Behaving Badly

Much of modern business is structured with incentives to behave badly. Perhaps financial institutions have the largest incentives to push the envelope of good behavior if not actually break the law, but they are not alone in finding the incentives to cross the line difficult to resist.

On the public company side, it’s easy to see where one of the incentives comes from: quarterly results closely watched that lead to rapid big share gains…or losses. And personal gain tied closely to these results.

The personal gain part is what gets so many in trouble both at these public companies as well as at privately held businesses. The measures used for bonuses, raises, and even public acclaim are all too often based on sales or financial results with much too little worry about whether they were achieved in appropriate ways.

In too many companies there is a win at all costs mentality. When I hear a senior executive…up to and including the top person…talk about winning at all costs I wonder if they understand the message they are delivering. Win at all costs. Even in war the concept of winning at all costs is tempered by acts we ban and actions we find immoral and abhor.

Yet many leaders in business set a culture and send a message that results are so important that fudging a bit, pushing the edge of legality, finding ways to manipulate things that get around the rules in ways that clearly violate the spirit of what was expected, and even stepping over the line if you can do it without anyone knowing…are acceptable if they lead to a good financial result.

When coupled with a general culture that worships wealth and turns billionaires into celebrities while being less concerned about how they achieved such wealth, it puts money, and that which it buys, at the forefront of success. Having lots of stuff is the sign of doing well.

I overstate a bit. Clearly there are many guided by a deep seated desire to do what is right. Those who find doing right the sign of success and lots of stuff ostentatious and obscene. Those who find increasing the welfare of all to be more important than building their own wealth.

The question for the future of your organization is which story you deliver: win at all costs or increase the common good through building a successful enterprise guided by inviolate principles. And then of greatest importance is which story you exemplify in all you do.

Before you get annoyed with me, I am not in the least against success in business as measured by running a growing and profitable business. I spend my days working with business owners and leaders to ensure they grow more rapidly and achieve high profit. I am against the idea of anything goes as long as it makes money for the company…and the person. I am particularly aghast at those who express high ideals for business and personal behavior and exemplify gutter morals in both, never realizing that everyone notices the actions and sees them as the real message of what is expected…and rewarded.

There is no need for behaving badly. An organization built with full accountability, focus, and alignment around a strong set of guiding principles exemplified by a leader who lives them is aimed towards success.

Build a strong and healthy organization. Banish bad behavior.

 

  1. I found this particular article very accurate. Years ago, I worked for Marion Labs, a pharma copany which is now part of Aventis. The company was founded by Ewing Kaufman, who early in his career learned the power of sharing his good fortunes with those around him who helped make him a success. His belief was that those who produce should share in the results. he gave generous stock options to all employees, regular bonuses to all employees and was an early believer in 401K programs. For two years the company could not pay bonuses, so he arranged for extra stock options. He also regularly made sure his company was among the best paying in Kansas City. When the company sold in 1989, everyone ended up a winner, with hundreds, including his secretary walking away with million or more from their stock options. Even people that had less benefited alter from stock market gains. No one ever left – there just was not a better place to work. And the company was sold when it became a billion dollar company. None of this limited his ability to walk away with many millions, which he used to create a charity dedicated to entreprenuralism.

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