Being fraudulent or deceitful isn’t always out of malice or intent to harm. Unfortunately, it often comes out of arrogance and hubris. Watch to learn more about how to use three simple tips to practice the business ethics principle of refraining from fraud.
Podcast:
Episode Transcript
[music]
00:03 Cindy Moehring: Welcome to this edition of The BIS, The Business Integrity School, your resource for practical tips from a business ethics pro who's been there. I'm Cindy Moehring, the founder and executive chair of the Business Integrity Leadership Initiative at the Sam M. Walton College of Business. Joining me today is Dr. Matt Waller, Dean of the Walton College.
00:23 Dr. Matt Waller: So business ethics, principle number two is avoid fraud and improper deceit?
00:28 Cindy Moehring: Yes.
00:29 Dr. Matt Waller: And of course.
00:32 Cindy Moehring: Right. Of course, you would think, and sometimes those situations can... They can get pretty complex when you're trying to track through some complicated business transactions. Sometimes it's just really, really simple. So I thought on this one, we would just start with a very simple example. It might be unbelievable, but sometimes the truth is stranger than fiction, and in this case, I would say that is absolutely the case. So fraud and improper deceit. We had a trader in London for city group that was making over a million dollars a year and ended up being suspended from his job because he wasn't paying for his food in the cafeteria.
01:14 Dr. Matt Waller: Yeah, but a million dollars a year is just enough to break even in London.
01:18 Cindy Moehring: I know. I mean, he probably didn't have enough money to pay for [chuckle] the cafeteria food. But he did it repeatedly and ended up getting suspended for it and you gotta call it what it is, that's fraud and improper deceit. He's essentially stealing food from the cafeteria.
01:33 Dr. Matt Waller: But he was probably the best trader.
01:36 Cindy Moehring: He probably was, and who knows.
01:39 Dr. Matt Waller: [chuckle] So if you're the best trader, of course you don't have to pay for you food, right?
01:42 Cindy Moehring: You don't have to pay for your food because you're too valuable as an employee.
01:45 Dr. Matt Waller: Exactly. Exactly.
01:46 Cindy Moehring: And you know the same thing actually happened, the Financial Times reported in... Few years ago, so this isn't an isolated incident, but also in London, so you gotta wonder. Well, it's a financial capital but it was a Black Rock fund manager, and this person wasn't paying his full bus fare. He was going to work, making over a million dollars a year as well, and not paying his full bus fair. And the regulatory authority in London actually banned him from being able to be a fund manager because it implicated his honesty, they thought, "Well, if you can't be honest yourself about how you're getting to work and paying for it, we don't want you managing other people's money."
02:20 Dr. Matt Waller: The same kind of thing happens a lot with like travel receipts.
02:24 Cindy Moehring: It can.
02:25 Dr. Matt Waller: People sometimes can submit things that really aren't a part of business or a trip, or really inflate some of the costs. I think this happens quite a bit in business.
02:39 Cindy Moehring: It does. It's a real risk area and one that has to be very carefully managed because it's kind of tedious [chuckle] and it really gets into the details, but is an area that unfortunately, I think a lot of employees take advantage of.
02:55 Dr. Matt Waller: Yeah. I think, I've always thought if you're not sure, either check it out with your boss or just don't submit it.
03:02 Cindy Moehring: You're right, yeah, yeah, that's the better rule of thumb.
03:05 Dr. Matt Waller: But you know, a lot of this is, as we've talked about, has to do with arrogance and hubris. Would you mind speaking to that?
03:16 Cindy Moehring: Yeah, yeah. So, when you talk about the trader in London who is not paying for his cafeteria food, or the person who is not paying for his bus fair, I think we sit back and think, "Why in the world would somebody do that?" And it really comes down to, there's this character that's called hubris, and it's this inflated sense of self-importance and arrogance, and believe it or not, it actually is a very real fatal flaw of many leaders in business.
03:42 Dr. Matt Waller: Well, I think too, on the one hand, you want employees that are confident.
03:47 Cindy Moehring: Sure you do.
03:48 Dr. Matt Waller: But I think sometimes you can mistake what seems to be confidence is actually hubris. So you've gotta be humble on the one hand and confident on the other. But when you're hiring people, sometimes it's hard to tell, are they arrogant or they just confident?
04:07 Cindy Moehring: Yeah, making sure you get a right culture fit is so, so important to avoid the mistakes that can come if in fact they're arrogant and not just confident, but yeah, hubris is... And you see that play out in business, and you see folks like we just talked about here whose careers and lives get wrecked because they were overconfident which turned into arrogance and they really end up feeling like the rules don't apply to them. They're so important or so good at what they do, or so above everybody else that they get to play by a different set of rules. And pretty soon that crashes down around them.
04:42 Dr. Matt Waller: So what should we do? What are some practical...
04:45 Cindy Moehring: Real practical tips for us in this situation to just keep it to the basics.
04:49 Dr. Matt Waller: Don't travel.
04:50 Cindy Moehring: Yeah, don't travel.
[laughter]
04:53 Dr. Matt Waller: Don't ride the bus. Don't eat in the cafeteria.
04:55 Cindy Moehring: Bring your lunch every day. I'd say this one is real simple. You wanna make sure you just be honest and be humble and really resist the temptation to think that the rules don't apply to you because the rules do apply to everybody and the higher up you rise as a leader, the more your folks are gonna be watching you. So if you act as though the rules don't apply to you, then they're gonna start thinking the rules don't apply to them either, or that you're just playing by a different set of rules and then you lose the trust of all your employees.
05:25 Dr. Matt Waller: I think another practical tip here is accountability.
05:29 Cindy Moehring: Yeah.
05:31 Dr. Matt Waller: And I personally think... I'm big on mentorship. I think everyone should be mentoring people and being mentored, but when you have a really good mentor or two. In my case, I have two mentors, but I always make it clear to them that they can speak into my life, tell me when you think I'm doing something wrong, but I also tell my direct reports that, "Please tell me when you see me doing something you think isn't right, or just not good for the organization."
06:03 Cindy Moehring: Yeah, but I think you'd be surprised how many leaders don't go that extra step of saying, "Tell me." And then you gotta go, you gotta be open to it. It's more than just saying, "Tell me", you gotta show them that you really are open to receiving that feedback, which I know you and you clearly are, but it is something that I think a lot of leaders struggle with.
[music]
06:22 Cindy Moehring: Thanks for listening to today's episode of The BIS, the Business Integrity School. You can find us on YouTube, Google, SoundCloud, iTunes, or wherever you find your podcasts. Be sure to subscribe and rate us, and you can find us by searching TheBIS, that's one word, T-H-E-B-I-S. Tune in next time for more practical tips from a pro.
