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When corporate cultures breed dishonesty

About the author

Eric is a freelance journalist who lives in Fort Lauderdale, Florida. He is formerly a writer and editor at New Times in Fort Lauderdale and The Pitch in Kansas City, Missouri. His work has been featured by  the Florida Center for Investigative Reporting.

Employees say they want honesty in business. Do they get it? (Photo:iStockphoto)

Employees say they want honesty in business. Do they get it? (Photo:iStockphoto)

It’s safe to say US President Barack Obama had no idea the trouble he’d find himself in after telling a kid journalist recently that his favourite food was broccoli.

Since then, comedians and Twitter users have served up entrée-sized servings of accusations that the president was dishonest with the pint-sized reporter.

If he did stretch the truth, Obama, a father of two, has plenty of company.

Some 84 percent of parents lie to their kids in the name of good parenting, according to a study released in November by the International Journal of Psychology.

Given that, maybe we can blame our parents for the difficulty we have being entirely truthful at work. One in five people admit to fibbing in the workplace at least once a week, according to a CareerBuilder.com survey, and a quarter of hiring managers say they’ve fired a worker for being dishonest.

Or perhaps we can blame the workplace. Corporate culture often calls for supervisors to keep “competitive secrets” to prevent revealing strategies that could tip off competitors. That practice leads people down the road of lying.

Honesty vs transparency

Honesty in business is often high on lists of what employees say they want in the workplace. Yet they usually get managers who tell white lies in the belief that they’re following the company line or protecting employees from bad news. But management experts say honesty should always win out — as long as supervisors understand and carefully manage the difference between truthfulness and full transparency.

Managers must always be truthful or they run the risk of polluting the ethics of those who report to them — even if that manager can’t be entirely transparent, according to retired US Army brigadier general Thomas A Kolditz, now a professor and director of the leadership development program at the Yale School of Management in New Haven, Connecticut. When Kolditz worked at the United States Military Academy at West Point, New York, his colleagues conducted a survey of soldiers serving in Mosul, Iraq, and found that they listed honesty and integrity third among the qualities they want in a superior (after competence and loyalty).

“Leaders set the ethical tone,” Kolditz said. “If a leader is being dishonest, you will see that employees will be dishonest with each other.”

That might sound like a politician’s hedge, but most managers struggle to maintain the balance between honesty and transparency. Kolditz himself dealt with that balance a few years ago when superiors told him the department he previously ran at West Point faced layoffs. When employees asked him about the possibility of cutbacks, Kolditz was honest with them — without revealing information he was forbidden to release. Instead, he’d say he couldn’t answer the question and then shift the conversation.

Honest, yes? Transparent? Perhaps not to his subordinates. But in such situations, it’s crucial for a manager to set the tone in the office, said R. Edward Freeman, professor and academic director at the Business Roundtable Institute for Corporate Ethics at University of Virginia’s Darden School of Business.

When asked about coming layoffs or cutbacks, for instance, managers need to be honest. But an awkward silence or half-truth meant to keep the opacity of the details is damaging — it sends too dire a message and breeds distrust.

“In today’s world, most employees are pretty smart, so they’re going to read into the lack of an answer,” Freeman said. “So it’s important for the manager to steer the conversation in a way that doesn’t cause panic.”

That advice goes against what a lot of human resources departments might hope managers are doing. Some prefer bosses to tell white lies to keep people working, Freeman acknowledges.

Retail outliers

Workplaces that stress the importance of honesty are more commonly found in the retail sector. The Container Store, for instance, has a trademarked set of guidelines for its 6,000 employees called Foundation Principles, which includes a section titled “Communication IS Leadership.” It spells out that there will be no secrets, with proclamations including: “We simply want everyone in our company to know everything!” The company, with 64 stories across the US, has seen a 25% compound annual growth rate over the past three decades — and managers credit those principles for a big reason why.

US natural foods supermarket chain Whole Foods also has a no-secrets policy, in which decisions are made by groups of employees. At the top, the company is headed by an “E-Team” of five executives that share the traditional chief executive officer role. That management model is duplicated in the company’s stores, where employees meet as a team to make decisions.

Still, this group-think approach might seem ridiculous in other parts of the world, where following authority may be more important than telling the truth.

“In other countries, there’s simply more dishonesty tolerated,” Kolditz said. “It’s about the societal expectations and whether there’s an expectation that managers will tell the truth.”

In China, for instance, the command culture system often overrides any expectation that superiors will be forthcoming with underlings.

North American employees also face dilemmas in countries where payoffs or bribes are standard operation for doing business. Workers from the US, for instance, often view a bribe as dishonest, and have a tough time repressing disdain for the practice if encountered overseas. That doesn’t mean managers or companies should play along, but, say, showing disgust over the suggestion of a bribe won’t make the situation better.

“Don’t be judgmental,” Kolditz said. “The key is to do the right thing in both countries.”

We must think of honesty as more than a crucial management trait, said Leigh Hafrey, who teaches at Massachusetts Institute of Technology’s Sloan School of Management and Harvard Business School.

“It’s a virtue or a value,” said Hafrey, who focuses on professional ethics. “It’s a standard that you hold yourself and others up to.”

A good manager, then, won’t lie if asked to do so by the company. She’ll speak up and refuse. That ethical act can do something dramatic: It sets the stage for an honest workplace.

If a leader is being dishonest ... employees will be dishonest with each other. — Thomas Kolditz, Yale professor

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