Tuesday, October 9, 2012

How Do I Lie to Thee? Let Me Count the Ways...

Reading an ethics book (Just Business by Alexander Hill) reminded me of the many ways we've built a lot, and I mean a lot, of extra cost into doing business because of low trust. Therefore, it was too easy to paraphrase Elizabeth Barrett Browning in the title.

  • Budgets are built with lies because of ways we treat them. Unspent money is not rewarded for the next budget cycle, so people inflate their budgets and then spend the money on ineffective programs, tools or training.
  • We're positive the other guy is going to take advantage and slip something into the agreement (e.g. our joked-about fears of 'first born' clauses in those ubiquitous user's agreements). Or we think we won't be able to reach a negotiated settlement with the other party without some strong enforcement written into the documents. Thus, we spend a lot on legal fees to review every contract, employment agreement, purchase order boilerplate, etc.
  • We tell our suppliers that we want 'everything' delivered at the beginning of the month, and we have penalties if they don't. Also, we spend a lot on expedited materials and overtime to make those commitments even though 'everything' is really not needed at the beginning of the month.
  • We tell our employees that we need a two-year period to protect ourselves from competition and we build that period into employment contracts' non-compete sections. We know that our business will change dramatically in six months, with regard to cost structures, customer bases, etc. that two years is really excessive. We're so insecure that we cost the economy some needed skills. Likewise, we have employees sticking around for no good reason other than they're afraid to leave. They don't want to stay but the two-year period keeps them in place. We're not getting the productivity we could if we had loyal and engaged employees who didn't feel enslaved.
  • We know our project schedules are inadequate, so we build in cost overrun clauses and fees for add-ons so that we can justify greater invoices when we run into delays.
  • We don't trust resum├ęs and references so we build in a lot of recruitment time and expense to double-check our candidates. We add background checks, credit report checks, personality tests ad infinitum.
  • We expect employees to lie to us whether they're really sick on 'sick days'. They need more when they are sick. Rather than get rid of good employees, we increase Paid Time Off (PTO). 
  • We institute per diem policies because we know people stretch the 'tips' part of their expense reports. So now we encourage people to spend less in order to pocket the difference.
  • Rightly so, we distrust performance appraisals and so merit increases are kept low; otherwise, everyone might end up getting the top tier raises. Employees understand this so they game the appraisals to force the effect. Concurrently, they also distrust management and therefore aren't giving 100%. 
Stay tuned for Part 2 (because the list is so long). Let me leave you with this, from my early teachings: "Poor systems generate more systems." Think about how we have distrust and inadequate measures and so we keep adding layer upon layer of policies, procedures, audits, etc.

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