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My boss just recently was asked to do some consulting for a major healthcare system. Things didn't go very well during the discussions, so he created an LLC and continued his consulting with the other entity outside of his current job...ethically questionable or just being opportunistic?

asteriskrntt1's picture

RxMan

Everyone is going to ask you to clarify the situation. Did your boss leave the company? Does the company know he is doing this? Details details please.

*RNTT

RxMan's picture

Will do.

Boss still works for company and consulting is something new to his job duties (this was his first one). Company A is our company, with B the other. Company B didn't necessarily agree with some of the arrangements sought after by company A (represented by boss). So, knowing he may still bring value to company B, boss starts his own LLC to continue consulting with B...and continuing to inter-relate businesses (for instance, may plan to want and bring company A back into negotiations if certain things can be achieved "outside" first).

Does this help?

WillDuke's picture

So his new LLC is competing for the same work sought after by the company signing his paycheck?

Let's look at that from the company's perspective.

1. I'm paying you to go get business for me.
2. You're getting the business I want for your own company.
3. I'm not getting revenue from that, you are.
4. You still want me to pay your salary? For taking business away from me?

I suspect he'd find himself out of a job and possibly in court.

ccleveland's picture

From your boss's perspective, it seems he's thinking that Company A would lose Company B's business completely. By setting up this "LLC" he may be able to bring some business back to Company A.

While working through a "third party" may be a fine strategy for getting Company B's business, in this case it represents a conflict of interest. Your boss is interested in the money and time he invests in his LLC as well as Company A's interests. Your boss is putting himself in a situation where people could question his intentions with no evidence besides his own integrity to show how if he is really looking out for the company that employes him. I wouldn't want to be in a position where my integrity was in question.

CC

RxMan's picture

CC,

To clarify (and not to the benefit of my boss), company B is new business, so there is nothong to "retain" so to speak.

Thanks for the feedback fellas - I agree with you both

ccleveland's picture

Of course, all that said... what are [u]you[/u] going to do (or [u]not[/u] do)? [i]You don't really have to answer this here,[/i] I just wanted to point out the obvious: It's your actions, not your bosses that you have control over. You haven't provided us detail indicating your involvement or how much this is generally known throughout your organization.

CC

RxMan's picture

Great question CC. Part #1 is that I have no involvement in his "venture", other than he is my boss at the employer. I was also not involved in the "deal gone bad" between the two organizations...other than him telling me about it.

I posted here to get a better idea of how other managers see the situation. My gut tells me this is WRONG and that I need to warn him to tread lightly with this sort of arrangement. I feel it's my fiduciary duty to do so. He is very intelligent and knows what he's doing, but you know as well as I how ethics and "thinking outside of the box" tends to blur the lines a bit.

WillDuke's picture

I'd be careful "warning" him. But I might "ask" him how he sees this moving forward? Does he expect any trouble with your shared employer?

That way you can help him explore it but it's all his idea. :)

bflynn's picture

Lets be clear - the ethical problem facing you is not whether your boss is correct to be forming the outside company. He is not. Your problem is what [i]you [/i]do about it.

I cannot tell you what you should do. I will tell you that barring extreme circumstances that you haven't mentioned here, I would discretely ask for a five minute meeting with our common higher boss and make sure he is aware of the situation. Its not something I would take pleasure in doing, but I believe it is my responsibility to the company to report a conflict of interests such as that. After doing that once, my conscience is clear and I can get back to focusing on my results.

After making the report, if the situation continued, I would question what kind of company I'm working for and they would lose points on the "I'm happy to work here" scale. If that scale gets low enough, I'm ready to look for a new job.

Brian

juliahhavener's picture

I will add from my Large Corporate Standpoint...if your company has an ethics line, now is the time to use it. We have available a confidential ethics line that was creates specifically to give our employees the opportunity to discuss items like this and/or to report them for investigation that comes from someone other than YOU.

ccleveland's picture

I'm with Julia, especially with Sarbanes-Oxley in the U.S., many public corporations have initiated specific programs to appropriately ensure leadership accountability. Our company also has a specific ethics policy and "hotline" to call in these cases.

Thinking outside of the box can be done with disclosure to appropriate ethics and management authority. Hopefully in this case, it has already been taken care of by your boss. However, it does seem that you have an ethical choice to make of your own.

CC

Mark's picture

I read the first two or three posts and stopped reading. It didn't pass the sniff test.

What is happening is unethical, or is close enough to smell the same.

Ethically, when you explain a situation breifly but accurately from your perspective, and someone else has lots of questions, and you say, "no, wait!" or, "Wait, wait, you don't understand!!"...it's not going to turn out sweetly.

Mark