This column is part of Globe Careers' Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab
Headlines are full of stories about people who have made personal fortunes at the expense of shareholders and taxpayers, leading us believe that the market system is failing because of greed. However, this isn't always the case. Greed is only the tip of the iceberg. More significant losses to society arise from well-intentioned employees invisibly gaming the system in the name of the company, or benevolent cheating. Both greed and benevolent cheating exploit gaps in the market system, but the normality of benevolent cheating leads to far greater losses for the company and society.
Benevolent cheating occurs when professionals exploit loopholes or focus on mimicking competitors' tactics rather than fostering innovation and long-term solutions. Rewarding this behaviour redirects creativity from functional innovation to who can cheat the best.
This leaves two key questions for managers: what makes cheating seem normal, and how can benevolent cheating be reduced?
Two group dynamics lead to benevolent cheating: collective rationalization and silent dissenters.
Collective rationalization occurs when groups work on assumptions that go unquestioned, even when they don't make sense. One theory is groups work harder when they are focused on goals that are difficult to achieve. However, this often leads to minor corner-cutting and rule-bending in order to achieve that goal.
For example, when unexpected costs occur, the conclusion is that the group was unable to operate within budget – even if the budget is unreasonable. When profit margins are tight, the inference is that opportunism is required to succeed in a competitive market. When regulations prevent the company from advancing, the group deduction is that competitors must be bending the rules, so they can too.
Cohesive groups lead to efficiency and achievement of goals. However, cohesive groups also avoid discussing the processes needed to support success. Individuals who identify issues with benevolent cheating are isolated so they won't interfere with team dynamics, or insulted for slowing progress. The average employee often concludes that life is easier as a silent dissenter. Eventually they, and the group, fail to see benevolent cheating for what it really is.
Over time, the group begins to assume that the end justifies the means. Group members avoid openly identifying and labelling cheating, and rule-bending and opportunism become the norm. Unfortunately, the long-term consequences – loss of trust and a lack of independent thinking and creativity – are invisible. Benevolent cheating can lead to employees shifting from cheating for the company to maximizing their own interests.
So, how can managers stop the vicious cycle of benevolent cheating?
1. Review processes and justifications of how targets are met.
The review needs to be open and blameless but has to analyze the assumptions and justifications for specific behaviours. Was the budget too optimistic? Why were formal processes avoided? Were regulatory loopholes taken advantage of? A review of this kind needs to be detailed, with the intent of improving rather than blaming.
2. Reward good questions.
Recognize those individuals who asked questions and acknowledge the value gained by having the questions asked.
3. Review the outcomes.
Asses the project as a whole and explore what questions were not asked but should have been, even if the outcome was successful.
Stopping the vicious cycle of benevolent cheating takes time. In the fast-paced business world, groups are focused on looking forward and have little incentive to look back. Yet, when groups do not explore the path they've taken, benevolent cheating is reinforced.
Creative efforts are focused on crafting shortcuts rather than building sustainable practices and future failure is inevitable. As benevolent cheating is reinforced, some professionals begin to justify cheating to maximize self-interest and end up in the headlines.
Loren Falkenberg is the associate dean of research at the University of Calgary's Haskayne School of Business (@haskayneschool). She is an expert in decision making, negotiations and corporate social responsibility.