on Consulting Issues
Carl Robinson, Ph.D.
1. Should a consultant own stock in the companies to which he/she consults?
Rodney Lowman: It depends. Generally, consulting psychologists should avoid dual relationships or conflict-of-interest situations. There may also be legal restrictions against buying or selling stock based on insider information that a consultant might have access to. Personally, I think it is “cleaner” not to own stock in companies with whom a consulting psychologist works, at least during the period of the engagement.
Shirley Maides-Keane: The easy answer here is a flat “no.” This is especially important for those working in larger organizations where stock ownership could interfere with objective professional judgment and limit the consultant’s true utility to the organization. On the other hand, if the consultant is working for a Fortune 500 company, and owns more than two mutual funds in his/her 401K or IRA, it is quite likely that he/she already owns some of the company stock since mutual funds invest in many of these large organizations. The consultant could have a difficult time tracing such ownership and, consequently, following the imperative to avoid stock ownership completely could be a tall order. It seems to me that the crucial factor has to do with the consultant’s deliberate ownership of the client’s stock. While a consultant may believe that his/her job is to help the organization be more profitable, and so stock ownership might be viewed as a vote of confidence, he/she needs to realize that a substantial value of psychological consulting expertise hinges on remaining unbiased in evaluation and development of human performance. During tough economic times it may be tempting to take an offer of stock payment for some portion of one’s consulting fees, but taking that stock puts the consultant on a slippery slope that leads into an ethical quagmire (when to trade, how to view senior management, etc.).
Mike Atella: The principle behind this deals with whether it is wrong for a consultant to hold a stake in the companies to which he/she consults. There could be biases and blind spots if he/she does. The consultant should seek consultation from a mature, trusted & experienced consulting psychologist when doing such consultations. Actually, some “ownership” may help effectiveness and motivation. The “internal consultant” has some stock – or stake – in the company in which he/she consults. And this consulting is usually legitimate; though working with an external consultant could be helpful. Just as an external consultant working with an internal consultant could also be helpful. Another point is that in these days of mutual fund ownership, it is easy to have a client in which you have some stock/stake. if the consultant has an axe to grind with the company or some other possible biases, then he/she should either not take the consulting client or be sure to be taking time for professional consultation (perhaps even ongoing) while doing his/her work.
Gordon Gibson: There are situations in which consultants have owned stock in their client’s firm without ethical conflicts. Some consultants have purchased a few shares blind to the client so they might observe the company performance from the perspective of the stockholders. This has generally been in the context where the consultation intervention is directly related to the financial performance of the organization. There are also situations in which the consultant has taken stock in place of professional fees where the client may have inadequate cash flow and the potential value of the stock is all that is available for bartering. In some organizations the initial stock exchange has become more clearly an ethical issue of the client having been exploited by the consultant, albeit not necessarily intentional, while struggling with the organizational start-up.
Some consultants argue that when the consultant has a stake in the organizational financial performance, that consultants are more reflective and conscientious in their consulting. More recently we have seen how the focus on the bottom line has negatively affected the judgment and behavior of both consultants and management in what have been grossly unethical situations resulting in horrific outcomes. In sum, there are cases in which consultants have stock ownership and there are no resulting ethical issues. There are, however, cases in which the organizational or client’s financial distress have led to stock exchanges in both an unethical process as well as unethical results. Let there be caution and deep reflection on thought processes that suggest our consulting will be more effective for the organization if we also own stock in their corporation.
2. Is it unethical to individually coach family members in a family-owned business when the organization is the client?
Gordon Gibson: Most organizations have one, two, or more in leadership positions who are both organizationally conscientious and organizationally altruistic. To provide individual consultation that promotes managerial leadership effectiveness and performance of an individual member of the leadership, regardless of whether it is a family-, privately-, or publicly-held organization, is not necessarily an unethical shift in the definition of the client. However, if the consultant is in the position of providing individual consultation for a takeover by one member, or for a major acquisition, or divestiture without family knowledge and involvement, then, the individual coaching raises questions about the ethical behavior of the consultant with the client organization.
can be part of the organizational intervention and
leadership development initiative. However, if there is a conflict between the individual’s
needs and the needs of the organization, it is important
for the consultant to remember and even discuss with the
person coached that the organization is the client.
Confidentiality needs to be worked out beforehand.
