Tag Archives: dishonesty

The Cheating Entrepreneur

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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. 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 earned or military service that didn’t 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. Several 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 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 an 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.

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

Entrepreneurial Snakes

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Here’s a set-up question. What do you think of companies that aren’t honest with their customers? The answers range from, “That’s terrible” to “It happens every day.” Unfortunately, both answers are correct. What’s particularly irritating is when those companies beat their chests about how much they care about their customers. There’s a disconnect between words and actions which is pretty disturbing and serves as an excellent lesson for entrepreneurs.

Allow me to tell you a personal story. Each summer we look forward to spending a couple of weeks at a beautiful destination spot in the mountains with enormous trees, blue skies and a fabulous lake. We fly into a nearby airport, collect our bags and head to the car rental counter where we’ve previously made a reservation. After checking in we venture to the car pick-up area – and every single year, bar none, our vehicle is never ready. We’ve waited anywhere from 20 minutes to as long as 45 minutes. The attendants smile and promise that “They are just cleaning up the car as we speak – it will only be a few more minutes.” Fifteen or twenty minutes later they smile again and disappear to go “check” and see where things stand. Sometimes we go through the same drill with two or three more attendants – they seem to work in a tag team sort of manner. Finally, someone tells us that “They’re bringing around the car right now.” Any reasonable person would conclude that would mean the car would arrive in two or three minutes. But it never happens. Eventually we may get the car we ordered. More often than not, we end up with a different vehicle – sometimes better and sometimes worse. Adjustments are made to the price and we’re finally on our way. 

Here’s what’s so bothersome about this experience. We are never told the truth. The attendants are friendly enough. They explain that they’ve been slammed with returns and pickups. But the string-a-long routine is always the same. Yes, I know. I should probably use a different car rental company – though I’ve encountered similar issues elsewhere with other firms. With this particular car rental company, on their website they make a big deal about how they focus on the customer. Part of their mission statement extolls their desire “To exceed our customers’ expectations for service, quality and value.” Elsewhere we’re told that, “Take care of your customers and employees first, and the profits will follow.”

This situation is emblematic of a pervasive problem in the business and entrepreneurial world today. Sometimes we’re so afraid of disappointing a customer that we’d rather try to give them hope while we juggle difficult circumstances. We say things that aren’t quite true and eventually we’re in worse shape than if we would have just been totally honest. Lying doesn’t usually end well. I learned this as a kid and have watched others suffer the consequences as an adult. What should the car rental company have done? For starters, they have a very sophisticated IT operation and could easily have collected data from every hour of every day at every location. Then they would know from my stated pick-up time that there usually is a 30-minute wait and set my expectation accordingly. But we all know that sometimes things unexpectedly go wrong. Training their employees to have empathy in such situations and be totally honest would go a long way.

In a circumstance like this, here’s what I would rather have someone say to me. “We had 50 cars returned within a 30-minute timeframe. Normally we never have more than 20 cars returned in such a short period of time. We’re running at least 45 minutes behind. I’m going to give you a 15% discount for the delay and recommend that you come back at 3:30. In the meantime, here are some drink coupons for the bar inside the airport terminal. Please accept our most sincere apologies.” This statement is pro-active and wrapped with empathy, honesty and realistic expectations. The customer may not be pleased, but at least the company can’t be criticized for not doing everything possible to atone for a bad situation.

We need to ask ourselves whether we set honest and realistic expectations for our customers. When we do, we’ll have a much greater chance of solidifying customer loyalty – even when things don’t go as planned.

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

Cheat to Compete

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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.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 84 – D or D?

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