Why Organizations Cheat?

This piece is dedicated to my father who was a brilliant Economics Professor. He left for heavenly abode on 1st May and this is my tribute to him. He taught me and every life he touched to stay honest and courageous in every situation. 

Kartikay: Why do organizations announce unbelievable promises and don't keep up those promises? Don't they fear employee backlash?

Sunil: Can you clarify more? what do you want from me?

Kartikay: There is this organization that announced unlimited mental leave got lots of good press but they never implemented it this way. Employees felt cheated. There are many such examples of organizations announcing mouth-watering promises for the employees but they never get implemented the way it was announced. Why does this happen? Doesn't the employee know about these things? Do they engage in some backlash? I need your view on these questions. How organizations get away with cheating?

Sunil: Kartikay, This is a complex question that involves, economics, society, legal framework and market.

The fundamental question is? Why Organizations Cheat and Get Away with it

This can be understood at multiple levels:

This can be answered at three levels:

1. Keynesian Economics and Market Perspective: While Employees are the closest who witness and face the real culture and value system of any organization, they are the ones who can also see through any gimmick. Therefore to win the trust of the employees you need to have genuine initiative. Organizations nowadays believe in the Keynesian Saying that We all live in short term and in the long term we are all dead. This economic model disincentivises any investment which will produce results in long term. Organizations and their management and promoters want quick result even from their employee investments. They want to produce productively committed, trusting employees within months. Believe me, Culture and Trust Decades to build and just a few days, months and years to destroy. This creates a situation for organizations and promoters/management which is established as toxic/cheating/gimmick driven to not invest in genuine employee initiatives. Employees are very smart they know these reputations and gimmicks. They have also adapted their behaviour to these kinds of employers.

The real answer to why these gimmicks/cheating/trickery happens has not much to do with employees. Actually most of the times these are intended for customers, investors, society groups, and policymakers. They are the actual target of these image-building activities. They are away from the organizations. many of them especially customers have no means to experience the real culture and value system of the organization unless something goes wrong with the product or service. Smart Organizations even keep this aspect separated from the real culture and value. So it becomes difficult for these far away stakeholders to see through gimmicks and trickery which is carried out in the name of employee-friendly announcements. I remember confronting a finance person with a policy document once and said why this is not implemented when this is an active policy. The answer I got was baffling, he said that this was created just to close an audit observation because this is legally mandated. Now see auditor who comes in close contact with an organization can also be misled then think about customers who don't have the wherewithal to do a reality check. This incentivises the toxic organization to keep doing these glossy announcements to influence clients.

You can always notice that during every pandemic, there are so many companies who like to use every pandemic to prove to the world that they are the Messiah of the world? While they don't extend the same gesture to their employees. So where is the disconnect? Just scratch the surface and you will know that most of them have engaged in these activities to do accounting trickery or to earn taxation benefits. They are the ones who make more noise and produce more gloss.

While customers are mostly farthest and they have little wherewithal to differentiate between gimmick and genuine initiative in the short run. This difference incentivises organizations to pounce upon pandemics or in normal time create an attractive jargon. Some of these organizations have developed an eye of a vulture to identify PR opportunity in pandemics and employee sentiments.

The question which can be asked that if by scratching the surface it can be found out then why they still do it? The answer is people don't have time and many a time scratching people get managed. Look at the investment they make in keeping media well oiled and managed. It's only when an accident of disproportionate proportion happens (like Enron, Macondo Oil Spill, Kingfisher collapse, Voice Recording or video recording of some senior leader mistreating an employee and many other similar events) that these organizations are found out and sleaze behind well-managed gloss comes out. At times Organizations with the help of friendly regulator, government, and media still manage their glossy image despite the sleaze flowing in open.

If you do some research you will find out that even during the year of their collapse they won multiple awards for being employee friendly were certified best employers. Employees have to be careful about making their decisions based on these certifications. There is a well maintained symbiotic relationship that exists between certification agencies and some of these large corporations. In return, they get high-value consulting assignments.

Now you see the economic reason for the glossy announcement is not the employees. It's just a coincidence that Unbelievable Employee related announcement and pandemic initiatives sell more and attract more eyeballs.