I would argue, yes. This potentially constitutes a dual or
multiple relationship situation. With all the coaches in
the world, why not refer out if the organization is indeed
Shirley Maides-Keane: Many of my clients are family-owned businesses and I usually find that some individual coaching with family members is necessary. Since I typically start an engagement with a group meeting involving major family and non-family members, individual contact usually is evaluative with minimal performance coaching. Most of the time there is some individual coaching with the CEO, and there may be some limited individual coaching with other family and non-family members that supports the objectives of the consulting engagement. If more extensive coaching of family members is necessary, that seems to be outside the boundaries of the consulting, and is most ethically handled by referring the individuals to independent coaches.
Can organizational consultants go to social events
with their clients?
is a common practice and usually is not a problem.
The first time I attended a theatrical performance
by a consulting client who is a local celebrity I was a
Since I have maintained very strict social
boundaries on my social contact with clinical clients, the
act of going out of my way to have social contact with a
client was a bit unsettling at first.
Regular business lunches and business social
occasions are certainly within the scope of acceptable
organizational consulting practice.
Even so, borrowing some discretion from the strict
ethical boundaries of clinicians can serve the consultant
well and still allow for enough social contact to help
clients feel comfortable with their organizational
yes, if this is the norm in the field and the contacts are
limited to those appropriate to a social situation.
Obviously, confidential and personal matters should not be
discussed at a social gathering or in earshot of those who
might overhear information best kept private.
Gordon Gibson: Over the course of years with longtime clients the consultant may know members of the client organization better than their next-door neighbors. If consulting with religious organizations the consultant may be attending social functions of that organization including worship. If consulting with an organization that must interact with a legislative body, government officials, and lobbyists, there will be plenty of challenges of social relationships testing the boundaries of the consulting relationship. If consulting with a longtime client in a metropolitan area where there is an opportunity to attend an NBA or NHL tournament game, I would say have a great evening, but keep in mind the boundary threats. If the situation has an obligation functioning where the fraternal membership is exclusive or where a quid-pro-quo interchange is evident, then there would appear to be the development of an ethics dilemma related to developing a dual relationship with the client.
as long as they do not get close or intimate.
If so, this can compromise one’s effectiveness
(e.g., candor being hindered due to fear of losing a
friend or lover; favoritism may also result).
Social contacts are often inevitable in smaller
communities (e.g., small towns, church communities)
4. What do you do if you are working with a CEO and learn that she is guilty of malfeasance?
would depend on how the information came to the
psychologist and his/her contractual relationship with the
firm. In the first place “guilt” or innocence is not
decided outside a judicial context. If the person were
found “guilty” of malfeasance that information would
generally be in the public record and not “news” to
the company. If a psychologist hears of allegations of
malfeasance, the specifics matter in terms of access to
the CEO or Board, purpose of the consultant being in the
company. In some instances, it would be appropriate to go
directly to the CEO and address the issue. In other cases
there would be an obligation to go to the Board. In still
others there might be a legal duty to report the
information to an outside agency.
it with the CEO and work to have him correct the
confidentiality agreement between consultant and client is
consultant should consider reporting the individual to the
board if risk to others is involved, (e.g., Enron
employees’ pensions) and the person continues the
consultation with the APA ethics committee, and other
trusted experienced psychological consultants would be
recommended before doing any reporting.
is a tough issue that must be addressed in order to
continue working with the CEO.
There are so many possible scenarios that could
play out depending on the specifics.
So the first thing I would do is to explore the
specifics and how they relate to the work we are doing
her behavior is grossly unethical and illegal then I might
question whether I could continue to work with her.
On the other hand, if there is a good working
relationship, and the CEO is willing to take
responsibility for whatever consequences result from her
actions, I would continue to work with her.
the consultant learns of CEO/client malfeasance, there is
the responsibility to name it, claim it, and determine
with the client how to respond.
Generally, the client can address the problem or
change the course. Some
would argue that this a bit naïve response and
admittedly, I have not been in a large and complex
malfeasance situation where the contingencies are far too
powerful for the above approach.
If it were a situation in which leadership denied
the presence of malfeasance or believed nothing could
effectively be done to change the course, then I would
rearrange the contingency relationships for the CEO.
Either the CEO proceed with addressing the
situation or consequences will follow including
notification of the governing body and appropriate legal
authorities, if illegal, and termination/discontinuance of
the consultation agreement.
You conducted a 360 assessment for an executive
coaching client and one of the respondents (a direct
report) writes in the open-ended comment section that your
client has been sexually harassing people (not the direct
your client reads the comment, he says it’s a lie and
tries to guess who made the comment.
