Cheat to Compete

I’m not writing this blog to be judgmental. I’m really not. However, there are some subjects that cannot be discussed without sounding judgmental. So here goes. Let’s look at the topic of (gasp!) cheating. I can’t say whether cheating is more prevalent in the business world today than 10, 25 or even 50 years ago. Needless to say, it still is an issue that takes many forms.

Presumably we all started learning about cheating as small children. As a youngster, I remember many a board game that devolved into accusations of cheating. Our teachers and parents admonished us to never look at someone else’s paper when taking a test. Playground games were fertile grounds for cheating – remember four-square? “The ball hit the line and is out.” “No it didn’t!” “You’re a big fat cheater!” Roll the tape forward and as adults we might see team members clocking in or out for colleagues; money being borrowed from the petty cash box; résumés containing college degrees that weren’t actually earned or military service that didn’t actually happen; padded expense reports, and exaggerated (and sometimes untruthful) claims about all sorts of things.

This all may sound like a collection of relatively minor transgressions. So let me tell you a story. A number of years ago we had an apartment manager who used a corporate account at a local store to make some personal purchases totaling less than $100 – and she actually reimbursed the property without being asked. When questioned by her supervisor, she admitted her mistake. Following company protocol, the supervisor wrote a memo that ended up in her file advising her that she had violated policy with a dishonest act. In our system of progressive discipline, another such incident could be grounds for termination. This probably seems like a pretty innocuous situation – right? But the story gets worse.

A few years later it was discovered that this individual had concocted a very intricate, elaborate and almost impossible-to-discover embezzlement scheme – to the tune of $160,000. Her property received federal rent subsidies, and while we never had any money missing – her property was always 100% occupied and all rents collected every month – she figured out how to defraud the federal government. As her employer, we had to immediately re-pay the $160,000 to the government and then filed a claim under our crime insurance policy. Of course she was prosecuted but had spent all the money, so there was no way to recover the stolen funds from her. The biggest surprise came when our insurance carrier denied the claim. Why? There was a fine-print clause in the policy that denied coverage if we knowingly hired or retained an employee who was dishonest. And the damning piece of evidence was that memo in her file that contained the words “dishonest act” involving her use of a company credit account for personal purposes. I’ll spare you the ugly details of litigation against the crime insurance carrier as well as the errors and omissions insurance carrier. Needless to say we lost and ate the $160,000 (plus legal fees).

The moral of the story is three-fold. First, understand the fine details of your insurance coverage and modify your policies and procedures accordingly. Second, be careful at shrugging off small acts of cheating or dishonesty. They are a window into the overall character of an individual. What may appear to be a seemingly simple “mistake” could be the tip of a very expensive iceberg. Finally, everyone needs to see us as the paragon of virtue. We entrepreneurs need to model “squeaky clean” for our team, our customers and for the public at large. As hard as it may be, we need to demand complete and total integrity from ourselves and everyone else in our organizations. We start by always doing the right thing – especially when no one else is looking. And we hold our colleagues and associates to the same standard. The temptation may be great to cheat to compete, especially if we are struggling to gain traction. But if we do, it’s hard to expect others not to follow suit.

Integrity is not a puritanical concept. Great leaders always do the right thing and show others that it is the only standard by which to operate.

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This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.