Economists, ethicists, and business sages had persuaded us that honesty is the best policy, but their evidence seemed weak. Through extensive interviews we hoped to find data that would support their theories and thus, perhaps, encourage higher standards of business behavior. To our surprise, our pet theories […]. To our surprise, our pet theories failed to stand up. Treachery, we found, can pay. Honesty is, in fact, primarily a moral choice.
Businesspeople do tell themselves that, in the long run, they will do well by doing good. But there is little factual or logical basis for this conviction. Without values, without a basic preference for right over wrong, trust based on such self-delusion would crumble in the face of temptation. Most of us choose virtue because we want to believe in ourselves and have others respect and believe in us.
When push comes to shove, hard-headed businessfolk usually ignore or fudge their dollars-and-cents calculations in order to keep their word. And for this, we should be happy. We can be proud of a system in which people are honest because they want to be, not because they have to be. Materially, too, trust based on morality provides great advantages.
It allows us to join in great and exciting enterprises that we could never undertake if we relied on economic incentives alone. Economists and game theorists tell us that trust is enforced in the marketplace through retaliation and reputation. If you violate a trust, your victim is apt to seek revenge and others are likely to stop doing business with you, at least under favorable terms. A man or woman with a reputation for fair dealing will prosper.
Therefore, profit maximizers are honest. This sounds plausible enough until you look for concrete examples. Cases that apparently demonstrate the awful consequences of abusing trust turn out to be few and weak, while evidence that treachery can pay seems compelling. Hutton was brought down by its check-kiting fraud. The cost? But what do these fables prove? Check-kiting was only one manifestation of the widespread mismanagement that plagued Hutton and ultimately caused its demise.
Incompetently run companies going under is not news. Considering the low probability of a spill, was skimping on the promised cleanup equipment really a bad business decision at the time it was taken? Compared with the few ambiguous tales of treachery punished, we can find numerous stories in which deceit was unquestionably rewarded. Philippe Kahn, in an interview with Inc. How much of that is apocryphal?
If it had failed, I would have had nowhere else to go. We figured the only way was somehow to convince them to extend us credit terms. What we did was, before the ad salesman came in—we existed in two small rooms, but I had hired extra people so we would look like a busy, venture-backed company—we prepared a chart with what we pretended was our media plan for the computer magazines.
On the chart we had BYTE crossed out. When the salesman arrived, we made sure the phones were ringing and the extras were scurrying around. Further evidence comes from professional sports. In our study, one respondent cited the case of Rick Pitino, who had recently announced his decision to leave as coach of the New York Knicks basketball team with over three years left on his contract. Pitino was quoted in the New York Times the week before as saying that he never broke a contract.
The stupidity of it all is that they get their way. Compared with the ambiguity of the Hutton and Exxon cases, the clear causality in the Kahn and Pitino cases is striking. Without subterfuge, Borland International would almost certainly have folded.
And there is a hard dollar number with lots of zeros in it that professional athletes and coaches gain when they shed a contract. What of the long term? Does treachery eventually get punished? Nothing in the record suggests it does. The robber barons who promoted them enjoyed great material rewards at the time—and their fortunes survived several generations. Power can be an of effective substitute and for trust. But they continue to prosper. Why do reputation and retaliation fail as mechanisms for enforcing trust?
Power—the ability to do others great harm or great good—can induce widespread amnesia, it appears. Its early deceit is remembered, if at all, as an amusing prank. Prestigious New York department stores, several of our respondents told us, cavalierly break promises to suppliers. You used the wrong carrier. Financial types have taken control, the merchants are out. I delayed payments an average of 22 days from my predecessor at this kind of amount, and this is what I saved.
They have too much power—they screw one guy, and guys are waiting in line to take a shot at them again. Heroic resistance to an oppressive power is the province of the students at Tiananmen Square, not the businessfolk in the capitalist societies the students risk their lives to emulate.
