In this series we confront readers with ethical dilemmas and ask: what would you have done?
Our ubiquitous management consultant Antonia had settled into a new job with Smith & Jones as a senior consultant, when she was summoned by a partner to discuss a new assignment. It appeared that the client was in some financial difficulties and the bank had invited Smith & Jones to assess the current financial position and future trading prospects - a ‘due diligence’ exercise. The firm’s specialist in reconstruction was already at work analysing the situation and reviewing the options with a view to reporting to the bank.
However, in view of this strain on the company's resources, both financial and staff, it had been decided to assign Antonia on a part time basis to the client to assist in controlling the cash flow to minimise the possibility that creditors would threaten legal proceedings. If such a course of action was threatened it could bring the company down, and the bank and the shareholders would lose everything, not to mention the creditors and the employees, before any rescue or reconstruction could be put in place.
Antonia quickly established a sound understanding with the finance director and set to work on scheduling payments within the available inflow of cash.
Contingency plans were laid to deal with ‘difficult’ creditors, so that a consistent, truthful picture was being given to everyone and continuity of supplies secured. Assets were examined for their cash value and plans laid to dispose of some without having to do so under distress conditions. Spending was slashed and all but essential recruitment halted.
By these means, coupled with a teamwork approach within the company's management, the company’s survival was prolonged and the bank’s exposure reduced substantially.
When it became finally clear that there could be no long-term future for the business as it stood, it was decided to sell it as a going concern. This would perhaps realise the greatest sum from the remaining assets and although the shareholders were unlikely to receive much, they reluctantly agreed to the proposed course of action.
When the business had been successfully sold the Smith & Jones partner conducted a review of the work and reprimanded Antonia for failing to maximise the firm’s billing by selling other staff onto the job; after all they were trying to save the client, weren’t they?
Antonia resented the reprimand since she had been attempting to serve the client’s best interests fulfilling her terms of reference with minimum fee costs.
Who was right – Antonia or her boss?
You can read a commentary based on readers’ observations and what had happened in reality here.