How can Consulting Firms leverage Transparency?

Dans le cadre de leur spécialisation dans le secteur du conseil, les étudiants d’Audencia participent à un concours d’articles portant sur les enjeux liés à l’organisation des cabinets de conseil et aux carrières dans ce domaine. Chaque semestre, le sujet est différent, les étudiants sont invités à développer un point de vue réflexif sur les tendances du secteur, en lien avec les apports du cours. Les étudiants sont appelés à trouver un angle intéressant et original sur le thème qui leur est imposé, à interviewer un ou plusieurs professionnels du conseil sur ce sujet et à en tirer des conclusions argumentées pour y porter un regard nouveau.

In the corporate world, transparency is increasingly becoming a benchmark for evaluating the integrity and ethical standing of organizations. The push for openness and clarity in business operations is not a novel phenomenon, yet its importance has magnified in the current age, where information spreads rapidly in front of public scrutiny . According to many , this growing demand for transparency is not merely a trend but a shift towards more accountable and trustworthy business practices across all industries. For consulting firms, where the essence of operations revolves around expertise and strategic advice, balancing transparency with confidentiality poses unique challenges. But facing these might make transparency your firm’s best asset.

Transparency in the consulting world
In Organizational theory, transparency can be defined as “the perceived quality of intentionally shared information from a sender” . Concretely, in the corporate world transparency refers to the practice of openly and honestly disclosing information related to a company's operations, decisions, and business practices to its stakeholders, including employees, investors, customers, and regulatory bodies. We can understand how transparency would constitute a key issue for decision-makers within a consulting firm. Isn’t a certain nondisclosure, even secrecy, necessary to conduct your highly tailored, often fiercely negotiated, relationship with your client? But there’s also another specific hurdle, for a knowledge-intensive industry: revealing methodologies and strategies could compromise intellectual property, offering rivals insights into proprietary approaches that differentiate one firm from another and ultimately depreciate one’s value perception. At first sight, in this ultra-competitive sector, certain secrecy seems essential, and to have long been the norm: efforts in transparency often seem to have been put in place first and foremost under the constraint of State legislation. At first sight, we get that a proactive policy on transparency was a difficult choice of governance and wouldn’t necessarily be met well by any of the stakeholders.

Transparency’s hidden benefits
However, when strategically managed, transparency can transform these challenges into significant advantages in terms of efficiency, good relationships, and better brand value. Internally, transparency improves governance by promoting accountability and shared responsibility among employees. 
Firstly, we believe that there needs to be a better understanding of the scope of transparency. Indeed, it seems logical to distinguish the framework of intellectual property (methodology, R&D) protected by patents from the rest.  Secondly, it must be borne in mind that not all aspects of consultancy require the same degree of transparency. Simon Roux , a Public Sector Analyst in one of the leading global consulting firm, gave the example of his work for the French Ministry of the Armed Forces, which is subject to full disclosure in view of the ethical issues that could be raised by excessive confidentiality. Furthermore, being open about operations facilitates compliance and reduces legal risks by ensuring that all actions are above board and in line with regulatory expectations. This proactive approach to transparency can also attract investment, as potential investors are more likely to engage with firms that exhibit clear and honest business practices. To paraphrase the philosopher Finn Janning  : "Transparency is proxy for trust" . And consulting firms rely, notably, on their image and are therefore tributary on this type of proxies. But transparency could also benefit talent acquisition, a strategic aspect of a consulting firm governance.

Transparency: A Handguide
To harness the benefits of transparency, consulting firms can adopt several practical steps. 
First of all, you need to assess the current state of transparency : evaluate how information is currently shared within the company and with external stakeholders. Are there standardized practices ? Is information shared informally ? Are there standardized practices ?  Survey employees, managers, and stakeholders to understand their perceptions of transparency in the organization and what they perceive as potential improvement areas.
Then, develop a plan : establishing clear objectives, defining specific actions and their scope and assigning responsibility. The top management will be crucial in implementing the plan and embodying the values to ensure transparency. By leading by example, senior figures in a consulting firm can demonstrate the importance of open practices. This might mean confronting difficult situations , in which discretion might have been the easy way out. 
Communicate : Communication will be key to implement transparency practices at all level of the organization. It will require optimizing current communication channels, but maybe also introducing new tools, such as specific meetings, guidelines and processes to monitor the progress of transparency initiatives. Providing resources educating the consultants will be crucial to ensure a cultural alignment within the company . 
Continuous improvement : striving for transparency will not be a one-time initiative, and therefore its strategy should be frequently reassessed and redefined. Maintaining a transparent company requires persistence and a long-term commitment from everyone in the organization. For this reason, you should encourage openness and ensure an environment that values questions and feedback within the proper channels.

Conclusion
Incorporating transparency into the fabric of a consulting firm's culture presents a path to turning potential disadvantages into compelling advantages. The delicate balance of sharing and protecting information, when managed adeptly, not only fosters innovation and loyalty among staff but also establishes a formidable competitive advantage and brand reputation. As consulting firms navigate the complexities of modern business landscapes, embracing transparency offers a way to stand out, build lasting client relationships, and drive forward with integrity and trust at the helm.

Paul Burin des roziers and Sarthak Amrutlal Mahida

¹ One of the latest examples: EY did not indicate that it was working for gas giant Santos, before advising the government of New South Wales (Australia) on its gas policy. In the same article, Professor Jane Andrew estimates the cost of "conflicts of interest, poor culture, and lack of transparency" to the general public at billions. See : Pr. Andrew, J. (2023) "Opinion : Powerful firms that put the 'con' into consulting”. The University of Sydney.

²Kavakli, B. (2021). “Transparency Is No Longer An Option ; It's A Must". Forbes.

³Schnackenberg, A. K. and Tomlinson, E. C. (2014) "Organizational Transparency: A New Perspective on Managing Trust in Organization-Stakeholder Relationships". Journal of Management.

⁴The name has been changed.

⁵Janning, F., Khlif W. and Ingley, C. (2020) "Transparency a Paradoxical Proxy for Trust ?". The Illusion of Transparency in Corporate Governance.”

⁶Up to 87% of workers want their company to be more transparent, according to Slack’s Future of Work study : Kelton Global. (2018). Slack's future of work study. See also : Villanova University. (2023). "The Benefits of Employer Transparency During the Hiring Process”. Villanovau.com. In the more specific context of consultancies, we can note the impact of the lack of transparency on work-life balance: for example, the widespread practice of very restrictive NDAs could prevents us from having accurate data on the burn-out rate within the industry. Read for instance : Fisné, A. and Polle, B. (2018) "Burn-out : le conseil ne fait pas exception à la loi du silence". Consultor.fr

⁷Cullen, E. (2022). "Transparency at Work: Why & How to Improve It". Mentimeter.com

⁸For instance, the consultant we interviewed said that she viewed management's communication positively in regards to last year’s results, but regretted that she was not better informed about Bearing Point's financial policies : “How do they invest profits? I've been wondering ever since we passed a billion in sales: what's going to come of it? I don't think it's transparent enough…”.