Recently we have read press coverage about the CEO of Yahoo losing his job for including on his resume a degree he didn’t have. And last fall, the CEO of Hewlett Packard lost his job over false expense reports.
In both cases, the ethical line was crossed. When that happened, they had to go—that line must never be crossed.
Why is this so important? The answer is that when someone crosses the ethical line, you can no longer trust that person. What happens when you face a situation where you have to rely on that person’s honesty, such as in a management representation letter, if you can’t trust them? The answer is that you cannot rely on them, so the situation cannot be allowed to occur.
Here’s just one example that affected me personally and that I hope will put this in perspective.
I was the CFO of a company when the CEO wanted to hire a new VP of sales whom he and others had worked with before. As a company we had all the personal references we wanted, and the candidate had a great selling history. Perfect guy, or so we thought. We got to the point of wanting to hire him quickly, asked him to complete an application form and started the background check.
Unfortunately, we quickly came up with two issues. He did not have the exact degree he claimed on his application form, and he had answered “no” to a question that the background check showed that he should have answered as “yes.” We asked him about these issues, and after some time he admitted the application form he had completed was inaccurate, that he had overstated the degree and answered the question falsely. He was very apologetic.
So were we, because we couldn’t employ him as a result of the false statements. How could I, as CFO—or the auditors, or the board—ever rely on any statement he may be asked to make when he lied on an application? Or how could we be sure that he was being truthful with our customers when he was negotiating on our behalf? We couldn’t, so we had to pass on him.
The sad fact is that we would have hired him if he had answered the questions correctly. We didn’t care what his degree was in, or about his other answer, but because he didn’t answer those two questions honestly we knew we couldn’t trust him to be honest with us when it really mattered. That’s the bottom line, and that’s why ethics matter.