Rupert Bumfrey has an interesting article today linking to Ian Fraser's blog which links to four articles by a former consultant for Boston Consulting Group in the UAE.
A $16,000 bribe sounds like pocket change for BCG.
It's hard to imagine. Did they think that a mere $16,000 was sufficient to keep this "explosive story" under wraps? Was that a judgment of Mr. Yost's intelligence? Or perhaps an evaluation of the content of his story? It just doesn't add up.
So, as natural, I delved into Mr. Yost's articles for more details.
First, on the alleged bribe, what he describes is a fairly standard agreement used when staff are separated involuntarily. Enhanced non disclosure agreements are included since it is highly likely that someone who is fired might have a bad attitude about their former employer and bad mouth him publicly. So it's time to reinforce the obligation of confidentiality and extend it if possible.
As evidenced by the less than princely payout, Yost was perceived as a relative small fish in the BCG pool. Perhaps, it's the current economic situation but I've never seen a one month separation payment. Generally, it's three to four months at least from US firms.
If BCG felt that Yost had some sort of smoking gun, when he refused to sign, they would have had someone from corporate legal have a "sit down" with him and "politely explain" how that first non disclosure agreement he signed earlier covered any sort of disclosure. And how he didn't want to tangle with a firm with the resources of BCG. It probably also would have been pointed out to him that as someone looking for a job, especially in tough times, he'd probably like a good recommendation from a former employer. And that it would be wise to take no action which might raise doubts about his loyalty in the mind of a prospective employer.
The existence of the agreement is kept secret because the firm doesn't want other staff knowing the payouts. That enables the firm to pay different levels of compensation to departing employees. Secrecy also provides some additional legal defenses for the firm.
So, was it a bribe? No. The story just doesn't hold water. It also raises questions whether Mr. Yost has (a) a penchant for exaggeration or (b) an analytical skill issue. Either of which might lead the uncharitable out there to question the rest of his analysis.
Second, it's not just in Dubai that consultants are hired to tell the client what it wants to hear. In fact that is an old saw about the consulting business.
In some cases consultants are hired to cut through internal politics. We all know what we should do, but can't say it because of politics. We all know what we should do, but having a consultant confirm it is a good form of CYA. McKinsey said. Bain agrees. BCG confirms. Booz is on board. No different than a board getting a "fairness opinion" on a takeover offer - either as prey or predator.
But, and a very big but, I've never heard of a firm cooking the analysis or the numbers to come up with it believes in its professional judgment is a wrong answer. That's not smart. It is a franchise killer. This business is about giving good advice.
Do consultants bend a bit? Of course, they do. Generally, life isn't black and white. There are often grey areas. Will this project result in a NPV of $15 million or $13 million? Can I run my corporate reorganization with x+1 resources instead of x and still be successful? (As an aside, if you think a consultant can give you an precise answer to either of the two former questions, I think you need to hire a consultant to brief you on uncertainty and the flaws in all valuation or other financial techniques).
But as a long time consumer of consultant services and an occasional consultant myself (though not for one of the household 4), there was a line that was never crossed. You don't give the client a NPV of $13 million if you think the project is a dead loss. If the client needs to do something, you tell him. I've personally told clients things they didn't want to hear. And, more importantly, made them do things they didn't want to. In some cases being told, if you insist on this, we will fire you. And as a consumer have faced the same things.
If Mr. Yost's accusations are accurate, this is a damning indictment of BCG.
Third, it's always good to reflect on the wider context when leveling criticism. I think one could have a pretty good case that those in charge of running Dubai Inc have done as credible and competent a job as many of our own home grown and highly educated and skilled titans of finance and captains of industry. There is a well demonstrated inverse relationship between the amount of excess liquidity in a system and the intelligence of the decisions made. A rule which knows no borders.
Fourth, is there a caste system in the GCC? You betcha to quote one of our popular political figures. Interestingly enough, often, the most ardent practitioners are expats themselves. There is an elaborate and rigid "pecking order" among one large subcontinental expat group in Oman. Even those from the sophisticated West are not above participating in such practices. And like all generalizations there are exceptions to the rule.
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2 comments:
AA,
I don't know if it's worth commenting on Yost's story at all. Firstly, he is a fresh graduate. Last time I thought a fresh graduate had something of note to say was when I was a fresh graduate myself.
Second, it's got nothing to do with Dubai in particular; it's an indictment of the entire management consultancy culture and its bottom-dwelling creatures.
Third, if Yost made $200K a year then $16K is about one month's salary - which is by local Dubai labout law the minimum statutory severance pay (aka 'gratuity'). Yost would have been entitled to that anyway without signing anything. (Btw., the labour law can be downloaded as a .pdf from the net) If BCG had made the payment contingent on him signing any agreement he should have gone straight to the Labour ministry who really don't like firms holding employees to ransom.
Which proves that the boy didn't do his job nor his homework on local legal framework.
Oh, and 'thumbs up' to BCG for employing him in the first place...
TRN
Well, it's getting play in the media. And might be mistaken for a well founded analysis. So I felt compelled to weigh in.
A general comment on the consulting industry is that often what is produced is of small incremental value. That gets to the heart of why consultants are hired - often to tell us what we already know. Or to have an independent (of internal politics) third party propose a course of action. That way no internal faction loses face - in terms of surrendering to a rival. Sometimes it's CYA. And sometimes intended as a reality check.
But I think it's pretty rare if it occurs at all that the consultant gives advice that it believes in its professional judgment is wrong. In general the correct answers are often only directional. If consultants could value an investment or business with certainty, they'd be employing that skill to make a killing in the markets not fussing around with clients.
That's what makes Yost's assertion that BCG cooked its analysis to give the client precisely what it wanted so dramatic.
As a fresh graduate and one who admitted he was not particularly knowledgeable about financial analysis, Mr. Yost may have mis-analyzed the situation.
Let's hope so.
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