“FOOLS THINK THEY NEED NO ADVICE, BUT THE WISE LISTEN TO OTHERS.”

A sound concept, and one that has withstood the test of time.  As a matter of fact, it’s a quote from the Book of Proverbs, penned by King Solomon, who is still universally regarded as having been pretty wise in his own right.  Judicious leaders (even those with the wisdom of Solomon), are often characterized by their skill at surrounding themselves with good counselors.  Just as leaders of nations have their cabinets and their special advisors, business leaders have their boards of directors, executive managers and their management consultants to lend a hand.  So why, with all that well-qualified help, have many business leaders recently found themselves accused of orchestrating financial scandals that have sucked their companies dry and shattered the public confidence in American corporations?  The general consensus is, “they got greedy.” But you can also make a pretty good case that they got poor council.

If you look closer at the root causes behind these scandals, it becomes clear that many business leaders involved were put in temptation’s way by the very people they relied on for good advice—their boards of directors.  While these directors didn’t overtly tell them to break the law, they certainly are complicit by having established pay packages that promised unprecedented remuneration if the firms’ stock price went up.  By giving their executive management pay incentives that depended upon stock prices, those directors thought they were motivating their managers more effectively.   Since the directors had stock in the company, this motivational approach was not a bad deal for them, either. 

The Institute of Management Consultants USA, Inc. (IMC USA), the professional association for individual management consultants in the United States, has as a backbone of its organization a Code of Ethics which is a pretty good guide to weather the storms of dicey situations.  According to the Code, “Members will avoid conflicts of interest, or the appearance of such, and will disclose to a client any circumstances or interests that might influence their judgment and objectivity.” Judgement and objectivity are cornerstones of wise council.  But unfortunately today, a company’s monetary worth (aka its stock price) is perceived as the sole indicator of success.

The directors, the auditors, and all the others who allowed these business scandals to take place right under their noses certainly knew that the price of a company’s stock is only one of the indicators of the strength of a company.  But they elected not to look at the big picture, and to go along with the questionable approach because they lacked the independence and the moral courage to take a stand in opposition.

We can tiptoe around capitalist theory all we want, but in the final analysis the whole idea of being in business has been mischaracterize if it is solely to “make money.”  Money is just the by-product.  The idea of being in business is to offer a good or service that has value to other people.  If you can efficiently produce a good or service that people believe provides them with value they will be happy to spend for it.

For the last several months the market has been reflecting the fact that the stock-buying public does not believe that stocks are a good value. Maybe it’s because they believe the executive managers of the companies offering their stock for sale are more focused on making money than on providing real value to their customers.  Maybe those executive managers should be seeking the wise council of their customers about how well the products and services they offer are being perceived in relation to those of their competitors.

In the 21^st century, the wise who seek council should be sure they are looking in the right place.

IMC USA promotes a strong Code of Ethics among its members and is the only body that awards the Certified Management Consultant (CMC) designation to qualified consultants. IMC USA members with CMC designations are acknowledged as leading experts in their fields, with track records of significant accomplishments in their consulting engagements. IMC USA is the U.S. representative to the prestigious International Council of Management Consulting Institutes (ICMCI), which has chapters in 32 foreign countries. For more information, visit IMC USA's website at www.imcusa.org , or call Lisa Burdige, Director of Public Relations at 800-221-2557.