When Everyone Cheats

Around a decade ago, the CEO of the Japanese subsidiary of a European building infrastructure and engineering services company told me his business had repeatedly experienced safety failures and accidents. One person had died and others might have in other incidents but fortunately had not. He told me he suspected the cause was the failure of frontline staff to follow safety protocols. He asked me to investigate and find out.

A Japanese prosecutor had taken an interest in the accidental death case and was investigating the company. The threat of an imminent indictment was real. News of the company’s accidents was in the media.

The company had branch offices in Tokyo and throughout Japan, serving customers in their territories. I traveled to every branch and interviewed the branch directors, the mid-level managers, and a selection of frontline staff.

The frontline staff all told the same story. Their managers pressured them to skirt safety protocols, often in defiance of Japanese regulations, to boost productivity and business results. The mid-level managers told me that the branch directors pressured them to do the same.

The branch directors all told me it was true—that this was the reality of the business. All companies in the industry skirted safety regulations, and it was necessary to do so to maintain profitability. It was an acceptable, necessary evil.

One branch director told me that the skirting safety protocols issue was irrelevant to his office, even though he admitted to the practice. He glared at me from across his desk, contempt in his eyes and a righteous indignation in his tone. His office had never suffered an accident or incident, and he asked dismissively why lax safety should matter to him.

Arrogance is the belief that one has nothing left to learn. Smugness is arrogance without the talent.

The branch offices were dark and quiet. There was none of the usual office banter I typically hear—excitement about a recent success, laughter and small talk among workers returning from lunch, chatting about evening or weekend plans, or any vibrancy about life. All the staff people I interviewed were stiff, muttering in muffled tones and checking their watches. No one was happy to talk with me.

A business’s purpose is to improve people’s lives. The Hippocratic oath is as relevant in business as in medicine: First, do no harm. These values are fundamental to all human endeavors. To violate them for short-term gain is soul-destroying for those who do so whether by volition or coercion. Is it any wonder the offices I visited and the people I spoke with were so dark?

What I had found alarmed me. I felt an ethical obligation to inform the CEO immediately rather than wait until delivering my final report. The CEO dismissed my concerns when I called him and instead accused me.

“The staff are deceiving you,” he claimed. “It surprises me that someone like you would fall for such a transparent ploy! Keep investigating!”

And so I did.

I interviewed the Japanese subsidiary’s CFO, a British expat who had worked for the company worldwide, not just in Japan. I asked him about what he thought of my findings.

“Steve, this is an open secret in the company. People skirt safety protocols all over the world. Everyone knows about it,” the CFO deadpanned.

“Does the Japan office CEO know, too?” I asked. The CFO did not answer. He did not need to.

I contacted the CEO and offered to deliver my report orally to him alone and in private, wary that my written report might be subpoenaed should the company be indicted. The CEO declined and insisted I provide a written report and presentation to him and his executive team. So I did.

I reported my findings in a conference room, all executives present, presumably including the ones who had succumbed to pressure to skirt safety protocols as they rose through the ranks and then pressured underlings to do the same in turn.

Partway through my report, the CEO exploded at me with fury.

“I cannot believe you are so stupid and gullible! The problem is the fault of frontline staff! They all conspired to deceive you!” He screamed.

He slammed his fist on the conference table, stood abruptly, and stormed out of the conference room.

I remained sanguine. I am paid to give my advice. Sometimes, people don’t like what I have to say.

The meeting was over, as far I was concerned. No point in delivering my recommendations. No point in a discussion. I gathered my things as the executives still seated at the conference table looked on. One spoke up calmly.

“Steve, you know how in Japan there are roads with a speed limit of forty kilometers per hour, but everyone does sixty anyway because forty is just unrealistically slow? It’s like that in our business. The safety regulations are unrealistic. Everyone violates them. Those who don’t can’t compete.” he explained as if talking to a naïve child.

“Your competitors don’t appear to have suffered accidents like yours, and none of them are being investigated. So what are you saying? Your competitors are better at skirting safety than you are and just haven’t been caught?” I asked.

“Maybe it’s because the authorities unfairly target foreign companies,” the executive offered.

And what about the person who died, I thought, feeling queasy, but said nothing. There was no point engaging in debate.

I left the conference room and the office unescorted. I was somber on the train. I arrived home. I immediately showered.

A few months later, I found a news article about yet another accident related to this company. Another person could have died but fortunately suffered only minor injuries. The territory in which the accident occurred was the one whose branch director boasted about his zero-incident record.

Occasionally, CEOs and executives ask me what they should do when their company systematically violates the law, regulations, or ethics. I tell them they have three options.

Live with it do nothing, which makes you complicit by default.
Do something to confront and change things.
Leave.

I tell them only the latter two options are viable. The first option is soul-destroying by degree.