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Hello there, this is Dan. Every consultancy founder or partner, at some point in their career, will be faced with a difficult ethical decision. If it hasn't happened to you yet, it's a matter of time.

In this email I share a bit of what I've learned from other Boutique Consulting Club members and my own consulting practice. Hope you use the occasion to reflect on your own values, perspective, and operating principles. This is the kind of stuff very few in the consulting space talk about - can you guess why?

Wish you a great reading.

Estimated read time: 7 minutes.

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As your consulting practice grows, the nature of your challenges changes.

Newborn consultancies, or firms going through some kind of transition, are often concerned about "the basics". Things like cash flow management. Marketing and sales. Designing compelling service offerings. Adopting a healthy mindset.

After you've built some momentum and started to see the results of your initial efforts, your attention might be caught by other issues. Challenges often include better pricing your engagements, developing long-term relationships and partnerships, creating IP and building a small support team.

But growth will also create several ethical dilemmas you will have to deal with.

It's easier to understand what I'm referring to with examples. Below you can find a list of situations a consultant might experience. As you read them, I want you to ask yourself: How would I respond to these challenges?

• "I used to be scrappy and very conservative with money, but now that I'm in a better financial situation I feel like I can - and should - treat myself better. If I increased my lifestyle standards (and now only fly first class and stay in 4 or 5-star hotels) should I bill my clients for these preferences?"
• "A competitor of one of my largest clients wants to hire me because of my reputation in the industry. As long as I respect NDAs, is there any ethical problem in working with clearly rival companies?"
• "I've worked hard to become a recognized authority in my field and have a strong reputation behind me. Is that acceptable if I take some ideas from other authors and consultants and put my personal spin on them (as long as I respect copyrights)?"
• "If I'm doing internal research inside an organization and a midlevel manager tells me (on a strictly confidential basis) about criminal activity inside the company, should I share that with the CEO or leadership team? Isn't it better - or even ethically necessary - to maintain confidentiality and continue to be a trusted partner for the client?"
• "Another consulting firm introduced me to a client they were working with to deliver a complex project together. The project went well, and at the end of it the client asked me to take on a long-term engagement replacing the firm that originally introduced us. Can I ethically accept this project?"

All of these situations have happened to me, to colleagues, or to consulting partners who are BCC members.

There are no right or wrong answers to those ethical dilemmas. And, of course, we can't ignore specific context. But these situations will force you to take a stand and make a decision - doing nothing doesn't mean you got rid of the problem. As someone leading the practice, it's your responsibility to make a choice.

One perspective I like is that of Alan Weiss:

It's a useful heuristic. If you genuinely believe you are doing the right thing, there's no reason to hide your actions.

The quote also made me wonder what other heuristics, principles, or set of rules I can adopt when I personally face similar ethical dilemmas in the future. And I came up with a few more:

• "Am I comfortable with my actions or decisions being made public?"
• "Does the decision improve other people's situation or only my own?"
• "Does the decision harm anyone without them knowing it and/or being able to respond to it?"
• "If I were in the position of the people affected by my decision, how would I want to be treated?"
• "Can I justify my actions to myself and others, without making excuses or rationalizations?"

Feel free to borrow those for your own practice. But remember that there's no right or wrong to ethical dilemmas. It's worth investing some time in exploring and documenting your personal choices.

At the end of my list, I've also added a small reminder: "If possible, open up."

Depending on the situation, when you find yourself in an ethical dilemma with a client you can ask them some of those questions. "How do you feel about it? Are we all comfortable if someone ever makes this public?" The very act of asking it may be enough to help you avoid trouble. They will be thankful that you asked.

Source: Venkatesh Rao, "The Art of Gig"​

A 2014 study by the Ethics Resource Center (ERC) found that, in the United States, 41% of employees in the private sector had witnessed misconduct in the workplace.

Among those, 63% said they reported what they saw. But the typical response from companies is not always comforting. 21% of reporters said they faced some form of retaliation in return.

Source: ERC, National Business Ethics Survey​

While I could not find reliable statistics for the consulting industry, there are a number of reasons to expect the frequency of such situations to be higher for us. And among consultancies, it's clear that the bigger your size, the more delicate (and political) those ethical issues become.

As Venkatesh puts it, abiding by a set of values is more about agreeing to pay a voluntary tax than expecting to benefit from them.

That's one of the reasons why, every couple of months, large consulting firms are involved in a new ethics scandal. Why say no to working with criminal, dictator-led companies? It's easier to pass the ethics ball to the client team and argue the firm only helped to "operationalize" their clients' vision and objectives. This is a convenient position if your goal is to accept work from anyone who can afford you.

You don't need a sense of ethics to build a profitable consulting practice. But this question is instructive whether you care about it or not. When people feel like their business (and the lifestyle of their family) is at risk, ethical issues are often ignored over more practical and urgent problems.

Profitability comes from excess opportunity. If you're desperately after work, you are much more likely to accept bad-fit clients, discount fees, and let prospects dictate terms. And guess what: It gets really hard to say no.

Now imagine you can only work with 10 clients, but have a line of 30 prospects wanting to hire you. You can be picky. You are forced to say no to most of them.

If we work to put ourselves in that situation, making the right decisions become much easier.