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Archive for the Dishonesty

Tip of the Day: Tell the Truth

Are you an employee? Want to get fired fast? Lie.

Are you an employer? Want to get sued fast? Lie.

According to a batch of recent studies discussed on FoxNews.com, it appears that lying is getting more and more rampant in the workplace.

What’s behind this phenomenon? It’s simple: we want to look good.

According to researcher Jennifer Argo, “We want to both look good when we are in the company of others (especially people we care about), and we want to protect our self-worth.” Not surprisingly, her study found that people are “more likely to muddle the truth with our co-workers than with perfect strangers.”

E-mails in particular were identified as a hotspot of “untruthiness.” “There is a growing concern in the workplace over e-mail communications, and it comes down to trust,” said Liuba Belkin, co-author of another study. “You’re not afforded the luxury of seeing nonverbal and behavioral cues over e-mail. And in an organizational context, that leaves a lot of room for misinterpretation and, as we saw in our study, intentional deception.”

What does this mean for employers?

Thinking back on all the employment lawsuits I’ve handled over the years, I’d have to say the #1 thing that executives do to get themselves and their companies in trouble is to lie. Almost all other infractions can be forgiven, but lying (particularly during an investigation or as part of an attempted cover-up) can cancel out years of built-up personal goodwill.

It’s critical that employers foster a culture of integrity, starting at the top. If employees see their leaders distorting the truth they’re likely to follow suit.

All managers should be trained on the importance of keeping communications honest. Documents that distort the truth — including everything from performance evaluations to discipline notices to run-of-the-mill e-mails — can wind up as defense-killing exhibits in litigation. I’ve personally seen entire lawsuits undone by a single e-mail that made the company look dishonest.

The bottom line: tell the truth.

$895 Million Settlement in Stock Option Case

Yesterday, United Health Group agreed to pay $895 million and to implement sweeping corporate governance changes as part of a tentative settlement of a stock option backdating lawsuit.

United Health agreed to:  (1) take the company’s performance into account when setting executive compensation; (2) create a shareholder-elected position on its board of directors; (3) implement stringent director-independence policies; (4) mandate an options holding period for all executives; and (5) require shareholder approval prior to any option repricing.

Excluded from the settlement are the company’s former CEO, William McGuire and former top lawyer, William Lubben.  In 2007, McGuire agreed to pay the Securities and Exchange Commission $468 million related to the backdating allegations.  Several lawsuits remain pending against the two former executives.

The Lesson

Stock option lawsuits have rocked the business and HR world for the past several years.  As discussed previously here on the Blawg, some HR execs have even gone to jail when they failed to blow the whistle on backdating schemes.

HR leaders have a tremendous opportunity to influence others to do right — or to do wrong.  One of our Top Ten Greatest Hits of Employment Law Advice is “The Mom Test.”  When making decisions, ask yourself:  “What would my mom think if she read about this on the front page of the paper?”  If it would disappoint mom, don’t do it.

The lesson is simple:  failing to do the right thing as an HR leader can land you and your company in legal hot water.  It could cost you your job, your money and your reputation.  Don’t let that happen to you.  Know the law, follow it and help others to do the same.