm have to end up as just a gun for hire? If not, how does an organisation avoid it?
19 comments:
Richard,
Not sure I can explain it all for you, but I do know that our code of conduct gives employees the right to decline to work on a project "if it is in conflict with their own values or beliefs, without compromising their current position or career opportunities".
Niall
Is there some way, Niall, that you can communicate to the sceptics about whether anyone's ever "successfully" invoked this right?
If you were advising other firms beyond H&K, what beyond establishing a code of conduct would you recommend they do?
Obviously I can only speak from personal experience, but I know of one example where someone in my team invoked the right because of a personal belief.
Everyone involved accepted that person's position.
The piper plays the tune, it seems.
Firms and individuals will not walk away from lucrative fee-paying work UNLESS some or all of three things occur;
• They can replace what they've turned down with alternative income.
• They have a strong enough moral compass to say "no" despite it potentially hurting them.
• The pain of partnership with undesirables is greater than the pleasure of revenue. This could be in the form of bad PR, shareholder or media backlash or adverse reaction from sensitive board members.
Many sole practitioners and indeed employed professionals take work because they have to, not because they want to.
There is a way round this -- it's called developing a reputation.
When you do that, you attract the right kind of work to you, which answers point 1 above.
You also adhere to a strong internal code of ethics called character, which squares point 2.
Point 3 then doesn't even become an issue.
Organisations expected to deliver shareholder value and a return on equity will almost never be in a position to turn down every "dodgy" client.
And let's face it, who doesn't have some shade of white in their make-up or past?
Perhaps "he who is without sin" can say no.
Richard, even you swear and offend people.
It's you, I know.
But that's far from righteous.
So who are we to judge?
I'm a reformed swearer, Rob.
Really!
But you're right, this is not about my claims to personal virtue (none of which I make).
No-one is more aware of his faults than I am.
The issue here is whether we can, as individuals or organisations, apply any criterion other than cash to our activities.
I do truly despair at the hopelessness that people and individuals feel -- their feeling that they cannot afford choices.
It's not that I don't like their clients -- it's that THEY don't and they don't think it matters.
I'm saddened beyond belief when I see people accepting work that THEY (not me) don't believe in, for clients THEY (not me) don't like.
It's the cynicism -- no, the despair -- that gets me.
Something profound has happened when people start saying:
"I can't afford to worry about whether I like my clients"
"I can't afford to worry about whether my client is the good guy or the bad guy"
"I can't afford to worry about the social consequences of my clients' actions"
Yes, Rob, I've got faults, but I think there's all the difference in the world between having standards which you occasionally make mistakes on, and giving up on the thought that you can have standards.
Let me add a side item to the principles issue (about which I share Richard's concern).
The old MAC Group, which I worked for, was one of the few professional services firms which placed individuals' good above the firm's.
It made for great creativity and camaraderie -- we still have reunions, 15 years after the firm's acquisition and disappearance, and great relationships.
It also meant people could indulge their ethical principles, e.g. refuse to work for a South African client (I'm talking about the 70s and 80s here).
Some did so, and with a minor amount of hassle from their peers.
But there was a price paid.
The price was that the firm itself was very light on principles, other than the principle of respect for the individual.
And it was -- albeit by choice -- never likely to be a one-firm firm, with all of the positives that could accrue from that kind of firm.
It was always going to be a collective.
In its own way, it sacrificed some principles.
Rob Brown speaks for many when he says that the requirements of shareholder value and return on equity are largely incompatible with turning down "dodgy" clients.
But I think he's largely not right.
Trusted practitioners get the reputation he talks about very early on in their career, first within their firm, then outside it.
Trusted practitioners make it clear what kind of people they are in the first client meetings.
And -- if you believe clients are attracted to trustworthy providers, and that they are rare -- then it follows that if you can generate a half-decent leadstream, internally or externally, you ought to be able to generate a better than average closing rate, return on equity, etc. -- better than someone who resolves to meet sleeze with lowered principles.
My experience is not that principled behaviour doesn't make money.
It's that that practitioners succumb to fear and pre-emptively sacrifice their principles, thus shooting themselves in the foot, and reinforcing their own self-fulfilling prophecy.
Charlie gives the example of MAC's individual choice principle (like Niall's description of H&K's), but reported that it prevented the firm being a one-firm firm.
But is it not only possible, but also real world, that you could expand the MAC/ H&K principle ("an individual doesn't have to work on anything the individual doesn't want to") and turn it into a true one-firm issue -- WE AS A FIRM don't work for certain kinds of clients?
Couldn't it actually be a fabulous source of competitive differentiation in the war to attract talent?
I got hints of this in my article PRACTICE WHAT YOU PREACH -- that one way some firms made extra profits was by keeping their people enthused and excited in part (in large part) by refusing to work for dull, unexciting clients.
