If You Can't Trust Your Team, Why Are They Your Team?

In a "previous life", early in my corporate career, I was a marketing analyst for a durable-goods company. One of my responsibilities was producing the monthly sales report -- how many Model XYZ1 did we sell, how many XYZ2, what % better or worse was that compared to last year, what were the year-to-date figures, and how many units did our competitors sell. Pretty straightforward (these days, no doubt, this would be coughed up automatically by a computer).

Since our parent company was located in Europe, one month I added a brief explanatory paragraph about current U.S. economic issues that had probably affected our sales.

I got some positive feedback from the few sales and marketing executives would received the report, and so kept adding to the commentary, so that the report grew from about a half-page to several pages (never more than four -- I figured no one could stand reading any more than that).

And then I started getting requests from other departments -- finance, production, technical development, advertising -- that hadn't been on the original distribution list. They had heard about the report, seen the most recent issue, found it helpful. Could they be added? Sure, I said. So every month the distribution list got a little longer.

Until we had a bad sales month. And then I got called into the office of the EVP of sales, who complained about the size of the distribution list. Why were all these people getting this report? Most of them didn't need to know how many XYZ1s and 2s we were selling. If we had a bad month, why should we share that with them?

I was stunned. Remember, this was a report that went only to people in the company, and contained only public information. If we couldn't trust our own people, I asked him, who could we trust? And, for that matter, if they weren't trustworthy, why were they our people?

I'm not telling you this story to impress you with my ethics. I'm telling this story because I've been thinking a lot lately about companies and the ways they behave, about the impact of the senior executives' ethics (or lack thereof).

A case in point: today's New York Times has a column by Floyd Norris about Beazer Homes USA, which has just entered into a "deferred prosecution agreement" with the Justice Department. According to Norris, "the company will pay $15 million, and perhaps more if it manages to earn profits enough and does not decide to file for bankruptcy."

He notes that, "Some of that money will go to defrauded homeowners, assuming they file claims and submit evidence. No money is to go to lawyers who help those homeowners, however. If the company knows a particular customer was defrauded, and by how much, it is under no obligation to point that out to the customer."

Best of all, from my perspective, is that the chief executive officer and the chief operating officer have kept their jobs, and the board of directors has not changed. The CEO even earned a significant bonus last year, for "communicating the importance of compliance by employees."

Say what?

Here's the way I see it: Either the CEO was complicit in the massive fraud that was going on at his company (over a period of at least seven years), or he genuinely didn't know what was happening at his company. If the former is true, he's a crook, and should pay the penalty; if the latter is true, he's incompetent, and should pay that penalty.