We all know there are a huge number of honest and ethical people. But we see society changing. Today, we are dismayed, but not entirely surprised, when the media reports that a person well known in the news, not heretofore singled out for dishonesty, turns out to be a cheat. In fact, this circumstance has become so commonplace that I sometimes feel that honesty is becoming the more deviant behavior. Perhaps my work has made me cynical. But I suspect I’m right.
Management’s Influence on Dishonesty
Is it possible that dishonesty can be influenced by management? To answer this question, let us look at a case example:
The subject of this true case, whom I shall call Clayton Ramsey, had always been a star, and had reached a legendary status by the age of 55. Employed by a multi-billion dollar organization for 27 years, he had worked his way up to the second-highest executive position. He was appointed to the Board of Directors with an annual salary package estimated to be in excess of $4 million.
When Clayton toured company locations, many of the one million plus employees revered him. The son of a former police officer, and an outspoken critic on corporate dishonesty, he was once quoted as telling a newspaper, “Anyone who is taking money from employees and stockholders ought to be shot. Greed will catch up to you.”
Well, greed finally caught up with Clayton. He was fraudulently overstating his expense account and submitting reimbursement requests for items purchased for personal use. Next it became apparent that he had prepared expense-reimbursement requests without supporting receipts, taking the requests to a subordinate who knew the documents were bogus for approval.
Clayton’s misappropriation of funds became contagious. Two other senior executives allegedly started copying his illegal practices. Along with Clayton, these two got caught. One ended up entering a guilty plea in federal court to three charges of wire fraud and the other got fired. As for Clayton, he pled guilty to five counts of wire fraud and one count of tax fraud.
Shortly after Clayton Ramsey’s dishonesty surfaced, his organization’s CEO made a company-wide broadcast telling employees, “If someone asks you to do something that you know is wrong, whether that person is a friend, a supervisor, or me (CEO), you must have the courage to say no.”
Expectations and Actions
Research by Dr. Cherrington into character development shows that when leaders tell employees how they expect them to act they often get the kind of behavior they request. The CEO said something very useful – but he was late in saying it. Long before the CEO felt the need to ask for honesty among all employees, Clayton Ramsey was saying by his obviously corrupt actions that it was ok to be dishonest; two apparently weak top executives listened to Clayton, succumbed to his actions, and destroyed their business careers.
A company’s culture or climate of honesty starts at the very top. Even seemingly trivial acts of management dishonesty are noticed by employees. Here’s an example:
After wrapping up an internal fraud
investigation involving top management in a middle-size subsidiary of a major corporation, I wrote an article for The Hayes Report newsletter on what had occurred and entitled it “A Climate of Dishonesty.”
Among several letters I received was one from an employee who said that even though our newsletter carried a warning not to duplicate it, each time the newsletter arrived she was ordered to make 20 copies and distribute them to the management in all company locations.
In closing she said, “Mr. Hayes, you are always writing about how important it is for management to set a positive example and to always promote honesty. My coworkers and I recognize that reproducing copyrighted documents may be trivial in the eyes of some, but we think that this is dishonest and certainly not a good example for any executive to give.”
The above letter serves as an excellent example of what my associate, Dr. Cherrington, would refer to as having to make a moral choice. This employee knew that making those copies was wrong. However, when a boss tells an employee to take some seemingly small dishonest step, the employee faces a moral dilemma.
In our next newsletter I cautiously addressed this case, making certain that I divulged nothing that would be harmful to the letter writer. I never heard back from this concerned individual. I can only hope her bosses, and others in other companies, got a message about casual dishonesty and its effect on good employees.
When management does things that are dishonest – whether these acts involve internal fraud or theft, or making questionable deals, or encouraging workers to not report vendor overages or accounting errors that favor the company, or abusing internal controls, or having a few unlawful copies made of copyrighted materials, or spending company money inappropriately for personal gain, or whatever – employees who become aware of the inappropriate action take away a message that dishonesty is okay – a message that resonates with employees who would themselves be willing to cheat. $