Can't the excitment (non-cynicism) of what "we" do BE a competitive strategy?
Everyone talks about the shorage of talent and the need to attract and motivate the best and the brightest.
Isn't this topic related to that in more than a minor way?
Dear Richard,
I believe that a very good explanation for this phenomenon (larger firms becoming immoral or amoral) is taught in the seminar, "Leading Professional Services Firms", in Harvard Business School's Executive Education program.
http://www.exed.hbs.edu/programs/lpsf/
Here, the professors espouse three main principles for professional services firms:
1) Partnership structure is ideal.
2) Small is beautiful.
3) Organic growth is superior to growth by acquisition.
When a professional services firm strays from these principles, they run the risk of sacrificing the values, culture, code of ethics and requirement to put the client's interests above theirs that is inherent in being a "professional".
A corporate structure, for example, causes the firm to focus on financial results and meeting shareholder expectations rather than meeting partner expectations within the constraints of the values, expertise and professional code of ethics that the firm agreed on when it came together.
Growing too large or acquiring firms that may be very different in values or culture, even within the partnership model, can also stretch the limits of aligned behaviour.
There is an interesting corollary to the "Poor me, I'm a firm that has to prostitute myself in order to make money", ethical challenge.
When a firm strays from the professional services firm principles above, temptations to take advantage of clients can develop.
Unethical activities like the recent T&E over billing/ non-disclosure scandals in the Big 4 are a case in point.
Your final point could not be more important nor profound, Francine.
Please forgive me if I repeat YOUR point.
When a firm slips into the "Poor me, I have to prostitute myself to make money" it opens the floodgates to many other forms of unprincipled, "self-justifying" behaviour.
Exactly!
There are CONSEQUENCES when leaders create an atmosphere that says "we can't afford to have standards".
Ethical breaches start happening in BOTH directions -- firms feel that they can't say "No!" to clients (and we end up with scandals) and, as you say, Francine, firms feel they have permission to cross the line in their own behaviour.
In general, I agree with the 3 principles described above, but I have to report that the temptation to "Do it For the Money" and JUST "Do it For the Money" is also very common in small private partnerships that do not do mergers.
(In fact, I wrote an article about this last year. Here's the link).
That's why I think the most successful firms have goals in addition to money (not instead of, in addition to).
They don't just say "Let's get rich".
Instead, they say "Let's get rich doing meaningful, important stuff for a cause and a group of clients we care about and believe in".
My proposition is that for those who have the guts to live this way, you make MORE money, not less.
It's the difference between building a firm which represents the Marines, versus a firm which represents the best mercenaries on the planet.
Of the two, which would you bet on?
Good work, Richard; you have an excellent blog and I am going to begin subscribing to it!
There are only a few professions which are self-governing: the legal profession, doctors (which include Psychiatry as well as therapy), CPAs.
They all are "self-governing" when it comes to moral and ethical standards.
In fact, in order to pass the Bar exam to become a lawyer, the applicant must pass an ethical test.
Because of the numerous ethical and moral violations we've read about (and probably haven't yet read about), I was wondering if it was possible to create some sort of "corporate governance" group, that would produce an Ethical and Moral standard for all "professional managers".
It would be a sort of "brand" that you had signed this document, and that you follow these standards in your daily routine.
It is a sort of bottoms up, grass roots idea, to self-governance.
If you are interested, please contact me.
Stuart Liroff
stuart.liroff@gmail.com
http://stuart.plaxoed.com
One of the most thoughtful discussions I've seen on this fascinating topic.
Thank you.
I am reminded of the memorable line from the otherwise cheesy and decadent thriller, "8MM": "If you dance with the devil, you don't change the devil -- the devil changes you".
Thanks, Tom.
Stuart, I'm sceptical that establishing a "corporate governance" group would work, just as I am convinced that, in the law and accounting, passing an ethics test accomplishes only a microscopic amount.
We've all read about transgressions by accountants and lawyers.
In all the years I've been watching, I'm convinced that the "self-governing ethical duty" of the so-called traditional professions doesn't lead them to be any different from other professions or businesses.
In my experience, accountants and lawyers are no more "do it for the money" types than other professions, but -- and this is the point -- they are no less either.
It's time we (and they) stopped pretending that they are "special".
I absolutely promise you that if you sat in on the business meetings of these firms, you wouldn't be able to tell one profession from another in their approaches to business decision-making.
The "self-governing" professions are not more or less venal.
I AM fascinated by what COULD make all this different.
As we have discussed before on this blog, I am interested in being a part of a movement to raise the professionalism of business life.
Count on my support for anything in that direction.
