Paid consultancy = conflict of interest?

Submitted by Anonymous (not verified)
in
General Questions and Comments

Does accepting a paid consultancy engagement in the area of your existing role constitute a conflict of interest with your current employer?

I have recently been approached by a consulting firm requesting my time to act as a paid consultant (not a lot of money) to a party interested in entering our industry.  The consulting firm specifically mentioned my role title from LinkedIn and wants to engage me to provide insight into the same industry in a different region of the world.

I am a low-mid level executive and have specific knowledge of company portfolio and strategy that I could not (and would not) bring into the discussion and would only use public information.  I have told the consulting firm that, but they still want to engage me. 

Is this a common practice?  Is this likely just an interview disguised as a consulting engagement?  I am flattered, but understandably wary.

Has anyone been in this position that could offer some insight?

Thanks and Merry Christmas.

dad2jnk (Ken)

Submitted by Mark Horstman on Thursday December 23rd, 2010 12:35 pm

Ken-
Great question, and one that will require a delicate touch.  I am spending the next couple days with my family, but hope to share some thoughts if you'll give me some time.
Mark

Submitted by Kenneth Dallmier on Monday December 27th, 2010 8:14 am

Thanks Mark.  I will check in between family outings and American football games.
All the best, Ken

Submitted by Asterisk RNTT on Tuesday December 28th, 2010 12:39 pm

I think you are in a situation where even though you are 100% above board, the perception you generate may sink you. 
Take the example of the recently deposed CEO of Hewlett Packard.  He is/was the A lister of A lists. Made HP relevant again and grew it to $ 100 Billion USD.   And then he spent $75,000 in a slightly inappropriate way.   The Board of the Directors could have slapped their superstar on the wrist and asked him to pay back the money, with some sort of penalty.  But they chose to fire him, because of the perception the situation generated.
His reputation did not save him. Will your reputation protect you?

Submitted by Bruce Aiton on Tuesday January 4th, 2011 7:37 am

This is akin to aiding and abetting the enemy.  You are helping a competitor.  Don't do it.  Might be different if you were helping an industry journal with research or a white paper.  But specifically helping a competitor join in the fray, particularly with your unique and proprietary knowledge should not be done.  Even if you don't intend to share the proprietary knowledge your employer has no way to know that you have not breeched that ethical boundary.

Submitted by stephenbooth_uk on Tuesday January 4th, 2011 8:21 am

 Would you feel comfortable going to your boss, telling them  that you've been asked to do some paid consultancy work for another company (including the name of the company) and asking them if they're OK with it?  If you did do you think they are likely to say OK?  If the answer to either questions is 'No' (or 'Yes' but they expect you to spy on the other company) then I would recommend not taking the assignment.
As an employee there is, sometimes written and sometimes not, an expectation that your loyalty is your employer.  The term 'Fiduciary Responsibility' is often used for this.  There is also, as asteriskrntt1 said, the matter of reputation.  You not only have to be honest in fact but also have the appearance of honesty beyond reasonable reproach to maintain a good reputation.  If you worked for me and I discovered that you had taken outside work without informing me of it and who it is for then I am going to presume that you did not tell me because you were being dishonest.  As a minimum you would be on disciplinary suspension immediately and very likely sacked and under investigation for fraud or/and facing a civil case for the potential loss caused by your actions.
You may also find there's a clause in your contract forbidding you from taking on outside work without agreement from your boss (some employers have it, some don't).  I have had to inform my employer that I had been elected treasurer of a volunteer group in my local aerea due to such a clause.  One of my colleagues was disciplined (written warning, 1 step short of dismissal with cause) because she had an Avon round and hadn't told her manager.  It wasn't that they thought that the Avon round compromised her loyalty to the company or her ability to do her job it was that she hadn't told them and it was a technical breach of policy to not inform them.  She was actually 'thrown under the bus' by another collegaue who was being disciplined for a similar breach which did compromise his ability to do his job (been caught doing evening bar work whilst on-call) and cited in his defence that she was doing outside work without informing them and they were not disciplining her.  How confident are you that none of your colleagues would find out and when they do wouldn't throw you under the bus come steel cage death match time?
Stephen
--
Skype: stephenbooth_uk  | DiSC: 6137
"Start with the customer and work backwards, not with the tools and work forwards" - James Womack
 

Submitted by Kenneth Dallmier on Tuesday January 4th, 2011 2:41 pm

All,
From a practical view, and mostly for the reasons presented by Stephen, I decided prior to the holidays to decline the engagement.  In my role, there is no plausible argument to say that I could keep proprietary information from a discussion like this.
I would still be interested in Mark's comments on the more theoretical aspect.  To me, this is the conundrum that a very good consultant faces and would be interested in his perspective.
Thanks for your thoughts.
All the best, Ken