DONALD C. MOSLEY

ProfessionalEthics andCompetenceinManagementConsulting

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THE 196O'S may well become known as the dec-ade when the profession of management consult-ing reached maturity. Today, more than ever be-fore, the businessman is turning to managementconsulting firms and to individual management con-sultants to help solve increasingly difficult techno-logical, organizational, and personnel problems.Moreover, the consultants are being called on notonly for recommendations regarding problem areasbut also for help in decisions aflFecting the futuredestiny of the firm, decisions concerning diversifica-tion, mergers and acquisitions, and the exploitationof international opportunities.

Many U.S. firms have benefited greatly by usingmanagement consultants. The continued use of con-sultants is testimony that an expert from outside theorganization can provide progressive recommenda-tions and initiate needed changes that an equallycompetent inside expert cannot.

At my university as a result of our consulting ac-tivities, we have worked with a number of compa-nies, primarily branch plants of large corporationswhich were having problems and with family-owned companies which were suffering growingpains. We have also gleaned insights into how oth-ers in the field operate, and from our frame of refer-ence the techniques of some management consul-tants are disturbing.

Since my field of interest is organizational theory,personnel, and industrial relations, my analysis willbe confined to this broad area of management con-sulting. Within this broad area I have encounteredwhat in my judgment are three clear-cut cases ofunethical behavior or incompetence within the pastyear. In all three of these cases the consultants dem-onstrated the following similar characteristics intheir consulting work:

I /They were not fly-by-night types but full-timeprofessionals, two of them having Ph.D. degrees in in-dustrial psychology. Moreover one heads a firm whichmaintains oflBces in some of the major cities of theworld.

2 / Through their evaluation of managers they playedthe role of God in such a wholesale manner that theyput the late Douglas McGregor's autocratic manager oftraditional performance appraisal to shame.

3 / Apparently all three consultants believe they arequalified and omnipotent to forecast future career per-formance of managers at all levels. In fact, one of theconsultants has been quoted in a major publication assaying he can determine a rough measure of a manag-er's ability after an hour and a half interview.

California Management Review

In two of the cases top management accepted therecommendations and have either implementedthem or are in the process of attempting to imple-ment them.^ Fortunately, the third company had atop management which recognized that the consult-ing firm focused on psychological aspects andseemed to ignore other aspects of running a busi-ness. They quickly concluded that the recommenda-tions were questionable and that to implement themwould cause more problems than it would solve.The experience of this company serves as the basisfor making the case against unethical behavior orincompetence.

A brief survey of the literature relating to man-agement consulting initially revealed a seemingpaucity of concern with the problem dealt vidth inthis case. A more thorough survey did reveal a fewwriters who touched on the problem although theirprimary focus was on other aspects of consulting.However, considerable support for my thesis occursin a not too unlikely source—Vance Packard's bookThe Naked Society.

Although the book contains a number of illustra-tions raising the question of ethical behavior on thepart of management as well as consultants, the fol-lowing excerpts present the problem most incisively.

The harshest words yet addressed to the multitude ofpsychologists who work for management's assessing menon the job and screening applicants came from Dr. JayL. Otis, director of the Psychological Research Serviceat Western Reserve and one-time president of the Divi-sion of Consulting Psychology of die American Psycho-logical Association. Dr. Otis kindly supplied me with acopy of the scalding remarks he addressed to his col-leagues a few years ago on the occasion of turning overhis presidential gavel. His talk was entitled "Psychologi-cal Espionage." He said he chose that title because thetrend in consulting work had made him pause andwonder. The phrase "psychological espionage," heconceded, "is not a nice phrase; yet it does characterizesome of the work we are doing and describes the atti-tude of some of our examinees and clients towards us."He observed: "We are professional practitioners withvery complicated professional obligations."He singled out aspects of the work done by psychologi-cal consultants when working for industry that were ofparticular concern to the conscientious professional:

1 / The use of disguised tests.2 /The role of the psychologist in making attitude

surveys. . . .3 / The dual role of serving an industrial firm and

serving the individual. . . . "I wonder how infallible wethink we are when we make a recommendation, after a

day or two of observation, that may affect the lifetimecareer of an employee."^

A Study: XYZ Chemical CorporationThe XYZ Ghemical Gorporation is a medium-

sized, growing company with branch plants locatedthroughout the country.^ Because of its technologythe company hires large numbers of engineers andscientists, many of them having advanced degrees.The plant we are concerned with is located in themid-south, is approximately three years old, and isinvolved in a highly technical process of produc-tion. This process is so complex that only one othercompany in America has perfected it. The home of-fice is located in a large metropohtan area outsidethe South.

