MAP

Cynthia Mathieu

Professor

Université du Québec à Trois-Rivières

Why seemingly honest people do dishonest things

MAP

What does honnesty look like?

MAP

How can we measure honesty?Is not the right questionThe right question isHow high is honesty on the

list of competencies we look

for in leaders?

MAP

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Success

MoneyPossessions

Position/Title

Fame

Power

« All that glisters is not gold;

Often have you heard that told:

Many a man his life has sold

But my outside to behold… »

Williams Shakespeare, The Merchant of Venice6

GREAT LEADERS MAKE

UNFORGETTABLE FIRST

IMPRESSIONSForbes Magazine (2014)

7

Those Who Make

Unforgettable First Impressions

Get Hired as Leaders

Selection/promotion

processes

Criminal justice

system

Victims

« The Devil is more

devilish when

respected »Elizabeth Barret Browning

How we define success

as a society has

implications for:

BASIC

The typical organization loses 5% of

annual revenues to

fraud

Median loss in Canada was

$154,000

Victim organizations

that lacked anti-fraud controls suffered

greater losses

Cost of Organizational Fraud 11

Association of Certified

Fraud Examiners (2016)

Many fraudsters do not limit themselves to a single

type of fraud; they steal from

their employers

wherever the opportunity presents

itself.

When the owners or executives committed fraud, the median

damage was more than 10X worse

Annualglobal loss of US$3.7 trillion

Cost of Organizational Fraud 12

13

Despite the cost of occupational

fraud…

40.7%

of victim organizations did not

refer the case to law

enforcement

Why don’t organization come forward and report

ocupational fraud?

14

Shame

Bad publicity

Blame

15

Dark personalities and

occupational fraud

More plea bargains prior to trial

No harsh sentencing

Not an « innocent crime »

Red-collar crime

Underlying cause: psychopathy

“The capacity to kill without remorse was a seed

inherent in the red-collar criminal that germinated when

the proper conditions surfaced.” (Perri & Lichtenwald, 2007, p.21)

16

CORPORATE PSYCHOPATHY “RED FLAG”

(BABIAK, & HARE, 2006)

Inability to form a team

Inability to share

Disparate treatment of staff

Inability to tell the truth

Inability to be modest

Inability to accept blame

Inability to act predictably

Inability to react calmly

Inability to act without aggression

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CORPORATE PSYCHOPATHY: PREVALENCE RATE

Babiak, Neumann & Hare (2010)

PCL-R

(Hare, 2003) 203 upper-level

managers

Prevalence rate:

3.9% (General

population: 1%)

Positively associated with

ratings of

Charisma/presentation style;

creativity, good strategic

thinking and communication

skills

Negatively associated with

ratings of

responsibility/performance;

being a team player,

management skills and overall

accomplishments

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PSYCHOPATHY TRAITS VS

LEADERSHIP ABILITIES

PSYCHOPATHIC FEATURES LEADERSHIP ABILITIES

Charm and charisma Leadership

Talking about lofty ideas/goals Visioning

Conning and manipulation Influence, Persuasion

Lack of remorse of guilt Can make hard decisions

Impulsivity Courage

Has no emotions Good emotional control

Grandiose self-appraisal Self-confidence

Thrill-seeking and need for stimulation Ability to multi-task

Adapted with permission from Babiak, 2001

Psychopathy in

the workplace

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How do they enter

organizations?

The most widely used

tool for employee

selection is the

unstructured interview

(Buckley et al, 2000)

Impression

management tactics

Verbal

Non-verbal

Great

haircut

Nice clothes

Confident

look/walk

… No sign of

anxiety

Selection

Interview

Biases

Non-verbal

IM tactics Attractiveness

Selection Interview

Biases:

Verbal IM tactics

Praising interviewer

Self-promotion

Overclaiming (DT)

Similar tactics can be

used to get positive

performance appraisals Flattery

Opinion conformiy

Which may lead to promotions

into leadership positions…

Differences between dark

and good leaders :

The intentions behind their

decisions and actions

Risk taking/taking advice

Empathy

People-oriented leadership

Humility

Short-term success

does not guaranty

long-term prosperity

Differentiating the good from the bad

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Association of Fraud Examiners, 2016

Structured Interview

Psychometric testing

Background check

Entry phase: What should be done

Don’tletthemin

B-Scan VS PCL-R Factors and Facets

Behavioral red flags

displayed by perpetrators

According to the Association of

Certified Fraud Examiners (2016)

Living beyondmeans

Financial difficulties

Divorce/familyproblems

Unusually close association withvendor/customer

Complain about inadequate pay

Employee

Living beyondmeans

Unusually close association withvendor/customer

Financial difficulties

Control issues, unwillingness to share duties

Irritability, suspiciousnessor defensiveness

Manager

Living beyondmeans

Wheeler-Dealer attitude

Financial difficulties

Control issues, unwillingness to share duties

Unusually close association withvendor/customer

Owner/

Executive

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Performance appraisal

360 degree evaluations

Look for behavioral red flags

Dealing with dark personalities on the insideHave a hotline in

place for tips and

make sure to

protect informant

confidentiality

Build an organizational

culture based on

transparency and have

clear rules on

occupational fraud

Work with HR to identify

individuals presenting

“red flags” (i.e. poor

performance reviews,

harassment and abusive

leadership)

Act quickly when

you detect fraud.

The longer a fraud

lasts, the greater the

financial damage.

Keep a close watch on employees and managers

who go to the office outside of work hours

FBI on Corporate psychopathy

Investigators should

familiarize themselves with the typical traits

and characteristics

of psychopaths.

Understand the manipulation techniques

used to create and manage the

psychopathic bonds

established with victim

organizations.

The psychopath’s

reputations, as judged by those

in power with whom they

have bonded, known as

patrons, often provide added protection from

closer investigation.

As a result, the investigator may need to build a case

with management

for the use and broad

application of more

sophisticated techniques.

FBI (2012) The Corporate Psychopath (Babiak & O’Toole)

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BASIC

BASIC

www.graphicriver.net/goashape

The world is a dangerous place

to live; not because of the

people who are evil, but

because of the people who

don’t do anything about it.

Albert Einstein

cynthia.mathieu@uqtr.ca