Businesspeople do not stand on principle when it comes to dealing with abusers of power and trust. You have to adjust, we were told. If we dealt only with customers who share our ethical values, we would be out of business. But the deal was so good, I just accepted it, did the best I could, and had the lawyers make triply sure that everything was covered.
Sometimes the powerful leave other no choice. The auto parts supplier has to play ball with the Big Three, no matter how badly he or she has been treated in the past or expects to be treated in the future. Suppliers of fashion goods believe they absolutely have to take a chance on abusive department stores. Power here totally replaces trust. Nevertheless, even those with limited power can live down a poor record of trustworthiness. To illustrate, consider the angry letters the mail fraud unit of the U.
Post Office gets every year from the victims of the fake charities it exposes. They want to avoid information that says they have trusted a fraud. When the expected reward is substantial and avoidance becomes really strong, reference checking goes out the window.
In the eyes of people blinded by greed, the most tarnished reputations shine brightly. Such investors want to believe in the fabulous returns the broker has promised. The search for data that confirm wishful thinking is not restricted to naive medical practitioners dabbling in pork bellies. The Wall Street Journal recently detailed how a year-old conglomerateur perpetrated a gigantic fraud on sophisticated financial institutions such as Citibank, the Bank of New England, and a host of Wall Street firms.
A Salomon Brothers team that conducted due diligence on the wunderkind pronounced him highly moral and ethical. A few months later…. Before you tell the truth to your boss about your failing work endeavors, do everything you can to: 1 understand the factors involved in the failing project, 2 assess your role in it, as clearly as you can, and 3 develop a sound action plan for addressing the challenges. No matter how bad your departure from your last job was, reframe how you communicate about it so your story fits the facts equally well never lie or embellish , but paves the way for as much expansion and positivity as possible.
For instance, if you were laid off brutally but so were others, share that you were part of a massive layoff that was a result of a major restructuring. Do the hard inner work of understanding your part in it.
Then, when you talk about the previous job and how you left, find all the good you can in what you learned and achieved, and communicate that. In every terrible job, there was at least one hugely positive thing you gained and learned.
Dig deep and find it. But getting the offer builds your confidence, strengthens your interview chops and supports your sense of worthiness in this tough employment market. Instead, find out any way you can research, finding contacts who know the organization, talking to others there, etc. Explore and "try on" the position as thoroughly as you can to determine if it could possibly work.
Again, the goal is to get yourself in the game and get an offer. Sometimes you will have a positive impact — and sometimes you will just cause distress. Yet keep in mind that if your focus is solely on being honest your results will be unpredictable. Honesty can indeed be a good policy. The problem with honesty is that what is honest for you as an individual is merely a personal truth. While something may be true for you, it is not necessarily THE absolute truth about a person or situation.
But when you communicate in that way, believing you are right, there is only one thing the listener will hear — that someone or something is wrong or has done wrong. Once that happens, the conversation is over, even if the exchange of words continues. Honesty is NOT always the best policy, when the purpose of your communication is to speak your truth without a conscious intention to actually make a difference for the receiver.
Also consider that to communicate difficult feedback effectively, you must also consider that your version of the truth may not match what the listener believes to be true about themselves or a situation. Unless you stand in the world of the listener, your personal honesty policy all too often occurs like an assault.
You may know this intuitively, which is why many people experience an internal struggle as they refrain from being completely honest. A complement to your personal honesty policy, consider this perspective. A key to ensure honesty is the best policy is to focus on being straight rather than just being honest.
By that, I mean speaking honestly for the purpose of making a difference. Do you know the specific point you want to make? There is a big difference between speaking up to make a difference and speaking out to be heard. When the purpose of communicating is all about you, chances are it is not going to be clean — despite your honesty policy that you strive to live up to.
Also, consider if what you are going to say is authentic for you. When you feel the need to demonstrate your personal honesty policy, it is important to consider the purpose. Do you want to be right or prove a point — or do you genuinely want to make a difference for the other person, a group, a situation, etc.?
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