Looking beneath a consulting firm's facade of objectivity

Oct. 25, 2011 — In August, when Boston Consulting Group, one of the world’s leading business consulting firms, released a relatively optimistic report on the future of manufacturing in America, that good news received extensive coverage, including a front-page article in the Financial Times. Implicit in almost all of the coverage was the premise that the report represented a thorough, objective, and neutral assessment of the relevant facts.

But according to experts in manufacturing and industrial policy, as well as to experts in corporate social responsibility, a close reading of the report — Made in America, Again: Why Manufacturing Will Return to the U.S. — reveals a different picture: that of a company with its own distinct and one-dimensional ideological framework, promoting a particular set of public policy choices.

The advocacy nature of the report perhaps becomes most clear in the report’s final sentence. There, BCG states that the domestic manufacturing renaissance supposedly on the horizon depends on the U.S. providing what the company calls “a favorable investment climate and flexible labor force.” Translated, some advocates said, the conclusion constitutes a not-very-subtle call for the U.S. government to continue to give business interests free rein.

The cover of the report features an American flag presented as the foundation upon which workers are busily employed, but the vision of large consulting firms has been, and continues to be, one that favors the unfettered movement of capital across national lines. Indeed, critics point out, the report is entirely indifferent as to where jobs are located, explicitly making a judgment that cost — not national allegiance or any other factor — is the only value companies should consider when making decisions about where to locate and invest.

Indeed, the absence of consideration of any values besides economic cost is one of the report’s most salient features. (See “Decoding the Report,” an annotated selection of excerpts from the report.) Remapping Debate’s requests to interview representatives of BCG were declined.

A narrow framing

Several experts asked by Remapping Debate to review the report criticized what they described as its narrow focus. They noted that reports like this one, not contracted for by a specific business, were not even constrained by the duty that the consulting firm might be said to owe the client, and urged large consulting firms to expand their analyses to include a variety of social costs and benefits

While some experts in corporate social responsibility said that no one should expect that BCG or other consultants would operate from any premise other than the perceived need to maximize profit, others said that consulting firms should be held to even higher expectations to address social costs than other firms.

“One of the adages in ethics generally is that those that have greater power have greater responsibility,” said Gene Laczniak, a professor of business at Marquette University who specializes in the social implications of business decisions. “So, that being the case, it’s clear that consulting companies have a special expertise and a special knowledge, and they should be setting the tone in terms of considering the social and environmental consequences of the advice they give.”

Big consulting firms: long the champions of globalization

Traditionally, private consulting firms like BCG and McKinsey have been champions of the free movement of capital, encouraging companies to relocate offshore in low-cost countries with loose regulatory standards if it would boost the company’s bottom line. That movement of capital and labor is often referred to as “offshoring.”

“The consulting industry has had a huge impact on offshoring in the past,” said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology. Hira said the role of consulting firms has long been to identify the easiest ways for firms to profit, and, in the context of globalization, that has meant being at the forefront of the drive to offshore production to low-cost countries, even at the expense of social, environmental, or national interests.

That assessment was echoed by Judith Stein, a professor of history at City College and the Graduate Center of the City University of New York, and author of Pivotal Decade: How the United States Traded Factories for Finance in the Seventies. Consulting firms, she said, are “the voice of multinational capital, the think tank of multinational corporations.”

Indeed, Remapping Debate found several BCG reports written within the last decade that advocate for offshoring to low-cost countries. A 2004 report called “Capturing Global Advantage: How Leading Industrial Companies Are Transforming Their Industries by Sourcing and Selling in China, India, and Other Low-Cost Countries,” for example, concluded by saying, “Companies that continue to hesitate [to offshore] do so at their peril. Globalizing your company’s cost structure and business model, with China and India as first-pass options, is rapidly becoming not merely a strategic alternative but a competitive imperative.”

“These guys have been cheerleaders for this stuff all along,” said Bob Baugh, the executive director of the AFL-CIO Industrial Union Council. “They led the charge…free market advocates like BCG have no sense of national interest. They’re in it for the profit.”