How would you handle that?
Gordon Gibson: Most organizations not only have personnel policy and practices about sexual harassment, but have formal training programs. Therefore, the direct report would be aware of the policy and practice and either there is merit to the expressed concern or it is a set-up as the executive suggests. With the concern now identified the executive should have the Director of Human Resources or other designated independent professional initiate the investigation meeting first with the representative of the individual complaining (or all of the individuals completing the performance appraisals) and then with the complaining individual. There are standard practices for conducting this type of inquiry, completing reports and recommendations, and for carrying out interventions.
discuss this with the client.
of all I would be curious about the client’s reaction
and what he thought the comment might mean.
It could be really important data that could
influence the client’s developmental plan in ways that
might not be obvious initially.
A few years ago I worked with a business owner who
was facing litigation for sexual harassment brought
against him by an employee.
The fact that the allegations were not true was a
minor detail in our work.
This highly successful entrepreneur was devastated
by the accusations because they triggered long forgotten
memories from a rough childhood on the streets of Chicago. Fortunately, we were able to stabilize his business as well
as work on the childhood issues that contrasted so sharply
with his life at the time (successful business owner,
devoted husband and father).
Even in the early 1990s when sexual harassment
charges garnered lots of attention, public relations,
business image issues, etc. took a back seat to the
importance of exploring what such accusations mean to the
that perspective, the consulting was able to help the
business owner as well as his organization.
advise bringing the person back to the ground rules of the
assessment. If those stipulate that all comments are
anonymous and confidential, the person should be
discouraged from speculating on the source of the
comments. If it can be done without creating inappropriate
anxieties in the larger group, the person might address
the issue with the group as a whole, indicating that the
manager understands that this was confidential but he/she
wanted to encourage anyone who had the impression of
sexual harassment occurring to deal with the appropriate
corporate or legal authorities about their allegations.
The procedures to be followed—and the important
implications of making such claims capriciously—could
then be reviewed with the group.
6. A client asks you for referral recommendations for a consultant who will provide a service you do not offer. You give your client 2 names, one of which you have a referral fee arrangement where you receive 15% of the fees they charge. How do you handle that type of arrangement with your client?
APA ethics code clearly stipulates that a referral fee
cannot ethically be paid for a referral per se. Only if
services are performed for the client or referral is it
appropriate to have a joint fee of this type.
are all kinds of financial arrangements that are so common
they are considered standard and customary in the
I think psychologists bring a different perspective
to those arrangements and, hopefully, model integrity and
honesty in their arrangements.
When I give a client two names I like to give them
the best possible referrals that I can find.
I do this for their sake as well as my own.
Over time I think that kind of business policy
reflects well on my company.
I do not like to have referral fee arrangements
because they interfere with my best judgment about
have found myself not referring to professionals that
offer those kinds of relationships because I am not
comfortable collecting money for referrals.
I suppose there may be ethical ways to do such
practices but I have not been comfortable with those
arrangements in my business practice.
If I had such an arrangement I suppose I would let
the client know about it when I gave out the referrals.
While there are firms that engage in fee splitting for referrals for the
most part this is so unnecessary within consulting
psychology or within the collegial relationships we have
in the Society of Consulting Psychology.
Given the conditions specified the referring
consultant could request the consulting firm to discount
their fees by an amount equal to the usual referral
percent/split. Overall, fee-splitting, or finder’s fees, or other similar
packages are arrangements that can lead to ethical
dilemmas and in the case of consulting psychologists
within our professional society should just be avoided.
the client (when giving the 2 names) about the finder’s
fee you will receive.
7. You have been consulting with a client organization, providing executive team assessment and development services. You have developed a very good relationship with the senior executive team. One of the executives asks you if you would be her executive coach. Would that be unethical?
if it overlapped and/or interfered with ongoing team
focused work, but I often find that team assessment and
development involves some individual coaching at different
points in time.
if it is as part of the overall plan to do such coaching
as a development service.
It is unethical if you were getting a separate fee
for this, for the temptation would be to be seeking
additional private paying clients while doing work for the
not. This scenario also represents a situation of
potential dual relationships. So long as there is an
ongoing relationship with the organization and team, it
would be preferable to let another professional work with
the individuals within that team.
is not uncommon that during an organizational consultation
other organizational issues are identified for which other
interventions are required.
An addendum or memorandum of understanding could be
made to the contract so the executive consultation would
be disclosed. If it is perceived that this is a conflict, i.e., executive
consultation provides a competitive advantage for the
individual or limits the team functioning, then they could
consider an independent coach for this member.