The company decided to use the consulting firmafter the president heard the head of the firm makea speech. Among other things, in his speech theconsultant discussed the problem of unions, point-ing out that his firm had chalked up many successesin helping companies keep imions from getting in orin getting them out once they were in. The secrethe said was to find out where a company's problemareas were and then take the necessary steps toeliminate the problems. This job could be accom-plished by the consulting firm conducting an opin-ion survey, the results of which would then be usednot only in coping with unions but in helping thecompany in other vital areas as well.

Although most of the plants of the XYZ Gorpora-tion are unionized, it is apparent top managementwould prefer not to have umions. With the excep-tion of maintenance employees, workers in themid-south plant are not unionized; however, theyare paid union wages. The philosophy of the plantmanager is not to concentrate on keeping the unionout but rather to treat people equitably whethertliere is a union or not. The maintenance employeesin the plant were organized in the first year of theplant's operation when there were severe technicalproblems, diflScult working conditions, and inexperi-enced men and leaders.

At any rate the decision was made to hire theconsulting firm to conduct an opinion poll in two

Donald C. Mosley is Professor and Chairmanof the Management Department of MississippiState University. He has gained experienceas adviser to management of a large firm.

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mid-south plants of the XYZ Corporation. A five-man team, headed by the firm's owner, an industrialpsychologist, came into the plant and spent a totalof four days conducting the opinion survey. Theconsulting fee was $15,000.

Consulting Firm's Methodology,Findings, and RecommendationsOrganization of the Report. The output of the con-sulting project was a bound, typewritten report di-vided into the following categories:

1 / The first section presented a summary of the find-ings.

A. It stated the morale of eight differentgroups ranging from management to production andmaintenance employees.

B. It listed favorable features including suchthings as lighting, overtime, the personnel department,job security, and the vacation plan.

C. It listed unfavorable features includingsuch things as dust and fumes, seniority, training,safety, treatment of men by foremen, pay, communica-tion, and benefits, as well as performance reviews vWthsupervisors.

D. It presented the role of middle manage-ment and supervision in determining plant morale.

1. This sub-section gave a description offirst level, middle, and top managers who were consid-ered possible sources of trouble.

2. The second section presented recom-mendations classified as those for immediate action andthose for longer-term action.

a. In addition to making recommen-dations regarding pay, policies, benefits, and workingconditions, the report recommended personnel changes,especially of managers who were considered possiblesources of trouble.

2 / The concluding section dealt with the outlook forunion organization.

A. It concluded that if the company adoptedthe firm's recommendations, it could defeat the unionamong the production employees if the election couldbe forestalled for two months.

B. In addition it concluded that morale of themaintenance personnel was so low "that the likelihoodis poor that the union can be decertified under presentconditions." However, the firni did suggest that if therecommended changes in working conditions and super-vision were effected, "it is possible that within a yearmorale can be improved to the point where the com-pany might have a chance to win a decertification elec-tion."

Under separate cover individual performance ap-praisals were provided on every supervisor andmanager within the plant. These included a listing

of strengths and weaknesses and an interpretationof the findings. The interpretations included an as-sessment of present performances, an assessment ofprobable future performance, and finally, a recom-mendation that the manager be promoted, demoted,transferred to a staff position, or retained at hispresent level.

MethodologyTliere were two distinct methodologies used in

arriving at conclusions. One approach was utilizedwith operative, supervisory, and professional em-ployees. A different approach was used in evaluat-ing performance of managers. The first approachutilized opinion survey questionnaires, administeredto all employees, followed by patterned interviewsconducted with selected operators, supervisors, andengineers.

Since our quarrel is primarily with evaluation ofmanagers, attention will be directed to this area.Like the operative, supervisory, and professionalgroups, all managers completed opinion question-naires. Beyond this step, however, an entirely dif-ferent methodology was utilized to determine pres-ent and potential future managerial effectiveness.

