Also by Adrian Furnham The Dark Side of Behaviour at Work (2004) (with John Taylor) Personality and Intellectual Competence (2005) (with Thomas Chamorro-Premuzic) Learning at Work (2005) (with John Taylor) Just for the Money (2005) (with Tom Booth) The of Physical Attraction (2007) (with Viren Swami) The Body Beautiful: Evolutionary and Sociocultural Perspectives (2007) (with Viren Swami) Personality and Intelligence at Work: Exploring and Explaining Individual Differences at Work (2008) Economic Socialisation of Young People (2008) 50 Psychology Ideas You Really Need to Know (2009) The Elephant in the Boardroom: The Causes of Leadership Derailment (2010) The Psychology of Personnel Selection (2010) (with Tomas Chamorro-Premuzic) Body Language in Business (2010) (with Evgenyia Petrova) The Wiley-Blackwell Handbook of Individual Differences (2011) (edited with Tomas Chamorro-Premuzic and Sophie von Stumm) For Alison (AF)

For Aly (JT) Bad Apples Identify, Prevent & Manage Negative Behavior at Work

Adrian Furnham Professor of Psychology, University College London, UK & John Taylor Consultant, UK © Adrian Furnham & John Taylor 2011 Softcover reprint of the hardcover 1st edition 2011 978-0-230-58474-7 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the , Europe and other countries. ISBN 978-1-349-36921-8 ISBN 978-0-230-30384-3 (eBook) DOI 10.1057/9780230303843 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11 v Contents

List of Illustrations ix Preface xii Acknowledgements xiv List of Abbreviations xv

1 Introduction 1 The apple metaphor 4 Integrity as a trait 4 Work groups and counter- productive work behaviors 6 The organization of jobs 7 The process 7 Organizational intervention 10 Dealing with unacceptable employee behavior 10 Conclusion 11

2 Counter- Productive Work Behaviors: The Nature and Size of the Problem 12 Introduction 12 Theft 20 Fraud 24 Bribery and corruption 26 Deceit 32 Information leakage (citizenship espionage) 34 Whistle-blowing 35 Espionage 41 Sabotage 42 Cyber- crime 45 Resignations 46 Conclusion 47

3 Counter- Productive Work Behaviors: Why Do They Do It? 49 Introduction 49 Human motivation 49 vi CONTENTS

Herzberg’s theory 51 Equity theory 52 Justice at work 55 The motivational context 63 Theories related to specific CWBs 83 Conclusion 93

4 Bad Eggs and Bad Apples 95 Introduction 95 The wrong focus 96 Vengeful litigation 97 The criminal personality 99 Personality, intelligence and crime 100 Eysenck’s Theory of the Criminal Personality 103 The anti-social personality, the psychopath or moral imbecile 107 Criminal personality disorder 117 Case study 119 Narcissistic bosses 122 The bullying boss 123 The toxic boss 125 Conclusion 127

5 Measuring Dark- and Bright- Side Attitudes, Beliefs and Behaviors 128 Introduction 128 The organization of work 128 Measuring CWBs by questionnaire 131 Organizational commitment and attachment 141 Organizational citizenship 144 Ethical climates and cultures 144 Disengagement at work 145 Conclusion 146

6 Deception, Dissimulation, Impression Management, Lying and the Truth 148 Introduction 148 Popular books and simple advice 151 Why do people lie? 159 Catching liars: Why they fail 161 The clues to deceit 163 Faking on questionnaires 172 Getting at the truth 180 Cognitive interviewing in the workplace 183 Conclusion 184 CONTENTS vii

7 Integrity Testing 187 Introduction 187 “Honesty” screening 190 Integrity testing at work 193 Self- report tests of integrity 196 Do integrity tests work? 200 Objections to integrity testing 203 Public policy 205 Measuring integrity 206 The lie detector (polygraph) 214 Conclusion 225

8 Protecting Your Assets 227 Introduction 227 “Enough security” 228 Detection 228 Recruiting the right people 231 Induction 232 Computers 236 Physical security 237 Security officers at all exits 238 Electronic methods: closed circuit TV 239 Policing the police 240 Exit policy 241 Anticipating trouble 241 Handling the press 245 Conclusion 246

9 Developing Loyalty and Commitment 248 Introduction 248 Risk assessment 248 Towards a strategy 249 Exit policy 262 Conclusion 266

