“It's Probably OK, So I'll Do It.”

By Harvin C. Moore, III

We all use this phrase from time to time, but when we do, we should examine the facts behind it more carefully. Perhaps, it could be paraphrased, “I am going to do it, and I hope it's OK, but who will ever know; and if someone does, it's what all my competitors are doing.” Sound familiar? The pressure of your competition (both domestic and foreign), your owners, your family and even your own pride will often override your better judgment and push you toward making a questionable decision.

That occurs frequently in business; but we must be on guard against compromising our values for a perceived short-term gain that could result in a long-term loss. So how do we protect ourselves against that kind of risk?

Assume Billy, the sole owner of the Full of Gas Company, is negotiating for a big contract that would increase his sales by 20 percent in the first year and his profits by 30 percent. Billy is very active in his local Chamber of Commerce and is respected by all of his employees. Two years ago, he was honored as "Boss of the Year" in the county. Though not the largest company, nor employer, he is well-known and liked. However, his wife is from a much larger city and she desires to return to the bright lights and buy some fancy clothes. She is always pushing Billy to make more money so they can do that and send their kids to a private university. He tries to satisfy her, but it is hard because there always seems to be something more that she wants. He need this contract! The customer is a much larger, well-known company, and if Billy obtains this business, his reputation in the industry will be enhanced. Sounds like an easy decision. Get that contract signed!

But there are some other facts we need to know. All the business terms are agreed upon: price, delivery, quality, terms of payment, etc., and Billy is negotiating with the Decision Maker (DM). Just as Billy is about to shake hands on the contract (legal documents will be prepared later), DM says, “Billy, this is going to be a very good contract for you. You are going to make a lot of money. And turnabout is fair play, so I need you to help me out. You'll need to lease more space, and I will lease it to you.” Not too subtle. Billy will need additional warehouse space with this contract, but DM has, by his words and body language, made it clear that this is the “quid pro quo.” If Billy doesn't lease his warehouse, he will not get that contract.

Billy is stunned. There was no forewarning of this “request” (“demand”); and no one had ever demanded anything from Billy before. Billy takes his customers down to the Bar-B-Que place and, once in a while, takes a really good customer to a George Strait or Randy Travis show when they perform at the stockyards; but this was a little over the top of his Stetson. What should Billy do?

DECISION 1: Turn it down Billy! DM is demanding a kickback.

RATIONALIZATION: “No way,” Billy says, “let's not be hasty.” DM is really a nice guy, probably knows how to saddle his own horse, too, and Billy will need additional warehouse space. By accommodating DM, he would cement his relationship and that should lead to more business. Besides, Billy doesn't think he needs to worry about any criminal violations because he doesn't think it's illegal. And he's pretty sure several of his competitors have been “kicking back” to other companies to get their business. He's even heard they make cash payments-just plain bribery. Billy wouldn't consider doing anything like that! This isn't bribery; I need a contract, DM needs a lease. Simple. Billy agrees to meet again to discuss the lease.

The next day, DM shows Billy the warehouse space, and he realizes there are several problems: It is not located exactly where he would like; it is a little larger than he needs; it will take some refurbishing that he must pay for; the lease rate is 10 percent above market; and the term is two years longer than he wants. Billy thinks these thoughts, but doesn't mention them. They are, however, quickly crowded out by the thought of that big, fat, juicy contract. With it, Billy's profits will soar and he can give himself a raise. His wife will consider him a hero! His employees will have new respect for his salesmanship. His competitors will take him seriously, and finally, he'll be an important member of the industry. Billy wants to sign up.

DECISION 2: Decline. It is a bribe, and the amount has gone up.

RATIONALIZATION: As Billy grapples with these “above market” lease terms, DM tells him that this property is actually owned by a Trust he set up for his children's college education and the lease payments would be made to “Ima Fraud, Trustee.” Winking, he says this is a deal between only the two of them and no one else will ever know about it. Billy is feeling better because there would never be a lease check issued to DM. No one in his company would know that he had made a “side deal” with DM. Billy just “found” this space and no one will challenge the terms of the lease because, after all, Billy answers to no one. It's his company; he owns it lock, stock and barrel. And with those bigger profits, he can hire that cute barrel racer who's been working at the stockyards as his administrative assistant, and he can do more marketing. There are so many more pluses to this deal than minuses it's looking better and better to him. Billy is ready to sign the lease.

DECISION 3: Run, don't walk, AWAY! You are going to get burned (as in branded)!

RATIONALIZATION: Billy knows that if he doesn't sign this lease, he won't get the contract, and this is the only opportunity to grow the business that he has had all year. No other new customers are on the horizon and it's been a fight just keeping his current ones. The industry is going to be stagnant, and this contract is a godsend. With it, he will not have to lay-off any employees should orders decline. He has never laid off anyone and believes it would be the worst thing he could do. Billy lives in a community where everyone knows everyone else. His employees have helped him achieve what success he has had so far. He won't risk their jobs. So Billy decides he has to sign the lease.

This example, up to this point, seems familiar, but there is something missing: a thorough review of all the facts and a realistic look at the cost of doing the right thing versus the cost of doing the wrong thing. Notice the pressures that Billy feels. The external ones are, for instance, the stagnating state of the business, the welfare of his employees, the profitability of this contract and the wants of his wife. The internal pressures are pride, ambition, envy and a little greed.

The combination of these pressures has led Billy to set up a false necessity, something that he now HAS TO DO! Thus, he signs the lease. Pressure can be OK, but when it becomes overbearing, it is not OK. Billy has caved in to these pressures.

Deciding to lease the space, Billy must justify it, and so he rationalizes. These are the excuses he makes to justify what he had already decided to do. Then he lives in denial that he has done anything wrong. What do you think?

Were DM a government official in a foreign country, Billy would probably have violated the Federal Foreign Corrupt Practices Act.

And the cost to Billy? You calculate it. Would you change places with him?