Network Troubleshooting

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October 2007

ON ETHICS: YOU BE THE JUDGE
Network Troubleshooting

Every business wants to grow and succeed, but can participation in networking and referral organizations create an ethical dilemma?

The Situation
Sheeza Schmoozer, P.E., is employed in private practice and is approached by a networking and referral organization that has multiple chapters around the world. Only one person from any given profession or line of business can join any individual chapter. The chapter that approached Schmoozer includes a lawyer, contractor, investment advisor, and insurance agent. At each weekly meeting, there is usually a presentation on how to market a business and one member gives a detailed presentation about his or her business. Finally, members may exchange any referrals that they have obtained for each other during the week. The referral organization earns its revenue though annual membership fees. The members do not pay any fees to each other, and the organization does not make any referrals nor require that members make referrals to each other. Schmoozer describes the organization's role as helping to bring people together to make "free referrals among themselves."

What Do You Think?
Would it be ethical for Schmoozer to participate in the networking and referral organization?

What the Board Said
It would be ethical for Schmoozer to participate in the networking and referral organization.

The use of a consortium of other professionals and the ethical implications involved in such a business association has been the subject of NSPE Board of Ethical Review deliberations in the past. Whether such business associations create the potential for conflicts of interest or other circumstances that could create appearances of impropriety is often dependant upon a review of all of the facts and circumstances relating to the operation of the consortium.

The Board believes that the facts are based upon an established model that is presumably practiced throughout the world. While that does not necessarily indicate that the practice is acceptable, it does demonstrate a level of credibility and sustainability. The arrangement outlined under the present facts appears to constitute a formalized networking circle and information exchange with no requirement that any party make a referral to another party. In addition, the fees that are paid are intended to cover chapter membership and general administrative cost, but are not provided to any individual member in consideration for a referral. Individuals are also free to make referrals outside of the network if the member so chooses. On this basis, the Board can not conclude that there is a violation of the NSPE Code of Ethics under these facts.

NSPE Code References
Section II.4.a.: Engineers shall disclose all known or potential conflicts of interest that could influence or appear to influence their judgment or the quality of their services.

Section II.4.c.: Engineers shall not solicit nor accept financial or other valuable consideration, directly or indirectly, from outside agents in connection with the work for which they are responsible.

Section II.5.b.: Engineers shall not offer, give, solicit, nor receive, either directly or indirectly, any contribution to influence the award of a contract by public authority, or which may be reasonably construed by the public as having the effect of intent to influencing the awarding of a contract. They shall not offer any gift or other valuable consideration in order to secure work. They shall not pay a commission, percentage, nor brokerage fee in order to secure work, except to a bona fide employee or bona fide established commercial or marketing agencies retained by them.

This scenario was based on NSPE Board of Ethical Review Case 05-9. Free single copies are available from NSPE Member Services at 888-285-6773.

NSPE's Board of Ethical Review considers ethical cases involving either real or hypothetical matters submitted from a variety of sources, including NSPE members. The facts contained in each case do not necessarily represent all the pertinent facts submitted to or reviewed by the BER. This opinion is intended as guidance only. It may be reprinted without further permission, provided that this statement is included before or after the text of the case and that appropriate attribution is provided to the National Society of Professional Engineers' Board of Ethical Review.