It may be the case that the individual is highly
valued and both the team and the individual concur that
individual coaching would be beneficial not only to the
executive member but to the overall organization.
8. Drawing from your experience, would you describe one of the more challenging ethical quandaries you faced and how you dealt with it?
with dual relationships, especially in a large church
community in which I do consulting.
I have to be careful that I am not either a friend
of my client or a ministry partner.
corporation with which our firm had been consulting on a
number of human resource management systems issues over a
couple of years, informed us that they were merging with
two other national firms.
They requested a proposal for providing them a
performance valuation system that would integrate the
systems of the three corporations and could be used for a
gain- sharing program.
Our proposal reflected an empirically supported
methodology and intervention(s) that had been successfully
utilized with our client two years earlier.
Within a week of submission of the proposal we met
with them to learn that while they appreciated the
scientific rigor and deliverables, they wanted us to compress the
project to three weeks and reduce the performance
evaluation system to a one-page evaluation format that
would assess all members on the same dimensions regardless
of the qualifications, position, and the job
meet the new deadlines and deliverables they offered a
six-figure bonus to the contract.
We declined on multiple bases and they contracted
with another firm. Our
firm would not compromise on the required methodology, and
would not collapse multiple performance dimensions to an
unsubstantiated system, and a system that would be plagued
with future problems although it might appear expedient at
almost two decades I ran one business that was both a
consulting and clinical practice.
In 1999 I separated the two businesses because I
encountered some ethical quandaries related to a case that
was originally in my clinical practice.
Several years after I had treated the youngest son
in a large family, I was asked to see his older brother
around issues in the family business.
There were multiple business and clinical issues
that emerged. I
elected to treat the case clinically at the time but did
some leadership development assessment and coaching
alongside the clinical work.
The case really motivated me to establish clearer
boundaries between the practices and I thought I had the
issues clarified until another family member approached me
in 2002 to consult with the business. Without going into all the details, I think it is fairly
obvious that the ethical quandaries in juggling clinical
and consulting roles have remained central in my
relationship with this client organization.
I have opted to work exclusively with the business
and to refer family members to others for individual
already provided several of the ethical situations for
In your experience, what are some of the most
common types of ethical dilemmas we face as consultants
that have not been mentioned above?
relationships, informed consent, and confidentiality are
the types of situations that I most often hear about as
raising ethical issues.
consultants who have transitioned from established
clinical practices, there are numerous issues about
consulting business with former clinical clients.
It concerns me when I hear consultants asking
clinical clients for business contacts.
I believe there is an ethical violation there.
relationships have been mentioned somewhat.
Another temptation toward unethical behavior is to
practice in areas in which you do not have expertise.
Gordon Gibson: There are two areas of ethical dilemmas that could be added to those presented, at least, in the way I responded to the dilemmas.
not frequently encountered in discourse about ethical
dilemmas in consulting psychology, the potential power of
the organizational consultation interventions consulting
psychologists utilize with organizations, places the
consultant in a moral enterprise as noted by our
colleagues Newman, Robinson-Kurpius, and Fuqua (2002).
Our responsibility is greater than the mandatory
ethics set before us in the APA Ethics Code; our
responsibility is to engage in maximal moral and
ethical outcomes, or aspirational ethics.
Our moral and ethical responsibilities are
very, very substantial.
What advice would you give to consultants if they
face an ethical situation that they are not sure about?
your resources to find the latest ethical standards, and
consult mentors, colleagues, or coaches who are in your
support network. Talking
through the issues with other professionals can help you
get clear about the situation.
Build and maintain collegial relationships to prevent professional
is a term in the field of anthropology that relates to
losing one’s objectivity in the situation, that is,
becoming a part of what it is you are observing and
Indeed, anthropologists have colleagues or others
identified outside of the culture they are studying to
provide them an anchor to their scientific methodology.
The consulting psychologist has an opportunity to
build long-standing relationships with other consulting
psychologists outside of their practice.
These relationships will enable the consulting
psychologist to be better grounded and to have a resource
at hand to clarify how a particular ethical dilemma could
is wisdom in many counselors.
Seek consultation. Call the APA ethics committee for a consultation as well.
Don’t operate as a lone ranger.
Call your Society of Consulting Psychology friends
and colleagues for their advice.
the APA ethics code. Consult colleagues. Consult on an
advisory basis the APA Ethics Office.