The second rule of the game

In today’s post, Seth Godin reminds us that the first rule of any game should be “All players must agree to not cheat.”

It’s a metaphor for workers, companies, governments and regulators. When only one of them cheats, the others can often contain the damage. When all of them cheat (think 737 MAX), you get a human catastrophe.

Thus, the second rule of the game should be “If a player cheats, no other player will tolerate it.”

Magic

The recent tropical storm Isaias left me without power for more than 3 days. It just came back at 2 AM this morning.

During the last 24 hours, I often thought of how my parents lived 3 weeks without power after an ice storm in 1997. For 40 miles in any direction, businesses were closed. No ATMs, no gas stations, no restaurants. No hot water, no heat. In the middle of winter.

I recall my dad telling me that after the power was restored, it felt like magic when he flipped a switch and a light went on. He felt gratitude every time. It was almost as if electricity had just been invented.

Imagine a world where we lose our ability to make ethical decisions for 3 weeks. Or even just 3 days. A relatively short period where everyone cheats, lies and steals. A time when you can’t trust anyone. You can’t trust your family members, or your neighbors, or your boss, or the press, or the government. Then imagine trust is suddenly restored and when you ask a question you can trust the answer.

It would be like magic.


This is my 700th post. Coincidentally, I also wrote about magic on my 600th post. You can find all my milestone posts here.

Frequent and short

Some scientists believe that we should start using COVID-19 tests that are far less sensitive but fast and cheap. They argue that if the low cost and speed of the test allows us to screen a person every few days, we will be better off than screening that person only once each month with a more accurate test.

This idea reminded me of the value of short and frequent messages about the importance of ethics and compliance in an organization. With every message, a manager is inviting her team to ask a question or raise a concern. An annual ethics stand-down day, complete with speakers and videos and games, can certainly send a strong message. But these events will catch most employees on a day when they don’t have a concern to raise, and leave the others unsure about whether they should speak up. How serious can a company be about ethics if they only discuss it once a year?

In almost everything we do at work, every day, there is an opportunity to cheat, steal or lie. You know that, your employees know that. Make it easy for them to ask question and raise concerns. And do so every day.

Hitting back

A Houston Astros player was deliberately hit by a pitcher yesterday. It happened during the team’s first Spring training game following their cheating scandal.

Many say the player had it coming. Many still expect the team will suffer such revenge throughout the season. The anger is understandable. But with 30 teams in the league, the way to distinguish yourself as a team this season is to be the one that doesn’t pick on the Astros.

This event reminded me of a situation I faced early in my career. The company I worked for imposed “austerity measures” to weather through some difficult times. Employees were upset about the measures and vowed to strike back at management by doing nothing more than the absolute minimum. My supervisor called for a special team meeting and explained that this was our time to shine. We would be the only department that didn’t complain or strike back. In fact, we would now go beyond the call of duty. I’ll spare you the details, but it worked out really well for all of us, in both the short and long term.

The companies we work for operate in industries with competitors. Some competitors play fair, some don’t. We should not compromise our business ethics simply because a competitor cheated us.

If you pay peanuts, you’ll get monkeys

I recently returned from the latest ECI Fellows meeting, which focused on behavioral ethics. This post is part of a series where I share my insights and lessons from the meeting.


If you grossly underpay someone, don’t expect superior performance.

Or ethical performance.

Of course, a small percentage of people will perform ethically and flawlessly no matter how little you pay them. Similarly, a small percentage of people will perform miserably and unethically no matter how much you pay them. But, eventually, the first will quit and the other will be fired (after costing you dearly).

The vast majority falls in the middle. The danger with underpaying someone, or with treating them unfairly in any way, is that it allows them to rationalize their bad behavior. They steal company property, they cheat on their expense report, they lie to a customer – all because they feel financial pressure and injustice. It’s the classic manifestation of the fraud triangle.

So unless you lead a volunteer organization, treat your employees fairly and pay them a decent wage. It will directly and positively affect their business and ethical performance.

The need to fit in

People want to fit in.

For centuries, if we didn’t fit in with the tribe, we could not survive. We lost access to food, shelter and fire. We had to fit in or die.

This instinct is still with us. And so we want to fit in with our family, with our friends, with our colleagues. This means that we’ll sometimes do things we don’t believe in just to be accepted.

This heightens the importance of corporate culture. If the culture tolerates small acts of cheating, lying and stealing, newcomers will soon understand what they need to do to fit in. Add the snowball effect, and eventually you have big acts of dishonesty.

Why not create a culture of trust, respect and integrity instead?

It’s the how, not the what.

People know what to do but they often struggle with the how.

The employee who is harassed by her supervisor knows she needs to report it but she struggles with how to do it without suffering more. The employee who can’t reach his sales target knows he can’t cheat but doesn’t see any other way around.

The ethical leader understands and gets ahead of this. She shares her commander’s intent with her team, makes it explicit that she wants to hear from them if she deviates from it, and points to HR or the hotline if subordinates do not feel comfortable speaking with her directly. And, whenever something bad happens in another part of the company (or in another company), she’ll take five minutes at the staff meeting and ask “how would we deal with this if it happened to us?”

There’s little value in telling people to do the right thing because they already know. It’s better to show them how to do it.

On performance incentives

You cannot incentive performance. You can only incentivize behavior.

– Simon Sinek

We cannot incentivize sales. Sales can’t do anything.

Sales result from the effort of sales people interacting with customers.

What we need to incentivize is the salesperson’s desire to learn about the offering – what it does, its value, who it’s for – and to learn the skills required to connect her offering to the customer who needs it.

Many companies simply offer a bonus to anyone who meets a sales goal. Year after year, the goal gets higher. The employee’s performance is supposed to improve without the learning of any additional skills. Of course, that’s not possible. Eventually, the salesperson will be unable to meet the goal without cheating or lying. Without realizing it, the company has incentivized maladaptive performance.

The next time you set an incentive, consider all the behaviors you will affect.