Ethics in Professional Services
Professional services includes law firms, accountancy and audit firms as well as business consultancies.
Last week the consultancy Principia published their Ethics Study 2024. It’s well worth a read if you’re interested in conduct, governance and culture within the industry.
The report is broken down into three main areas:
‘Unforced errors’ - repeated breaches of regulatory or professional standards that continue to attract scrutiny from regulators
Structural pressures - inherent in the nature of a professional services partnership model
Unavoidable tensions and trade-offs - issues that can never be fully resolved, but require constant vigilance
Here are my main take aways from the report:
The audit sector has been under scrutiny for quality in auditing and for ‘answer sharing’ in the area of ethics during professional qualification (wow!)
The partnership model of many of these firms creates tension between collaboration (needed for effective client work) and competition (partners, regions and departments are pitted against each other in a race to the top)
Personal networks are still integral for promotion and work allocation decisions meaning it is difficult to challenge peers and seniors, or to call out poor behaviour
…many firms are dominated by a passive-aggressive, “nice” culture that inhibits frankness and honesty between colleagues, and prevents emerging issues from being properly surfaced and openly discussed.
There is a conflict between revenue growth and other objectives i.e inclusion and culture
Professionals who are time-pressured or burned out are sometimes tempted to take shortcuts that breach conduct guidelines, or contravene the spirit — if not the letter — of the law. This is an important case for improved wellbeing in professional services
As you can see, it was a bold and brave report that called out structural and behavioural challenges in the industry. The report goes on to highlight how firms can assess their ethical culture and make improvements.
Would love to know what you think of the report? Does it ring true for you?