This methodology included interviews with amanager's immediate superior and the immediatesuperior's boss. The two superiors were asked togive an overall appraisal and to indicate the princi-pal strengths and weaknesses of the subordinate.The consultant then made an interpretation of theinterview results. In several cases the interviewswere supplemented by the consultants' observationsbased on their contacts with the managers and inone case by follow-up interviews with subordinates.

ResultsFrom a morale standpoint the plant had a good

rating. Out of seven groups, four were judged ashaving good morale, two fair, and only one poor. Incontradiction of these judgments the plant was eval-uated as having an ineffective managerial team. Ac-cording to the consultants' appraisal, only one often middle and top managers—excluding the plantmanager and first line supervisors—was rated asbeing promotable to a higher level position. It wasrecommended that four managers be transferredout of line positions and into staff or technical posi-

46 California Management Review

tions without supervisory or administrative dutiesand that one manager be demoted to the level offoreman or machinist. In short, out of ten managersabove the level of supervisor, five were consideredincompetents who should either be transferred ordemoted.

CritiqueIf the moral question of conducting an opinion

survey with the primary objective of preventing orremoving a union could be ignored, it would behard to criticize opinion surveys per se. Rensis Lik-ert has demonstrated the importance of measuringvariables which affect organization health and per-formance provided the job is done by experts.*With one qualification the opinion survey coveringoperative, supervisory, and professional employeeswas worthwhile for the company and above averagefor an opinion or attitude survey. The qualificationis that it appeared to be slanted toward weaknesses.

The charge of management quackery arises as aresult of the consultants' wholesale appraisal of allmanagers above the supervisory level and the incor-poration of these findings with those of the opinionsurvey at the operative level. More specifically, theconsultants' manner of determining strengths andweaknesses of managers reveals glaring omissionsand deficiencies, some of which are as follows:

• An incomplete picture was obtained of managerialstrengths and weaknesses in that only two superiorswere interviewed. Interviews with the manager's sub-ordinates and co-laterals were not made. In fact, inonly one case were subordinate interviews consideredin the appraisal.• In nine out of ten cases the consultants' appraisaldijffered from the consensus of the two superiors. Forexample, in one case the two superiors stated that aman was performing very well and exceeding or meet-ing expectations and was now promotable to the nexthigher level. The consultant's conclusion was that "heis well qualified for his present responsibilities but isnot equally well suited to higher level duties."• Related to the above, the appraisal interpretationsseemed to be based on "psychological" interpretationsand the consultant's impression rather than on whatwas actually said by superiors. Moreover there wereinconsistencies in shifting the final report. For example,several managers who were rated very high in theopinion polls were downgraded in the final report.• The plant was concluded to have an ineffective man-agement team; yet a most important criterion was omit-

ted in reaching this conclusion. From a results stand-point, the plant has succeeded in profitably developinga production process where three competitors havefailed. That these results were achieved under difficultcircumstances was ignored. For the most part workerswith farm backgrounds were successfully trained as me-chanics and chemical workers. At the present time theresults of the plant operations are exceeding companyexpectations and targets.• Finally, and the most shocking aspect of the entire re-port, was the glib manner in which the consultantsplayed God with the careers of professional managers.For example, in evaluating one key manager the consul-tants concluded that although he was doing a fine job inhis present position, he should not be promoted to higherlevel because the increased pressure might cause himto become an alcoholic. The manager's two immediatesuperiors—one being the plant manager and the seconda vice-president—had not mentioned anything about adrinking problem in their intei-views. The plant managerwas quite dismayed when he discovered the consultantreached the potential alcoholic conclusion upon hearingoffice talk that the manager in question had becomeslightly inebriated at one cocktail party he had attended.

If the top management of the XYZ Company hadbeen the type who believe when you call in outsideexperts for $15,000—then you should follow theiradvice—the following events would probably havehappened. Ten managers would have been writtenoff for future promotions. Five would have beenwritten oflE as complete failures as managers. Theplant manager's opinion is that when word filtereddown through the grape-vine, this plant would havehad an exodus not only of managers but also ofprofessional engineers and scientists.

