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Are Your Employees Cheating To Keep Up

August 1, 1997
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There's an epidemic spreading across our society. It's a condition that strikes employees in all types of organizations and at all levels. Its symptoms are well-documented, but no one yet has claimed to have found a cure.

The symptoms are familiar: Employees who are distrustful of leadership, who view the workplace as uncertain and/or hostile and who feel entitled to do what they know to be wrong.

For some leaders it's easy to blame the employees. Some employees find it easy to blame the leaders.

As an observer of this process, I offer this perspective: Both groups, leaders and employees, are right, and being right is irrelevant. What is relevant is that these mutually destructive perceptions are creating a counterproductive reality in many organizations.

Watch as the system breaks down. Let's use the example of one of today's most pernicious management cliches: "doing more with less." Every employee is expected to be more productive while consuming fewer resources. If an organization buys the myth that it can do more with less, it shouldn't come as a surprise when the company experiences something like the following scenario.

1) The company has a sales quota for its sales representatives.

2) The quota is reasonable and all or nearly all representatives achieve the stated goal.

3) Managers, seeking to stretch the sales force (or: get them to do more), raise the quota.

4) The quota is challenging but still attainable, and all or nearly all representatives achieve the stated goal.

5) Managers ratchet the quota up another notch.

6) Some of the marginal sales reps fall short of the goal.

7) Managers threaten the sales representatives with disciplinary actions for failure to meet the goal. Managers, however, don't offer training on how to do more, add tools or technology to facilitate doing more or develop improved products or marketing to make it easier to do more.

8) The sales representatives figure out how to "game" the system to protect themselves from the threat of discipline-appearing to do more, but actually doing the same or less.

9) The reps still appear to be reaching the sales goals, so managers up the quota another notch. Middle managers may suspect that sales representatives are cheating on their results, but they fear the consequences of broaching that reality.

10) Now fully competent employees are failing to reach the goal, so they adopt the game as well.

11) Managers, seeing reports of increasing sales and a near-zero failure rate among the sales reps, assume there's still more room for stretching and ratchet the goal once more.

12) Soon the goal is totally unreasonable, even for the exemplary employee. All employees are feeling "required" and therefore "entitled" to cheat on their sales reporting to protect their jobs in an environment of unreasonable and unacceptable performance pressures.

13) The system is totally infected with fear, deception and distrust.

One company was so used to cheating that it had shorthand names for the three most frequently used strategies.

Recognize any of these games? Consider this real-life example, as reported in "Human Dilemmas in Work Organizations, Strategies for Resolution" (Society for Industrial and Organizational Psychology, 1994), a book written by Abraham S. Korman and Associates. One company's sales force had so institutionalized cheating on sales that it had shorthand names for the three most frequently used strategies.

Silent Sales: Sales reps were measured on average dollars per order. If the average fell below the quota, employees would add items to a customer's order. The extra product would be shipped and in most cases the "error" discovered and the extra shipment returned and restocked (at the company's expense). Of an estimated $130 million in sales approximately $7.5 million was fraudulent.

Intentional disconnects: Telephone sales representatives also were measured on the average duration of a sales call. If a representative's average was too high, he or she would intentionally disconnect the next several incoming calls to drive the average call time down. This took on racial overtones when employees started to intentionally disconnect Asian customers (or those believed to be Asian). The operative stereotype was that these calls took longer due to language difficulties, and that Asians were less likely to buy supplemental products and services, driving down the average dollars per sale. In the company's main office alone, it was estimated that as many as 500 customers were intentionally disconnected each day.

Coding the customer: Sales representatives could exclude customers from the database used to conduct customer-satisfaction surveys by entering a code which indicated that the customer had specifically requested that he or she not be surveyed after the sale. Supervisors then used customer-satisfaction survey results to "motivate" employees. (This prompted one employee to post the notice, "The beatings will continue until morale improves.") Sales representatives routinely coded any customer who had been the victim of a silent sale to prevent managers from learning of this method for reaching sales goals.

Go ahead and snicker. This could never happen in your company, could it? But before you get too confident, consider these data. After a landmark survey of 4,035 U.S. employees, the Ethics Resource Center, based in Washington, D.C. reported that in 1994:

Twenty-nine percent of respondents reported that they feel pressure to engage in conduct that violates their companies' standards of business conduct to meet business objectives.

More than one in seven said they believe that their companies' policies encourage unethical behavior in the pursuit of business objectives.

One quarter reported that their companies' managers look the other way and ignore unethical business conduct to meet business objectives.

Redirect this costly behavior. Employees in an unethical work environment often feel powerless. They believe the company is generating unmanageable change and its managers are imposing unreasonable demands. The employees consider leaders to be out-of-touch implementers of ill-conceived strategies. Soon staff morale deteriorates, and some employees begin to make bad choices.

It can be expensive. The losses associated with these types of unethical behavior average more than $3,000 per employee per year in tangible, measurable costs. That doesn't count the losses in customer confidence, damage to the organization's reputation, loss of employee commitment to and confidence in leadership, or other, less-tangible costs.

The first reaction of most managers when hearing about silent sales, intentional disconnects and customer coding is to look for ways to tighten controls. That's an exercise in futility. Managers can't make the controls foolproof, because employees can find a way to game any system they can create. So, instead of an irrational initial reaction by management, the more productive goal is to redirect employees' creativity and energy toward solving organizational problems.

This redirection requires that managers look beyond the symptoms and uncover the causes of these behaviors. Too many employees are distrustful of their leaders; they're uncertain of their future and feel vulnerable and out of control. They're both angry about how their managers have been treating them and fearful that their jobs are in jeopardy.

What they need from managers is open communication. Employees need to know what's happening. They need to believe that their leaders have the competence to lead and the integrity to do so honestly. They need to know what's expected of them for success and that those expectations are within reach. They need to know that although this job may not last forever, when they're again "in the market," they'll have skills and competencies that are in demand. They need confidence as well as competence, and they need their managers to believe in them.

Fortunately, there are exemplary companies that have developed best practices for addressing these employee issues.

Workforce, August 1997, Vol. 76, No. 8, pp. 58-61.

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