Nasty Disclosures of Boardroom Behavior

We have all overreacted at least once. Some of us can be very logical and rational most of the time under pressure. Others lose perspective as soon as conditions become too anxiety-filled. Certainly, when dollars are involved, our money, we are especially sensitive and sometimes most irrational. Thus, we are not always able to get beyond the emotion of the ivory tower of our reality that Francois Gautier, a journalist, was observing in his quote above.

Our emotional and passionate responses are reflexes, sometimes best intentioned. Emotion has been a big part of our collective reaction to a series of recent events. We have demanded, albeit unreasonably, immediate safety from the terrors of madmen murderers and greedy dishonest corporate chieftains. Our elected politicians are listening and acting upon it as I write this.

This is despite logic and history telling us that evil and deceit are qualities that we can try to overcome, but have always existed among modern man. Thus, relative safety may be achievable, but absolute safety is an impractical dream.

Some of that reaction involves the role of and who will perform business consulting in the future. As a champion of integrating technology in corporate strategy and based on my consulting background, I want to share some perspective to the recent emotional reaction to nasty disclosures of reprehensible boardroom behavior. The goal of this discussion is to focus on the progress that we have made as well as reiterate some lessons that should not be forgotten.

Mixing consulting and auditing. Do the two make a good match from the same vendor? While today's emotional argument would say "of course not," the "open sea of thought" would suggest that this is more complicated.

In many businesses, understanding all of business processes is difficult and time-consuming. Typically, when companies are engaging consultants, they are looking to improve corporate performance often with a holistic approach. Improving efficiencies and reintroducing technologies require detailed knowledge. In theory, much of this knowledge is also required during the course of a financial audit. Thus, seemingly this match is one of convenience and efficiency for both the client and the service provider. The difference may only be in the objective of each service – auditing is a snapshot in time, while consulting is looking towards the future.

In my experience, the reality of that efficiency is often not achieved. Instead, the co-existence of both service offerings by a vendor is about cross-selling and creating a depth of relationship that would encourage client loyalty. Still, for a few clients this lowers total consulting fees and the loyalty may be more mutual.
Lesson: By itself this mixing was not as successful for business as it should have been.

Ethics and standards. For the most part, anyone can hang out a shingle saying that they are business consultants or management consultants. There is little to no licensing of consulting and even certifications that would indicate a consistent basic level of knowledge is rarely meaningful. Furthermore, there is little self-regulation to maintain any business ethics and oversight that would project a level of confidence of a fair shake.

The CPA firm being involved in consulting provided a solution to this problem. Confidence in the CPA was high for trustworthiness and ethical standards, CPA firms had to understand business, and there is ethical oversight of both firms and certified individuals.

Lesson: As consulting continues to evolve, there must be greater accountability of advice. In addition, results of advice given and work performed for references must be critically analyzed before hiring the consultant. Finally, the consultant must be honest. The dishonest consultant who milks an opportunity, especially of a client in need, is giving all consultants a bad name.

The consultant’s job. Too often, I have seen the consultant become a paid lobbyist of the approver of his/her bill. Just as the auditor must look past personal relationships to report financial results, the consultant has fiduciary responsibility to the company, employees, and shareholders.

Never buy technology emotionally. We are seeing some of the impractical outcomes of legislated technology and employment changes as a result of September 11. Ivory tower emotion demanding specific behavior is especially dangerous for all technology purchasing.

Lesson: Appreciate the panic gripping airport administrators to meet federal guidelines and vow never to impose such unreasonable demands on our IT people. This by itself could be a great CDW commercial!

Don't lose the multi-disciplinary approach in the boardroom. As CPAs and other business advisors diversified their skills in advising clients, an increased appreciation for underrepresented perspectives rose in the boardroom. Technology, logistics, and even marketing roles grew, since the consultants were adding those views as part of recommendations or work implemented. This realization raised the roles and input of internal executives representing these views in determining a vision for a better corporate future.

The current focus on abusers, who specifically did not look to really grow their businesses by developing this approach into competitive advantage and rather shortcut the system, undermined it.

Lesson: We must be careful not to look for only short-term financial performance without regard to a greater strategy. Some of our emotional reaction to the stock market meltdown has conveyed how tied in we have become to short-term results.

American business will rebound as the greatest economy in the world forges ahead. Let us use recent events to be our inspiration for our personal "open seas of thought."

CHAIM YUDKOWSKY, CPA, CITP is Chief Information Officer at Textilease Corp., a uniform and first aid services company serving the Southeast. He may be reached at 301-937-4555 or cyudkowsky@ByteofSuccess.com. Chaim is available to speak to your group or business on a variety of technology topics.