Indicative of the plant manager's reaction to thereport are these excerpts from a letter to the Presi-dent of the Corporation:

I loould be doing ijoti a disservice if I were not tohe candid and give you my true feelings about thequality and nature of the survey. In general the rec-ommendations made by the consulting firm indicatea very serious bias aimed only at fighting un-knowns. They apparently are not qualified to evalu-ate the overall operation of a chemical plant. If onewere to take the survey seriously, he would have totake tlie position that a very incompetent job ivasdone in selecting key people for staffing the plant.Their evaluation of our staff and recommendations,if taken seriously, would mean that toe shouldremove or consider non-promotable most of ourkey people. No constructive ideas are advanced re-garding the fact that individual toeaknesses should

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be compensated for by building a team, by choos-ing subordinates strong in tlie areas of deficiency.

The consulting firm apparently wasn't experi-enced enough in industrial life to point out that thesame team they so easily damned is the one thatvery successfully tuned up a complex plant whichhad more than its share of technical and mechanicalproblems to solve under very adverse working con-ditions. Further, this job was done by taking virtualfield hands and backyard mechanics as raw mate-rial.

The report in essence recommends that wechoose personnel whose prime purpose in life is tokeep employees happy. In fact, we should make lifetruly perfect by improving all economic benefitsand make this truly a wonderful plant, working sim-ply because a poll of our employees so indicated.

Apparently technical com.petence, cost saving at-tributes, and the many other facets to a man's char-acter which are needed to run a competitive chemi-cal operation are not important. I say this becausethe report further states in essence that I do nothave competent or promotable people.

Actually the record shows that a very competentjob was done, contrary to the implication of the re-port.

Fortunately, the president of the corporationagreed with the plant manager that the consultants'report was a distortion of the true situation and thereport would go no further than their respectivedesks. Later events have confirmed the wisdom ofthe president's decision.

The consulting firm had indicated that unless thecompany followed its suggestion, it would probablylose any future election covering production em-ployees. The suggestions were not followed—yetwithin a year a union election was held and theunion was defeated by a tbree to one ratio. In addi-tion, four managers that the consulting firm hadrecommended not promoting were later promoted.All of these men are either meeting or exceedingcompany expectations in their positions of increasedresponsibility.

Recommendations and ConclusionManagement in the future will turn more and

more to outside consultants for help in taking ad-vantage of opportunities and in coping with organi-zational and personnel problems. The profession ofmanagement consulting and the number of consul-

tants in the field will grow in the years ahead andsome people will become wealthy. Until positive ac-tion is taken, the profession will continue to attractmore than its share of unethical and incompetentpeople.

One action that could be taken is the develop-ment of a clearing house for considering charges ofunethical and incompetent consulting practices. Thestaff of the clearing house could sub-contract with aprofessional standards group, such as the Associa-tion of Consulting Management Engineers of thedivision of industrial psychology of the AmericanPsychological Association, to investigate and eitherconfirm or deny such charges. If the charges wereconfirmed, a warning could be issued to the guiltyfirm that any further substantiated unethical or in-competent practice would result in widespread pub-licity being given to the charge.

Of course the above is only a general idea andmany details would have to be worked out. How-ever if certain key professional groups, such as theNational Association of Manufacturers, the Ameri-can Management Association, the Academy of Man-agement, the Society for the Advancement of Man-agement—just to mention a few—were to unite be-hind such a cause, the problems should not be in-surmoimtable. Representatives from the associationsinterested could form a committee to initiate theproject and to contact various professional stan-dards associations for support. After tliis step itshould not be difficult to secure funds to finance theestablishment of a management consulting clear-ing-house.

In the short run, organizations planning to em-ploy management consultants would do well to dotheir home work and check with previous clients ofthe consulting firm being considered. Certainly theproblem of unethical and incompetent consultingpractices is grave and the hour is late.

REFERENCES1. Ill-effects are already observable in one of these

companies, primarily in an exodus of capable middle-managers to other companies.

2. Vance Packard, The Naked Society (New York:Van Rees, 1966), pp. 96-98.

3. To respect management's request, the company'sactual name is not used. In all other respects the factsare correct.

4. Rensis Likert, "Measuring Organizational Perfor-mance," Harvard Business Review (March-April 1958),41-51.

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