Assignment-Ethics Inappropriate Mark-ups on Sub-contractors Many agencies in professional services rely on sub-contractors as an extension of their workforce. Many firms feel that maintaining a freelance network is an asset in and of itself. Mark-ups for freelance labor are often set lower due to lower overhead costs (such as healthcare benefits), which can translate into customer savings - a lower profit margin on the freelance resource vs. the full time employee. However, a firm may not necessarily divulge to a customer who on the project team is not a full time employee. The firm may want a customer to believe that a subcontractor is fully integrated into the company, therefore promoting stability and capacity. (The truth is that with a little effort the customer could hire the same person on their own). In addition, firms may bill out a sub- contractor at the same rate as an employee, which could ultimately result in an excessive mark-up on that sub-contractor's billing rate. The agency may call the mark-up a necessary management charge, however, the customer is most likely already paying for a project manager and an account manager and therefore, in a way, getting double-dipped on management. On more than one occasion, I have been told by an account representative, 'Client A does not know that John is a subcontractor'. The ethics issue here is a withholding of important information that the customer has a right to know. Is it unethical even if the customer does not ask? a. If you were the project manager, would you bring this issue with your company's upper management? b. Would you as the project manager mention the term 'unethical' during your discussion/conversation with the upper management? c. What will you do as the project manager, if the upper management refuses to agree with you? (quitting is not an option!) d. If you were a project team member, and was made aware of this issue, who would you go to first? Upper management or project manager