THE PSYCHOLOGY BEHIND FRAUD, UNETHICAL BEHAVIOR AND THE HARD-CORE
WHITE COLLAR CRIMINAL
–THE SYNTONIC SYNDROME–
Throughout 26 years of working with all levels of management in a variety of organizations and businesses around the world, I have discovered a pattern — a syndrome — that is indicative of whether an organization, whether a start-up or Fortune 500, is headed toward an “Enron” meltdown as the result of
unhealthy leadership. Enron, and the resulting fraudulent practices that were uncovered, was not the exception, just a symptom of a problem that all companies and organizations face, large and small, public or private, people-oriented or not.
“Unhealthy” leaders do more than use their power to serve their own self-interests. They exercise a certain combination of psychological and mental traits that lead them to their own undoing and, when the organizational culture permits, the undoing of everyone around them. I call this combination of traits the “Syntonic Syndrome.”
The focus of this article then is not the realm of accounting and business practices that is normally associated with corporate wrong-doing; rather, it is the exploration of a psychological syndrome that greatly impacts business conditions. It therefore is necessary to use psychological theory, research and
terms when explaining it, which I will liberally punctuate with true stories and examples to demonstrate the traits and manifestations of this syndrome.
Why exactly is this topic so important? As a client recently said, “We are not talking about flawed employees or managers; the Syntonic Syndrome refers to ‘fatally flawed’ people.” If executives are to prevent misconduct in those who work with or under them, then they must grasp clearly the psychological
and situational factors that invite a particularly dangerous type of problem into their organization.
Let’s begin with a true story about a small but growing brokerage firm brought to its knees by a syntonic person:
He seemed like a sure bet. CEO Bill and his executive team were very pleased with their new hire, a bright and talented broker we’ll call Gil who soon proved himself to be an absolute wizard at building new clientele. Bill believed in integrity and excellent customer service, which were the two key reasons his company was growing so fast. He also believed in a high profit margin, and soon he had Gil helping to train the other brokers.
Gil was happy to do so; he seemed to like the recognition. When he made suggestions at company meetings, people listened. Everything was going extremely well — in fact, so well that Bill and his executive team gave Gil a great deal of autonomy.
About four months later, problems began to surface. Gil felt that Bill should make changes (including changes in his commission structure). He also wanted a place on the executive team. Bill and the
executive team had already rewarded Gil twice, and were not willing at this time to go any further. Gil kept pushing. When Bill finally decided to take back some of the authority he had given Gil, he found to his horror that Gil had been doing a lot more than managing his own clientele. Over the months he had built a clique of brokers who were his “favorites.” Bill had been dimly aware that good brokers had left in the past few months but never really questioned why. Now he knew: they were not part of Gil’s group of favored brokers who got first pick of client prospects (after Gil) and they left.
Gil’s favorites also had been getting an earful about Bill for months and they now viewed him with great disdain. Thus, when Bill finally confronted Gil, the whole group of brokers walked. The company was crippled since brokerage services were still their bread and butter. The final blow came when the SEC called a month later with concerns over illegal trades. The company folded.
Over the years, I have encountered enough “Gils” and observed them over a sufficient period of time in a variety of situations to recognize three things:
1. There are not many of them (about 5% of a company’s workforce), but it only takes one to create complete havoc.
2. There is a pattern or syndrome in both their mental makeup and the resulting actions that can be found across this group of people.
3. The old saying “One bad apple will spoil the whole barrel” is especially apt for this group – destruction ranges from wasted time, money and resources, and generally culminates in the destruction of the company (Enron).
Traits to Look For
THE ORGANIZATION: KEY SITUATIONAL FACTORS
What Can Be Done?
Recognize that it is possible a person with syntonic syndrome is knocking on your door or is already operating in your organization. This person would be ego-syntonic, meaning he or she has a central tendency to re-arrange external events so that they are continually interpreted in their favor, often at the
expense of another; he or she probably has a personality disorder; it is very likely that he or she is extremely bright, exhibits a pattern of according differential treatment to people in your company; and seeks to control the decision-making process.
The most frequent question I am asked at this point is a simple one: what can be done once I suspect a person with syntonic syndrome is operating in my organization? There are two ways to answer this question. First, there are some tools that capable people can use in their organization that will help detect this person earlier rather than later. I will discuss these first.
Finally, I also give a step-by-step process for actually managing this person out of the organization. Plaster Ethics, training in ethics, access to completely safe person/place to report wrongdoing.
Summary
So, you say, this doesn’t sound so simple? You’re right. But it is truly what needs to be done. You are not responsible for saving them or “making them better,” except to provide the appropriate working environment and opportunities as outlined by law (and you can suggest counseling, which they rarely will follow up on. After all, it is not their fault!). And don’t try to hide them in the organization, or move them to another department unless you genuinely think they will turn around there. Your responsibility ultimately is to the true health of the organization, to all people who work there, and to the external
customer. Remember, ultimately these people are building a foundation of sand; the longer you keep them and the more you have, the farther your organization will fall.
