Organizational Dishonesty

Dishonesty can happen to anybody. An example of dishonest act is breaking a long queue to request a given service earlier, earlier than many people who come earlier. A person like that is dishonest and unfair not only to the people coming earlier but also to himself. A normal person simply knows the virtue of queuing. Nonetheless, we often see people committed dishonesty in a consistent way.

First a person starts to break a good rule. Then follow his friends and enemies, resulting in a bunch of dishonest people, from an RT, an RW, a county, a city, to the whole society. To be fair, it should be told that there are indeed good communities promoting good deeds, honesty, and fairness, from a unit, a division, to the whole institution. What is it the primary cause of prevalent dishonesty? Is there any cost related to committing dishonesty?

A few years ago I read an article related to an interesting topic, The Hidden Cost of Organizational Dishonesty, from MIT. If you have time searching the Internet, you will easily find the related sites. If lucky, you even can download related materials hopefully without cost you a cent (except those computer and connection off course). If you do not have time, here I summarize the consequences of organizational dishonesty.

According to the article I read, the consequences of organizational dishonesty are (1) bad reputation and low return, (2) employee value mismatch, and (3) inevitably increased supervision. Each consequence has its own cost that should be paid. The first one decreased long-term profit. The second, value mismatch, has a bit more complex consequence. Honest employees find it difficult to cope with the prevalent dishonesty. The options are very limited: reverting to the prevalent behavior or keeping honesty. On the one hand, keeping honesty is hard though and causes the employees’ stress, absentee, dissatisfaction, and getting out, meaning high turn over and cost. On the other hand, reverting is easy but it increases the number of dishonest employees. It makes corruption more prevalent, as well as politicking to gain personal wealth, against the interest of shareholders.

Sad? Yes, but the story has not end yet. To address dishonesty, the organization tries to strengthen supervision. Instead of positive, inevitable supervision cause (a) more stress and health problems, (b) low trust, (c) more attempts to manipulate loopholes, (d) employee’s false perception that they are really honest because of mere compliance, and (e) management’s false perception that supervision system is effective and should be even escalated. All of these consequences mean cost increase.

So, what is the condition of our organizations, our companies, and our government institutions? Moral lesson: prevent before it is too late. What if it is too late? Um… can we rely on the wisdom of crowds – crowds where dishonesty is difficult to cure?