In your business career you are going to be continually tested by experiences where your own interests diverge from those of your employer. The way you decide to handle such situations is an outward demonstration of your character, revealing the kind of person you are in a way that words never can. Do you stay true to your pledge to act as an agent of the company's shareholders, making calls and decisions that serve their good, or do you default to enhancing your own position?

Observing this kind of situation over the years, I'd guess that at least eighty percent of the time managers take the selfish route. In fact, there are many tools in our modern management toolbox specifically designed to get managers interests and those of the shareholder "in alignment." But no matter how clever the design of incentive systems, or how well-crafted the company's strategies, there are going to be plenty of instances where these interests diverge.

It starts by the example set at the top.

Having had the opportunity to work in several public companies where I served in high level positions, I've been able to see how CEOs sometime serve their own interests at the expense of the shareholders.

In one company, I participated in multiple meetings to decide what to do with "loser" business units, ones that were significantly under-performing expectations. In this case, those business units were actually destroying shareholder value, and many had been doing so for years. There was an obvious answer to the dilemma presented by these "losers" -- divest. But doing so would represent the admission of an error committed under or by the CEO. Instead of enacting the obvious solution, we burned huge amounts of management time (not to mention destroying the careers of some capable managers in the process) trying to "fix" the "unfixable." Is it any wonder that when a new CEO makes an appearance, they very often take take the divestiture actions everyone has known for years were needed, a set of actions often referred to as "flushing the toilet?"

In another company, the CEO (probably feeling insecure about his position) couldn't seem to make up his mind about what to do with a variety of projects and ideas. Instead of assembling the evidence, making up his mind, and defending his decision, he was constantly flip-flopping often based on the latest comments from his board. The consideration of the right move for the future of the company never seemed to come up, rather every major decision seemed to revolve around what was "sellable" to the board.

Another "tell" about top management's attitude on this subject is how they see the behavior of their subordinates. One CEO I worked for interpreted every subordinate's actions through the lens of "what generates their largest bonus payout." Needless to say, since not all employees are motivated by short term bonus payouts, he was sometimes confused by why particular decisions were made.

How does this play out further down in the organization?

Managers tend to emulate the behaviors of those at the top, learning what is acceptable from those in charge. Even if the example set is proper, however, you can still expect plenty of self-interested behavior where the manager puts herself ahead of other stakeholders. This is probably simple human nature, but is also a statement on the priorities and character of the managers involved.

One peer running an independent business under the same corporation provided a perfect illustration of this. His division sold a product to mine, and he was angling for a major price increase. His plan had nothing to do with increased costs, he simply felt his group should make more money from the transaction, which would translate into a higher bonus and rosier reputation for him. In the ensuing standoff, he was more than willing for me to take the business to an outside company -- an action that was clearly not in the interests of the shareholders -- rather than suffer with the margins he found to be unacceptable. What was best for the company didn't interest him.

It was textbook example of local optimization, global sub-optimization.

Does working on the business's behalf pay off in the long run?

Sometimes it does, but not always. I'd like to believe that acting unselfishly in the interests of the shareholders inevitably builds your reputation for reliability, honesty, and trustworthiness, but in my experience these personal sacrifices largely go unnoticed. Perhaps it is because so much self-interested behavior occurs, making most people consider selfish behavior to be the norm. Unless they know the details of your decision, they don't recognize that you're putting the company first.

I can think of one instance where my reputation for working on the shareholder's behalf did help me considerably. A former subordinate that had engaged in a strictly illegal behavior (unbelievably self-interested, but too complicated to describe here) made accusations that "others" in management were aware of and condoned his scheme. I was on the list of potential "others" but no one higher up in management believed I could have been involved. First, because I was the one that brought the situation to light, and second because I had a reputation of being transparent and acting in the company's best interests.

I hate to say it, however, but I think this kind of situation is the exception rather than the rule. If you decide to act unselfishly, don't think that your reward will be waiting for you somewhere down the line.

What to do?

When you're faced with the choice between your interests and the company's, your character and conscience should be your guide. If you act based on self-interest alone, it is unlikely anyone will blame you. But if your own moral compass directs you to act in favor of the company's interests, you can't get into much trouble doing so. Just remember, the "treasure" gain may be marginally less as a result.

Coming to the rescue of a third party, however, where doing so goes against both self-interest and company interest can be quite dangerous. In those situation (often where one perceives that an individual is being unreasonably treated) you must tread lightly -- both because you can cause great harm to yourself, and because you can inadvertently injure the party you're trying to protect.

In all cases, however, you will likely be the most important judge of your decisions. Do the "right thing" according to your own conscience, and let the chips fall where they may. 22.3

When it's Right for You, but Wrong for the Business

Tom Spears

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