There are a few re-reads in my collection of books. I love reading them because they stand out for one reason or another, and they are relevant to my consulting. One of these books is The Cheating Culture by David Callahan. Callahan writes about many areas of cheating from doping to economic inequality. Recently, as I was reading it again, I remembered a few anecdotes that I wanted to write about.
During salary negotiations the CEO of a well-known healthcare company gamed the bonus system by ‘requesting’ a lower salary. However, the bonus structure was uncapped if he could produce lofty monthly and quarterly numbers. According to Callahan, “CEO’s often are able to extract a raise in hard times, simply by re-engineering their pay packages in a manner that makes the average stakeholder think they took a pay cut.” This is a prime example of gaming the system!
In another case an organization attempted to hire a person at a lower than average salary, but with the possibility of incredible bonuses if their sales goals were met. The organization thought they were getting a young, hungry, and talented person eager to prove their worth. What they got instead was a young, hungry, and talented individual who understood the system better than they did. This individual realized that the company was in a pro-growth phase and was eager to purchase more buildings in the area to increase market share. This individual had been a financial analyst in the banking industry and therefore possessed a keen understanding of how the company’s aggressive (pro-growth) strategy could be used for their own personal gain.
In certain healthcare environments the length of stay of a patient is an indicator and a predictor of profits. As an example, each additional minute charged for rehabilitation services creates additional revenue. Consequently, the diagnosis of a patient has a direct correlation to the revenue they will receive.
For example, imagine that a 70-year old patient with a hip fracture is admitted to your hospital for five days of rehab. The patient is scheduled to be released and receive additional services at home. Instead of letting the patient go home after five days, the hospital convinces the patient to stay for another week or so by paying their co-pay. This increase in the length of stay results in large bonuses for hospital employees. Then the hospital can write off the copay as a business expense.
In these stories we see how money greases the wheels and how the ripple effect of unethical action starts to grow and grow. But, where does it start? One story I think sums it all up comes from a high school student who got caught cheating on a state exam. Asked about his behavior, the student said, “Yes I would cheat. I know it’s wrong but I’ve been raised in a results-based society. If I didn’t feel so pressured to do well in school I probably wouldn’t.” It is interesting that the student said results-based society, and not ethics-based society.
Small business managers, in the execution of their organizational development goals, must examine the ethical aspects of their businesses. Ethics are principles that govern organizational activities, the conduct of business, and guide company policy. When leadership has high ethical standards it creates a culture of behavior that all employees will emulate. Employees, guided by strong ethical leadership will give you honest, principled work you can rely on. Ethical businesses can create a great culture of winning.
So, what’s at stake for gaming the system? Why do we game the system? Some would say because the system is gaming us, so why not!
I bring this up because I want to discuss how cheating or gaming the system can corrupt your organization, leadership, and teams. How many of you offer bonuses to your employees? What structures do you have in place to minimize unethical behavior in achieving those numbers, or do you? How many times have you offered a bonus program only to find the system has been gamed? Write me, share your stories of gaming the system, pro and con.