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Avoid the high cost of corporate dishonesty

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in FMLA Guidelines,Human Resources,Leaders & Managers,Management Training

New research shows that dishonesty hurts the bottom line much more than anybody thought, and leaders who teach or allow dishonest tactics will suffer the consequences.

Arizona State University researchers describe those consequences as tumors: growing, spreading and eating away at the organization’s health.The researchers outlined three kinds of malignancies:

1. Damaged reputation. It takes years to build a good reputation, but you can lose it overnight, and the fallout can prove disastrous: Four-fifths of those responding to a recent Wirthlin Worldwide public opinion poll said their perception of an organization’s business practices directly affects their decisions to buy—or not—from the organization.

2. Clash of values. Deceptive business practices will spark moral opposition from employees, which leads to absenteeism, low job satisfaction, reduced productivity and higher turnover. With lower satisfaction in a dishonest workplace, turnover will replace more skilled and productive people with less-skilled and more dishonest ones ...who are more likely to cheat on travel expenses and engage in other fraudulent activities.

3. More surveillance. The cost of adding surveillance systems is staggering. The indirect costs are even worse, including lack of trust, adversarial relations and an erosion in productivity ... because surveillance systems set up an expectation of wrongdoing that can become a self-fulfilling prophecy.

Solution: Set the right example by treating large and small matters with honesty and integrity.

— Adapted from “The Hidden Costs of Organizational Dishonesty,” Robert B. Cialdini, Petia K. Petrova and Noah J. Goldstein, MIT Sloan Management Review.

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