Dear Colleagues

One only needs to think of the huge cases of lying and dishonesty within large industrial companies such as Volkswagen (car emissions fraud), Enron and Tyco (both accounting fraud), and the increasingly cynical commentary about these cases from a weary public to wonder whether this is a fast growing trend. I often wonder whether it is simply about people regarding it as a playful attempt at gaming the system rather than believing these cases are fraudulent.

However, there is no doubt that these cases above are simply representative of blatant dishonesty and lying. Ron Carucci has done extensive research on the issue and believes that there are a number of simple reasons why dishonesty and lying penetrates an organisation – no matter whether you are running a tiny plumbing company with three employees or a billion dollar industrial enterprise selling electrical switchgear throughout the world with tens of thousands of employees.

Source: Brainy Quote

Ron’s research revealed that these reasons are easily within the control of the organisation and can save you from huge organisational value destruction. Even if an organisation isn’t actively pursued under the law for lying, thieving and corruption – there is no doubt that the resultant reputational damage is enough to destroy value. I saw this happen only this week; when a huge organisation was investigated for corruption and dishonesty in gaining governmental contracts – within weeks of the news being out – even though they were hugely profitable – they have been forced into liquidation as their banks being nervous about being tarred with the same brush – have withdrawn all banking facilities.

A few suggestions from the research (and my take on the issue):

A lack of Strategic Clarity. Where there is a mismatch between the organisation’s stated mission, vision and values and what happens on the shop floor, there is a high likelihood of dishonesty. When employees are required to do things which are in stark contradiction to what the overall positive vision requires - such as cutting quality corners and compromising safety in an attempt to lift production, things start going badly wrong.

Badly Designed Accountability Systems. Where employees are held to unfair targets which have no hope of ever being met. They then start to invent reasons why these targets are actually being met and being pushed to be dishonest. I think of the classical case with defective project management where an engineer is held to certain unreasonable time and cost targets where there is not a hope in hell of these being met – in an attempt to keep her job and her bosses happy, she will tweak the figures to show that she is still on target. Recently down the road from our offices, a huge business building power stations and mineral processing plants went belly-up because (too late) they discovered huge company-destroying losses in the construction costings as a result of dishonest (so-called ‘optimistic’) reporting.

Transparency in governance and management. Where open meetings are avoided and the truth forced underground about the real day-to-day operations of the company resulting in incorrect information spreading by rumour, the scene is set for the blocked artery syndrome of limited information flowing through the organisation and then being used to make poor decisions. Sure – giving bad news to management about problems on a project is hugely painful but the way the problems are dealt with is what predicates a successful company.

Development of Silos. I never cease to be amazed that even tiny companies rapidly develop a silo mentality where departments run their own race without working closely with their peers in other departments. This results in a dysfunctional company with dishonesty breeding as a result.

Conclusion

I can categorically assure you that there is no organisation on this planet which is 100% squeaky clean on these four measures above. However, working hard on an ongoing basis to address these points above will make a dramatic improvement to your operations, employee and customer satisfaction and indeed, your bottom line. And enable you to withstand the inevitable economic storms we all are buffeted with from time to time.

Warren Buffet says it all: "In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And, if they don't have the first, the other two will kill you."

Thanks to Ron Carucci and the Harvard Business Review for a fascinating take on dishonesty in organisations.

 

Yours in engineering learning

Steve