Companies deploying dishonest tactics toward customers, suppliers, distributors and others typically do so to increase short-term profits, and in that regard they might succeed. But the misconduct is likely to fuel social psychological processes within the organization that have the potential for ruinous fiscal outcomes, outweighing short-term gains. There are three types of consequences to organizational dishonesty: reputation degradation, (mis)matches between values of employees and the organization, and increased surveillance. These outcomes can lead to decreases in repeat business and job satisfaction — and increases in worker turnover, employee theft and other hidden costs.
These consequences will, like tumors, spread and eat progressively at the organization’s health and vigor. They will also be difficult to identify through typical accounting methods and might lead to corrective efforts that overshoot the true causes of poor productivity and profitability. Without a thorough understanding of the three types of consequences, an organization could try to control one financial hemorrhage (for example, losses from employee theft) by creating another (namely, investments in increasingly expensive security systems).
1 Comment On: The Hidden Costs of Organizational Dishonesty
In many cases, organizational dishonesty is going to be proportionately linked to the amount of time in position or with a company. The more people move around, the less they have to face any long term consequences.
The second element I have seen first hand is that the individual in power places unrealistic demands on their subordinates, expects the subordinates to achieve the desired results, and also expects them to accomplish everything wearing a bright white hat of compliance.
Being that type “A” individuals are going to avoid failure at all costs, actions get rationalized and the line gets crossed in order to achieve the goals that will lead to promote, pay raise, and failure avoidance.
Until there is a fundamental change in the human psyche, its going to be difficult to train this type of behavior out of people