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Conflict of Interest or Good Business Model?

Ethics has been a topic of this Blog at least nine times in the past.  Let's make it an even 10.

An interesting debate in the industry.

Earlier this month, one of the world's largest retained (executive only) search firms bought a very large assessment organization.  This is the third purchase (of which I am aware) of a non-search but HR related business (all coaching and development focused) by this search firm.  They are clearly making a statement about their business intentions.  This same search firm has made overt overtures to other search firms regarding purchasing them in order to expand or improve their business.   This search firm is not the only global search firm that also does assessment/development coaching.

Can you assess Coke and do searches for Pepsi?

No - this is not an actual example (that I am aware of), but it is an interesting question to ponder.  As a search professional, I gain market information on competitors to my clients all the time.  I do not do this to spy; it is simply a byproduct on the work that I do.  I am calling into the competitors of my clients to identify a candidate for an opening I am working to fill.

Back to Coke and Pepsi - if I do assessment and coaching for Coke, I will know who is their best talent and who has the runway to move beyond their current or proposed role.  My company then does search work for Pepsi.  What happens to the Coke information?  While you can easily say that this will be kept secret, let me refer you to our Blog from September 17th.  A local firm passed information on a prospective candidate to another part of their company.  It was a routine internal communication for the firm, but an ethical breach in the eyes of the candidate.

There is no single, agreed-upon ethics model or stance.

I can't hide my opinion when I write on ethics.  Call me opinionated if you like.  That said, the firms referenced above that do both assessment/coaching consulting as well as search are not acting unethically in their opinion or in the eyes of their customers.  I can tell you that customers are not in universal agreement that a firm offering both service areas is something they want.  (I attended a conference where this was hotly debated by four large companies.)

Each person and each company has to take their own stance, making sure to ask questions and agree on ethics rules when they work together.  If I am Coke and I know my search or consulting services provider works with Pepsi, I need to make my decisions accordingly. So does the service provider/consulting firm I work with - they need to decide if they can do business with one or both companies and in what service area(s).

As with all previous posts on ethics, make sure to have the dialogue BEFORE you engage.  Having it afterward is too late.

Wishing you all the best for the holidays and 2013!