Leadership Character v. Perpetrating Fraud

In the financial services world, fraud is a big deal. After 30+ years in and around that industry, I have seen things both great and small when it comes to fraud. When it comes to leadership character, being a fraud is a huge problem.

There is a basic definition of fraud that can be explained by these three parts.

fraud

My question is whether you, as a business leader, have ever perpetrated fraud? I don’t mean in the criminal sense, although that certainly would be a significant issue with respect to your effectiveness as a leader. No, I mean the practical sense; the one where you deceive those around you. You have a lapse in judgment and make false representations about facts or circumstances. Have you ever needed to misrepresent a material fact? Have you had less than honorable intent to deceive an audience? Have you used your influence to adversely affect a final decision?

Perpetrating this kind of fraud is a serious act, causing sometimes permanent damage to reputation and trust.

Your Motives

Why would you ever feel the need to misrepresent something? Here are a few reasons why.

  • You get caught coming up short. You’re not prepared, you’re not ready, the “dog ate my homework” sort of thing.
  • You’re feeling small. You look in the mirror and you know you have shortcomings. You haven’t quite yet figured out everything you need to know to deal with the situation you’re now in.
  • You made a mistake and you are not ready to own it. It could be about a small mistake or it could be a big one. Regardless, the sense that you made something go wrong is always hard to handle.
  • Also, you might believe you really need to get out of the situation that is swirling. You have not yet figured out the escape route, so the easiest way is falsify information, lead the discussion in another direction. Dodge the bullet as it were.

There Is Always a Cost

Regardless of any justification, moral, ethical, or character fraud always carries a cost. All of the effort to build and grow a following can disappear overnight when a leader commits fraud.

The let down people will feel when you decide to defraud them, is damage from which you may never recover.

The biggest damage is to trust. Fraud erodes trust. People start to think, “well if he/she did this then, then when again?” The looks you get after the fraud is uncovered are frequent.

You can try to excuse it, but you better be prepared to pay the price. You may need to stay in someone’s penalty box for quite a while.

Look at all of the national figures who have been caught in a lie. Oh how mighty the great may fall. Yes, we often see second chance redemption to the celebrities who defraud us, but day to day, those of us living a more common life are usually not so lucky.

Relationships crumble, business partnerships dissolve, and the people you need around you start to fall away.

It’s a Character Thing

The temptation to commit a fraud is truly a character thing. It has been said:

How’s your character? Here are some questions to ask yourself.

  • Are you living the life that builds trust for those around you?
  • Have you been ready and willing to admit shortcomings without trying to mask over them?
  • Do you have an accountability crew with whom you seek counsel?
  • Do you value the people around you or are you willing to skim over their significance in your life, minimizing the risk of letting them down?
  • If you see a flaw in your heart and mind in a certain area, are you working to strengthen that weakness?

These are just a few the ideas necessary to prevent fraud. You owe it to your team, the people around you, to rise about the temptation. Avoid committing fraud. You won’t like the price you have to pay.

 

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