2. Manpower Demand Supply Economics: In markets like India where the supply of manpower exceeds Demand, many organizations don't feel the need for genuine employee-related activities, because what they are bothered is about is the market image and not Employee trust. It is just too costly and career jeopardizing for employees to call it out. They all know about it talk in a hush-hush way but everyone tells others to remain quiet about it. Most Employers and even HR professionals lack the courage to hear the truth and act upon it. This is a vicious circle. Over time Employer get surrounded by people who further desist him/her from taking genuine employee initiative and convince him/her that it's a waste of time and money.

You may ask at this point that isn't employers do these glossy announcements to attract Talent. The answer is Yes. However, the good part is that Most of the Prospective Employees see through it. However, still, a good number fall into the trap of these glossy promises. That's is one of the smaller incentives for this type of behaviour from the organisational side.

While Employees know about it, organizations continue to cheat and produce gimmick because the demand-supply equation is in the favour of the employers. They feel confident that they will always be able to trap enough warm body keep running their ship. It's a different matter few dies or burns-out in the process.

One question comes here so why still employees contribute. The answer is no they don't contribute they simply get used to the mistrusting, gimmicks and thuggery of their employers. They start engaging in behaviour where they pretend to work 30 hours in a 24 hour day, produces tons of papers, emails and meeting without any real productivity.

Some of these organizations have found this out. But since they are inflicted by a virus that doesn't allow them to invest in genuine employees initiatives or to build trust, they invest millions in spying on their employees and find out what their employees are doing on the desk, in loos, in their homes and even when they are on vacation. These organizations often ask consultants why their employees still not innovative, creative, or going extra mile for the cause of the organization. The answer is Employees knows your intentions. I tell them You have to change your value system and culture which is flowing from you. If you aren't ready no one can change this for you. Better go and have a look in the mirror and have the courage to see who you are. You are surviving only because the demand-supply equation favours you.

There are quite a number of organizations that invest in earning the trust of the employee and they are amply rewarded for it. I can name a number of organizations that have operated this way but I am shying away from it as I also don't have a close view of skeletons lying in their cupboards.

3.Psychological Contract: Talk to Employers or their HR many of them will acknowledge that they have heard about this concept. But when it comes to respecting it, we will have to walk with the floodlight of stadiums in hand to find those countable organizations who acknowledge psychological contract between Employee and Employer and make sure that their manager and leaders take utmost precaution to fulfil the psychological contract. For beginners let me explain what is this psychological Contract. This includes what is legally binding, what is written, what is said and also what is unsaid understanding. Good employers respect all 4 dimensions of the psychological contract. They understand that the offer letter is not the only document which they need to respect. Unfortunately, most of the organizations keep looking at ways to limit themselves to legally binding or written letter and some even don't deliver that.

Many people tell that it is employees duty to earn trust. My answer to them is Bull-Shit. It is the Employers duty to build trust. It's for them to make employee believe that the employer is trustworthy. This equation always works like this Employer has more power in employer-employee relationships. They have to take many steps in this direction before lecturing employee about how to earn trust. I hope many HR Leaders reading this piece also get this right.

Recently I heard an HR Head giving some mentoring sermons to employees as to how they can grow in the organization. He said you can't grow by differing with your superiors. He went on and added that he has never differed with his bosses. He probably stopped sort of saying that he stooped so low that all his superiors can walk over him and consider him as the best protege. Unfortunately, Organization he represents almost every year comes to the news for unethical practices. But you know psychological contract can go down the drain if regulators and policymakers and society isn't aware of the truth and made to believe that in the population of billions if the employee has got a job that's a big deal. they should be grateful to organizations and be happy to remain employed.

I will end this article with few observations:

It’s a choice that organizations make to create a culture of cheating or trusting.

While there is lots of research which suggest that employee-centric organization, ethical organization do better than unethical and toxic organizations. The reality is that both coexist and both make money. Many people might throw at me the data of many companies which are flagbearers of ethics and employee-centric initiatives. The reality is that you don’t know how much they invest in cleaning the negative media, negative comments from the internet, how much they invest in making sure that main media don’t report anything and all get managed. While reading this keep these companies in mind too. They are not as ethical and employee-centric as they look. They are surrounded by like-minded people who believe that what matter is their survival and not what is right. 

For a Great Organization Foundation of Honesty, Integrity and Trust is something that can't be compromised upon. Organizations making money is no indicator of a great organization.