Carson City, Nevada. In some twisted, warped, and yet inevitable way, it makes sense that the consulting industry and the gambling industry would someday intersect. Perhaps only here, in the capital city of the capital state of gambling, would the consulting industry risk its future on a roll of the dice. Only here would consultants gamble on debunking themselves.
This consulting crapshoot came in the form of Senate Bill 220, which arrived last February at the Nevada State Senate’s Committee on Commerce. On the face of it, the bill appeared harmless, benign – even well-intentioned. The proposed act simply required all management consultants to pass an ethics exam and to pay a licensing fee to the state. Any consultant who failed to comply and who was caught, flagrante delicto, consulting without a license would be subject to a fine levied by the state. Vito Tanzi, an experienced consultant and the chairman of the National Bureau of Certified Consultants (a membership organization headquartered in San Diego), is the man behind the rush to regulation. According to Tanzi, the measure represents a cross between a classic strategy ploy in consulting and a standard betting gambit in poker: first-mover advantage. “I knew that sooner or later, some organization would feel that it had gotten the short end of the stick from a consultant,” Tanzi says. “Then that group would go raise Cain in some state legislature. It is better that we open the door to legislation ourselves.”
But here in Nevada, the wheel of fortune never spins true. Tanzi selected as the site for his consultant’s quest the one state in the union where the gambling industry – itself a highly regulated operation – plays an oversized role in matters of state politics. And in matters of politics, the gambling industry leaves nothing to chance.
Tanzi’s first attempt at regulation did not go over well at all with Nevada’s casino kingpins. “They felt that the bill would restrict them from hiring out-of-state consultants to assist them with their operations,” Tanzi says, without a trace of irony or sarcasm – or any indication of what the word “consultants” in that context might really mean. As a result, Tanzi’s bill got only a preliminary hearing in committee, and it never reached the senate floor for a vote.
Tanzi has not wavered from his quest, however. He’s working with a lobbyist – his own political consultant – and has taken his bill to his home state of California, where he hopes to get a committee hearing on the matter within the next two years. To improve his chances in the political arena, Tanzi is also honing his arguments and coming up with additional reasons why the only good consultant is a licensed consultant. Here are some of his best arguments.
Consultants should be like hairdressers.
For some consultants, the licensing issue is one of prestige. As it stands now, if you want to be a consultant, all you have to do is head to a Kinko’s for some business cards and declare yourself open for business. But doctors, lawyers, and stockbrokers all come under licensing provisions.
“Even hairdressers have to be licensed,” notes Chris Howard, managing director of Howard Consulting Group Inc., in Reno, who helped Tanzi get his bill introduced in Nevada. “If you get a bad haircut, your hair will grow out again, but a bad consultant can virtually ruin a company. And that takes a whole lot longer to fix.”
Of course, plenty of prestigious jobs don’t require licensing or registration. Investment bankers don’t need to be licensed (even though stockbrokers do), and college professors don’t need state approval (although public-school teachers do). Besides, an imprimatur from the government does not guarantee a good reputation. “Lawyers are licensed, but that hasn’t improved their image a great deal,” says Carl Long, a consultant with Long & Vickers, in New York City. He also serves on the legislative committee for the Institute of Management Consultants, a membership organization that opposes Tanzi’s efforts. And – surprise, surprise – Long also cites the hairdresser analogy, but he uses it to argue against licensing. “I’ve had some really bad haircuts,” he says, “but I didn’t feel that I had any more recourse simply because the barber was licensed by the state.”
Consultants should be more like prostitutes.
As Long suggests, customers tend to feel safer when interacting with a merchant who is licensed. In Nevada, home of a thriving sex-consultant industry, people already understand this. “Houses of prostitution in Nevada are regulated at the county level, and our county requires that the girls get a checkup from a doctor every week,” says Robert Del Carlo, president of A.G.E. Enterprises, which owns the recently closed Mustang Ranch, one of Nevada’s largest licensed houses of ill repute. “We’re proud that no serious case of a sexually transmitted disease has ever been traced to a legal house of prostitution.”
Del Carlo has never hired a consultant for the Mustang Ranch, but he does have a CPA on contract. “He’s an internal consultant,” Del Carlo says. “He produces spreadsheets and other reports of that nature. But if I ever did hire an outside consultant, it would be nice to know that the person had a stamp of approval from the state. I’m in favor of it.”
So is Chris Howard, who would just as soon keep his colleagues and their clients away from a different kind of house – a court-house. “If consultants were licensed by the state, clients could go to the state licensing board to settle disputes,” says Howard. “These days, unhappy clients have no other recourse but to sue.” (Howard himself has never been sued.)
But opponents of licensing have adopted a buyer-beware position: “Consumers of consulting services are pretty sophisticated,” says Long. “They probably don’t need too much protection.” Long doesn’t oppose certification or registration. But, like sex between consenting adults, licensing should be voluntary, he argues.
Consultants don’t want to belong to any club that would accept them as members.
Proponents of consultant licensing have sympathy for those who’d prefer to keep state government out of their industry. “I can understand why people wouldn’t want to get tangled up in a bureaucracy,” Howard says. “People wonder why they should pay for a license when they get along fine without one. But they need to look at the big picture. Will the industry benefit if we all have a common code of ethics? If we have a system for addressing grievances? I think it will.”
But if a code of ethics is so important, why hasn’t a group of consultants simply mobilized and established one? “Consultants are not joiners by nature,” explains Tom Rodenhauser, a veteran consultant watcher and publisher of the “Rodenhauser Report,” an industry newsletter. “Industry associations have never taken off, because a McKinsey & Co. guy knows that he doesn’t need an Elks Club of consultants in order to have lunch with someone from Boston Consulting Group.” Rodenhauser notes that there are hundreds of thousands of consultants in the world, but no single association represents more than 3% of them – a sign that consultants are as hard to manage as a herd of cats. (To read the CDU on herding cats, see “The Consulting Cat Is out of the Bag.”)
For his part, Tanzi sees this disinclination to associate as a possible character flaw. “There’s something wrong when so few people want to be part of an organization,” Tanzi says. “But if we can get states to set standards of competence and ethics for consultants, people will have to register.”
Consultants can’t even seem to agree on what consultants are.
Here’s where consultants who are adept at scenario planning can play a useful role: Suppose Tanzi convinces the Nevada or California legislature to pass his bill. Who will determine what committing the crime of “consulting without a license” means? For that matter, who will decide who exactly is – or isn’t – a consultant? “We’re not talking about just any ‘consultants’ here,” Tanzi argues. “Tupperware ladies are ‘consultants.’ Avon ladies are ‘consultants.’ We’re talking about management consultants – people who have an in-depth knowledge of management principles and who are involved in management-advisory services.” Tanzi adds that he doesn’t want to call anyone a criminal; he just wants consultants to have the same standing as, say, hairdressers or hookers.
Contact Vito Tanzi by email (email@example.com) or visit the National Bureau of Certified Consultants on the Web (www.national-bureau.com).