Situational Ethics for Consulting Foresters

Situational Ethics for Consulting Foresters

Is the teaching of ethics to forestry students important?

Regular readers of this blog and our newsletter will remember a discussion of situational ethics for procurement foresters written for the SAF’s Forestry Source in August 2019 that I also shared here. You will recall that the SAF Forestry Source has been publishing a series of articles on ethics with the idea of promoting ethics discussions. One of the comments that I found interesting was the comment that basically said ethics teaching was not necessary.

As a consulting forester who is occasionally asked to provide ethics training for foresters, I found that comment naive at best. I believe we all can benefit from a look at our basic beliefs and how they impact our daily decisions. If we don’t occasionally think this through, we can find our past decisions have painted us into a corner that isn’t where we want to be.

And where better to have that discussion than as a student, before launching a career? After all, one aspect of a college education is to broaden our understanding and provide us the proper tools for our chosen profession.

As a proud member of The Association of Consulting Foresters I was recently asked to provide an example of situational ethics for consulting foresters. This article is the result. Click to view the article in the magazine.

Challenges & environment of consulting forestry

First, let’s talk about the business environment a consulting forester faces so we have a complete picture. The county where you’ve started your business has 6 other single man consulting forestry shops, similar to your business, and two large consulting forestry firms cover the area as well. Some of the competition are members of the SAF, a few are ACF members and most are licensed in the state with the state registration board. And some of your competition are not members of anything in the belief that the money they save in dues is better than the benefits they get from membership. In addition, a few large loggers in the area purchase timber and they also provide landowners with management advice based on their years of experience in the area and in managing their own timberland.

In the five years since you started, your business, a few of the mills in the area have reduced their head count and a few of the laid off, have started their own consulting forestry business. Which is the long way of saying you are no stranger to having competition in your space.

So, congratulations on making it to your 5th year in business for yourself! A big accomplishment, after all, since 44% of small business never make it that far! A fact that you are well aware of as cash flow in your business has been seriously cramped at times, your credit card balances, and truck payments are a monthly demand (not to mention feeding the family) and work is not always monthly. In fact, you are seeing a seasonality to your cash flow that doesn’t’ always make it easy to pay all the bills due.

Add to this the challenges you and your clients have been facing as wood markets have shifted and even stagnated. Consequently, you find yourself selling more and more wood via per unit contracts rather than lump sum bid sales. Which in your mind isn’t really a bad thing, since per unit prices can have the advantage of reducing overhead, both for you and for the purchaser.

This means timber sales for your landowners are done using the “negotiated per unit sale method”. Which involves you contacting wood buyers in your area, asking them to review the timber sale and submit the per unit product prices they would pay for the sale. Then you take the various bids and run them against your cruise numbers to see what the best result for the landowner would be. Once you are confident in the “best bid” you contact the landowner with your recommendations.

Sale preparation ethics

Of course, this assumes you’ve done your homework. Do you provide a forest management plan to the landowners or do you just “handle the sales”? Did you cruise the sale to get a good feel for the product mix on the ground? Or did you use the windshield cruising method to estimate the product mix? Or did you put in a few plots and extrapolate? Or did the bidders provide you with cruise numbers you are using to figure the best bid?

For this scenario, let’s assume you’ve done your homework. Per your forest management plan with your client, you’ve readied a timber sale consisting of 100 acres of thinning that needs to be accomplished this year. Your process consists of contacting timber buyers in the region that you have experience with to solicit negotiated per unit bids.

You contact the landowner and inform him the markets in the area are doing well and you think its time to sell, not to mention you know your business needs the cash flow! He says proceed as planned and you do just that. You contact the a few timber buyers, explain the sale to them and ask them to please deliver their bids to you three weeks hence on Friday by 11:00 am. Just curious, how did you decide which potential buyers to contact?

Receiving bids and awarding sales

On the day of the bid you get phone calls, texts and emails from 3 buyers communicating the prices they are offering. But as you tabulate the results you see one individual has asked you call him if he is not the highest bidder, and sure enough he’s not. You as a representative of the landowner are about to call the high bidder and award the sale, when curiosity gets the better of you and you call the low bidder. You inform him he is not the high bid and you’ll be awarding the sale to someone else. He asks that you reconsider, stating that he’ll add 10% to whatever the high prices were, and he states if you agree, he’ll make it worth your while.

You are committed to getting the best prices possible to maximize the landowner’s assets, so you face a decision. Do you see any ethical challenges? How do you think you should respond?

How would you handle this?

Since you work for yourself, who will know if you make the deal? But if you make the deal, you’ll have to amend the bidders’ statement to the landowner. If you provide that statement. And as your own boss you can do what you want, right?

And, you know several of your competitors would grab the deal and keep moving, if you turn the deal down you could end up losing business. And there is the truck payment coming due. If you don’t get some cash flow going soon things could get ugly on the home front.

The above scenario is geared for the self-employed consulting forester, but what if you are a consulting forester working for someone else?

In my experience larger firms have codes of conduct, employee handbooks, supervision to assist in navigating the gray areas found in any business. Of course larger firms have yearly budgets, and clients expect more of a large consulting firm in an effort to minimize their own expenses and maximize the results. So more communications and more expectations are one area where the larger consulting firms differ from the owner/operator consulting firms.

But the questions faced in the case above are the same. And what if we change the case above to a last minute request from your landowner client to get some wood harvested by the end of the year to improve his or her tax position.

You have the same budgeted plan, but for the current year you’ve already harvested all you and the landowner planned. To meet the client’s demand you could move next years budgeted sales into this year, but is that the best silvicultural plan? Which comes first, the client’s financial needs or the best land management approach?

What if you decide to meet the client’s needs, but the only way to do so is to negotiate a per unit deal with a wood buyer who you don’t really know, but “word on the street” is they have left a few landowners wanting more? Do you proceed at all costs?

As you can see the push and pull of being a forestry consultant can easily push folks into uncomfortable areas. Sometimes while we are busy meeting the day’s needs we don’t stop and think about the longer term implications of our actions.

That’s why ethics training is a key component to any foresters education and a primary reason ACF has always had a Code of Ethics for members.

ACF’s Code provides principles of professional conduct for ACF members and secures the level of professionalism and service that can be expected from the profession.

It is important to note that ACF’s Code of Ethics is not a dusty tome on the shelf, rather it’s an enforceable Code. This means that if a breach of ethics charge is made against a member, an investigation will be conducted by ACF’s Ethics Committee. If a member is found to have violated the Code of Ethics, the Executive Committee may discipline the member up to and including removal from membership. This process, while rare, has occurred in ACF’s past, and strictly followed procedures outlined in ACF’s Constitution & Bylaws.

You are invited to consider this article a conversation starter! If it has stimulated your thinking and raised a few questions feel free to contact me or write a letter to ACF! Feedback is always appreciated.