Protecting the Firm

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    One of the most prominent aspects that we promote on this podcast is the need for consultants to be Protect_Firm_Informationclient minded.  And while it’s true that those of us in any professional services firm should strive to put the client first and dedicate ourselves to the client’s success, we should also make sure that we keep our own firm’s interests in mind.  Last week we spoke about protecting confidential information, this week we’ll talk about what a consultant should do in terms of protecting his own firm.

    1. What does a consultant need to consider to protect his own firm
      1. The consultant/client relationship should be a win-win situation. Obviously, a top consulting firm needs to deliver value and make their service worth the client’s money.
      2. But with that being said, the consulting firm needs to be able to make a fair profit.  If they don’t, they cease to exist and that doesn’t help the client any either.
      3. So in order to be profitable, the firm needs to be protected from the perspective that their own confidential information needs to be kept confidential.
      4. Another issue a firm needs to be aware of is with what I’ll call dirty laundry.  This is the type of internal politics and turf wars that occur within the firm.
      5. Exposing things like inner turmoil and firm politics to clients can damage a firm’s credibility not to mention the individual consultants that are working for the client.
      6. Another thing that consultants need to do to protect the firm is when they disagree with firm decisions and policy.  A consultant is not going to agree with the direction the firm is taking at all times.
      7. But there are times when you need to follow the company line whether you agree with the firm or not.
    2. What are the ramifications when these things happen?
      1. I think the biggest damage is to the firm’s credibility.  Consulting firms are hired to give companies advice.  If there’s evidence of internal strife within the consulting firm, then the client may wonder why they should follow the firm’s advice if they can’t even keep their own house in order.
      2. It’s sort of like the marriage counselor that’s going through a divorce or a medical doctor that smokes.  You just begin to question their credibility as business consultants.
      3. Another ramification is when there is internal strife within a firm, it becomes a distraction. If you as a consultant are dealing with a politically charged environment or any internal issues, that can prove to be a big distraction from the work you’re doing for the client.
      4. And exposing that to the client will distract them.  Any time a mistake is made, they’re going to immediately assume that it’s because the consultants are focused on those internal issues.  So it’s a bit of a combination of distraction and credibility loss.
    3. What does a consultant need to do to ensure that confidential information is kept confidential?
      1. This is one of the biggest issues I see in protecting the firm.  I’m a big believer in consulting firms being open and honest with their clients.  Transparency is key to developing strong, long-term relationships with clients.
      2. But there is some information that needs to be kept confidential.  For instance, you never want to reveal the consulting salaries and some firms don’t like to publish their individual billing rates.  They may price projects based on a fixed bid for the entire project or provide a blended rate for the entire staff so that you don’t know anyone’s specific billing rate.
      3. This protects them from their rate schedule getting into the wrong hands.  You never know when a client may share that information with a competitor or even if a client employee leaves their company to join a competing consulting firm.
      4. The firm may subcontract with another firm or with individuals and the rates the firm pays those consultants should remain confidential as well.
      5. One other aspect of this is when you have multiple clients, and that’s the case for most firms.  It can very sticky if you serve two clients in the same industry.
      6. Let’s say that your firm has two clients in the banking industry.  Unless they have a specific non-compete agreement with you, there’s nothing wrong with having two competing firms as clients.
      7. I once worked for a large firm that was the result of a merger of two firms a few years before I joined.  The two separate firms each had a competing Fortune 100 client.  The newly merged firm was told by each of those two clients that they needed to select one or the other.  Neither would allow the firm to serve both firms.
      8. That’s an out-of-the-ordinary situation, but it does happen.  The more likely scenario is that a firm has two competitors as clients and neither knows they serve the other.  It’s critical for the firm to make sure that none of one client’s trade secrets is shared with the other.
      9. One way to make sure of that is to have completely separated teams.  No one on one client’s project can also work on the other.  And if a consultant finishes their work on one client’s project and moves on to the next, you want them to share their experience, without sharing any trade secrets.
      10. Most consulting firms sign a non-disclosure agreement or NDA, which is a legal contract between the firm and the client stating that they will not release any proprietary information about the client to anyone else.
      11. Once the firm signs one of these, it’s their responsibility to make sure their individual consultants working on that project know the terms of the agreement and uphold the firm’s commitment.
      12. This includes talking about another client where you could be overheard by your client or leaving information out on your desk or on your computer screen.
      13. If your client walked up to your desk to ask a question and saw another client’s information you could have violated an NDA or at least violated an ethical rule of protecting your client’s information.