Also count me in on the eternal battle against cynicism, scepticism, "practicality", defeatism, "being realistic", "we don't have a choice" thinking.
We do have choices -- we just have to have the courage to make them.
Hi all, I hope all firms, will have similar provisions with that of H & K.
Based on observation, the only choice for the employee is either leave the firm or stay and compromise their values.
We typically work on projects which involve teams of people from the client.
My question is: How do I handle a situation in which I'm working with great people from a great client, but there is one person on the client's team who (for whatever reason) I do not respect or trust?
One thing that no one has mentioned is that individuals are all different, and what one person sees as immoral (working, say, for tobacco companies or gambling companies or arms manufacturers) another person -- quite reasonably (in my view) -- feels capable of working for those companies without any moral issues.
I agree that, as an individual, you should have the right not to work for a particular client.
And, in reality, most medium to large firms have enough staff that this is unlikely to be an issue.
You just don't get put on the team.
However, to say the "FIRM" should reject those clients means the partners (or more likely just some of them) have to impose their morality upon the entire workforce.
So do we end up with a firm that only employs people who oppose gun control?
Or who support pornography?
Its easy to pick extreme examples, Enron and so forth.
But how far do you go?
A firm doesnt need to say "we wont assist clients to commit fraud", that should be a given.
But clients that some people in the firm dont like or agree with or think are socially irresponsible?
Aren't you, in effect, saying you will and can only hire people "just like us"?
The bigger the firm, the greater this issue.
Andrew, if people don't join in with responses to your question, then I'll try to remember to start a new thread around it.
Let's see what people say.
ctd -- what if we accept your reasoning completely -- a firm made up completely of people "like us".
Does that make the firm stronger or weaker?
To look at this another way: Many argue that each firm needs to be very diverse to reflect possible markets -- so they go out of their way to hire for diversity, a spread of political opinions, etc.
But what then is the link that binds the firm together and provides its motive force (other than a pay scheme).
Wouldn't a firm be stronger if it put like minded people together?
For example would a group of people passionately committed to right-to-life be a stronger firm if it started hiring free-to-choose people?
Isn't the organisation (and the people within it) more likely to get what they want if they know what they stand for and what goals and mission they are pursuing?
Richard
I totally agree that a (small) organisation made up of people committed to a single cause is far stronger than one made up of people not necessarily committed to that cause.
However, law firms/ prof services firms etc are not committed to a single cause (well, other than making money etc).
How close to the line do you go -- when does hiring people with the "same goals and mission" as you become hiring "WASPS" only or those that belong to the right club or went to the right school and so forth.
In other words, I agree that you don't hire someone who isnt focused on clients, on service, on all those other matters you so rightly and excellently write about.
But these are not moral or ethical issues.
You can have a strong group committed to clients but with completely different moral and even ethical standards or opinions.
My view is that a firm should make it clear that a staff member can refuse to work on a file, because they dont like the client, the industry, what the client wants done etc, without any penalty.
But unless everyone in the firm refuses the work on moral grounds, or the firm believes its reputation will suffer by taking the work, then no one should be able to say "you can't work for that client because I don't agree with what they do".
ctd -- you argue well, and your point is taken.
But we may be making different points.
(maybe).
I'm not arguing for ideological purity.
Nor am I arguing that everyone in a firm should have a veto over everyone else.
I AM (as the title of this thread indicates) trying to say that being a "gun for hire" for whoever will pay is both sad and, through the cynicism it breeds, ultimately less profitable than an organisation that (collectively) says "we know who we want to work for on what kinds of things -- and why".
It's called having a strategy and a repuation and a differentiation and a positioning -- and you can't get there if we'll do anything for money.
We can all justify on the basis: "someone's gotta do it and it might as well be us".
That's not the point here.
Edelman set its stall out to be the high priests of blog ethics.
Richard Edelman has been on record numerous times about the need for transparency and an ethical approach.
So unless it is monumentally stupid as an organisation, then these multiple fake blogs must have been known about at least in the mid-tier.
And to say no-one gets fired over this is lame.
The story simply doesn't hang together and it is interesting to note that Edelman himself has delivered a series of bland and at times subtly contradictary answers.
It's simply untenable for the company to say "we didn't know" leaving juniors hung out to dry.
Even now, unless you know about Edelman, the disclosures are inadequate for the man in the street to make a value judgment.
PR companies have been the most vocal about blogging.
Why?
Because it directly threatens the command and control model.
What better way to offer an alternative view if you can get enough flacks aorund you to participate in that discussion.
Exactly what Steve Rubel -- now at Edelman -- successfully achieved.
Which is fine.
Until you're caught out doing something difrectly contrary to what you say is acceptable practice as a firm.
That's hypocritical, cynical and unacceptable -- IMO.
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