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Study: Aggressive production goals lead to unethical behavior

A new study published in the journal Organization Science, says that high-pressure production goals within companies often set the stage for ethics violations and misconduct.

This may not surprise you if you're aware of the scandals at Wells Fargo & Co. Whistleblowers allege that pressure to meet strict sales quotas led many Wells Fargo employees to create fraudulent accounts without customers' knowledge.

The University of Kansas School of Business set out to observe the effect of aggressive production goals on a real company and shed light on the actual mechanism at work:

  • Upper management sets unrealistic goals but fails to put controls in place to catch cheating.
  • Responsible for seeing those goals met, middle management pressures production workers to report the right numbers with little regard for accuracy.
  • Production employees re-interpret gray areas and game the system to meet the goals.

For the study, one of a team of researchers embedded himself for nearly a year with help desk personnel at an unnamed large telecommunications organization. The unit was given a challenging sales goal. The researcher spent 273 days shadowing the help desk salespeople and 20 days following middle managers. He also observed informal interactions between workers at breaks, documented phone, email and face-to-face communications, and conducted over 100 interviews.

The data gathered showed that the help desk team lacked the skill to increase sales enough to meet the goal, the workers were bogged down by time-consuming administration, and the goals were unrealistically high. The middle managers responded by encouraging the help desk team to feign success.

One way this was done was through manipulation of the system. Help desk workers began claiming credit for orders instead of sending them over to the sales unit. They also offered to handle sales administration work for field salespeople in exchange for claiming some of the credit for orders. These arrangements simply transferred credit for the existing sales flow to the help desk unit rather than increasing sales overall.

The researchers also found that middle managers actively schemed to hide these arrangements from upper management. Upper management, they found, failed to invest in monitoring to ensure the apparent increases were real. Moreover, they allowed a company culture where middle managers were afraid to push back against unrealistic goals.

If this sounds like your organization, you may be in a position to observe unethical or even illegal behavior. If your company contracts with the state or federal government, you may be witnessing fraud.

If you believe that is the case, you should talk to a lawyer about a possible False Claims Act or qui tam case. If you blow the whistle on fraud against the government, you could receive a substantial reward.

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