    4. Let’s talk about the dirty laundry. When have you seen dirty laundry exposed to the client?
      1. The most common situations I’ve seen this is when the consultant starts to develop a good working relationship with the client.
      2. They develop a friendship where they start going out to lunch or out for drinks after work.  Sooner or later, they start talking about the inner politics at the client.
      3. The client starts talking about their own dirty laundry.  This could be about two executives that hate each other because they’re both fighting to be promoted to the same position or flat out gossip about who’s sleeping with whom.
      4. I’ve heard some very interesting and entertaining stories from clients who develop this sense of security in telling an outsider.
      5. I was once out for drinks with a group of people from the client and a married administrative assistant pulled me aside and told me, in more detail than I wanted to hear, about her affair with one of the married executives at the company.
      6. Often when people tell those stories, especially to an outside person, they expect you to reciprocate and tell some equally interesting and scandalous stories about your own firm.
      7. Every firm has them, whether it’s lascivious affairs between two married people or some battle between two political rivals.
      8. Sometimes it’s just implied that I should provide my own stories and other times they come right out and ask me.  ‘What kind of BS goes on at your firm like that?’
    5. What does a firm need to do to avoid airing their dirty laundry?
      1. This needs to be instilled early on to any new employee about how it will undermine the firm’s credibility as well as their own.
      2. If you make the consultants understand that they may be less inclined to get involved with it.
      3. One example I’ve given is, let’s say you hear about two consultants at your firm who are fighting an internal battle for a single promotion.  The client doesn’t know these two people so what’s the harm in telling them about it?
      4. So the next week, one of them gets assigned to your project.  Suddenly the client knows something about this guy and he has no credibility there at all because you’ve undermined it before they even met him.
      5. So one thing I always suggest is not to get caught up in sharing the stories.  One advantage we have as consultants is that we’re often out at client sites.  When the client starts telling these stories and then asking us to provide our own internal dirty laundry, I usually say something like, ‘I’m never in the office, so I never hear anything about that kind of stuff’.
      6. That doesn’t always satisfy them, but if you continue to claim ignorance they eventually figure you don’t know anything.
      7. I also try not to fuel their fire. When they start into telling those kinds of stories I’ll let them talk without asking any questions.  They’ll tell as much as they want to tell and I’ll gradually steer the conversation to some business aspect of the project or even to something like sports to completely divert the conversation.
      8. Eventually the client will learn that it’s just no fun to share the gossip with you if you don’t take too much interest in their stories and you don’t return the favor.
    6. You also talked about when consultants disagree with decisions and policies of the firm.  I’m sure that has to be a challenge for firms.
      1. Yes. I was once in a meeting where the client asked an individual consultant what to do about a business problem. This consultant’s response was “Do you want the firm’s answer or my answer?”
      2. He essentially didn’t like the firm’s policy on this and decided to undermine it by telling him that he disagreed with the firm and this was his advice.
      3. If you disagree with a firm’s policy and you have some good reasons to do so, then you should talk to the firm’s management. They may have other reasons for this policy that you’re not aware of.  In the end, you have to decide whether you can live with their policy and follow it even though you disagree.
      4. If you can’t go along with it, then that’s a problem. If you’re not passionate about the services and the advice that the firm provides, then maybe you need to move on.
      5. But you have to be a team player.  And that means towing the company line even if you’re not in 100% agreement.
    7. So what is a firm to do about these issues?  How do they ensure that they are protected from these forms of exposure?
      1. It’s something of a training issue, but I think it needs to go beyond that.  Training implies that you teach them once and hope they remember it.
      2. I see it more as an internal marketing campaign.  When a company wants to market a new breakfast cereal, they don’t just run one commercial for it and assume everyone will go out and buy it.
      3. They have a marketing campaign where the advertise it using different channels and constantly remind their market about the product.
      4. A firm needs to do the same thing by constantly reminding them of the need to protect their privacy and that of their clients.
      5. We’ve listed a number of different ways a consultant can inadvertently slip up and do it without even noticing it.  The firm needs to continuously remind them to always be on their toes.
    8. Any final thoughts on protecting the firm from confidentiality and other issues that can expose a professional services firm?
      1. A lot of this comes down to protecting the firm’s brand.  Any type of exposure to confidential information or dirty laundry hurts the firm’s brand and as an extension, it hurts your own brand by looking unprofessional.
      2. It’s not just in the firm’s best interest. It’s in the client’s best interest.  If they don’t need to know about what goes on behind the consulting firm’s doors, then they shouldn’t know.
      3. It’s not a matter of keeping secrets from them, it’s about protecting your firm’s brand.

    Next week’s topic: Being a Guest at the Clients Premises

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