10 Counter-Productive Work Behaviors: Case Studies 268 ALDRICH AMES: Betrayer of his employer – the CIA, and his country – the United States of America 268 NICK LEESON: Broke the rules and caused the collapse of The UK’s oldest bank – Barings 272 JEFFREY WIGAND: Revealed the illegal activities of his employers, Brown & Williamson, the US Tobacco giant, in the press and courts 275 JEROME KERVIEL: Made a series of unauthorized trades totaling as much as €50 billion 278 viii CONTENTS

DANIEL JAMES: Convicted of communicating information calculated to be useful to an enemy 279

Bibliography 282 Index 296 ix List of Illustrations

Figures

2.1 A causal reasoning model of counter-productive work behavior 19 2.2 Fraud reported by industries 27 2.3 Individual variables that affect the outcome of whistle-blowing 38 2.4 Situational variables that affect the outcome of whistle-blowing 39 3.1 Herzberg’s theory 52 3.2 The motivational complex 64 3.3 The path to revenge 79 3.4 The unsettling forces 80 3.5 Different forces on theft 86 7.1 Polygraph accuracy 219 8.1 Detection of reported frauds in percentages 230 9.1 A strategy for managers 251 9.2 A minefield of misunderstanding 262 9.3 The career path 267

Tables

2.1 Counter-productive work behaviors 17 2.2 Summary of Jack L. Hayes International Survey 22 2.3 Perpetrators of fraud, 2009 25 2.4 Consistent and prevalent fraud and misconduct, by country 32 2.5 Various criteria that justify whistle-blowing 42 2.6 Fundamental differences in sensitivity to espionage 43 2.7 Conditions that lead to a serious betrayal of trust 44 3.1 Equity theory 53 3.2 Employee self-comparison 54 3.3 Employee attitudes to outcomes and inputs 54 3.4 Typical procedural justice systems 58 3.5 Sources of motivation 64 3.6 Profiling values 68 3.7 The characteristics of the narcissist 70 3.8 Person theories 84 3.9 Workplace theories 85 x LIST OF ILLUSTRATIONS

3.10 Five principal reasons for deceit in medical research 87 3.11 Six reasons for information leakage 88 4.1 Early risk factors for later delinquency 100 4.2 Risk factors associated with youth crime 101 4.3 Factors indicating potential criminality 103 4.4 Cleckley’s criteria and personality traits 108 4.5 Black’s rough guideline of queries to explore the possibility of antisocial personality disorder 114 4.6 Biological factors predisposing an individual to criminal behavior 118 4.7 Symptoms of the dysfunctional manager 126 5.1 Top 20 typical CWBs 132 5.2 Means and standard deviations, Austria 133 5.3 Items comprising the OCB and CWB measures 135 5.4 10 of the 80 CPI items selected for the CPI-Cp scale as an example 136 5.5 Questionnaire to measure commitment 137 6.1 Keys to spotting lies 152 6.2 Body language signs of dissent 154 6.3 The most common lying gestures 156 6.4 Main reasons for lying 160 6.5 Overview and descriptions of the non-verbal behaviors 164 6.6 Specific verbal indicators 165 6.7 Lying check list 173 6.8 Self-deception and impression management 178 6.9 Forced choice or upsate measures 179 6.10 The five stages of a PEACE interview 183 6.11 Combined 9-phase procedure for interview 184 7.1 A veiled purpose test 199 8.1 Issues at risk 229 8.2 Danger signs that may indicate embezzlement by employees 243 8.3 Common indicators and risk factors when considering the potential for fraud in an organization 244 8.4 Signs of potential for fraud 244 9.1 Counter corruption practices in the police forces 249 9.2 Manager skills to reduce the threat of insiders 257 9.3 Six specific strategies of persuasion a manager can deploy 261

Examples

7.1 Examples of integrity test scenarios 197 7.2 Examples of situational judgement tests 207 7.3 Examples from a situational judgment test to measure integrity 209 LIST OF ILLUSTRATIONS xi

Boxes

6.1 The issue of truth and lying 149 7.1 The Polygraph Test: Lies, Truth and Science 221 9.1 Essential loyalty checklist – How well does your company do? 255

Case study

4.1 Dave 120 xii Preface

This book is a radical revision and update of our earlier book The Dark Side of Behaviour at Work, published in 2004 and translated into various languages. Much has happened since then in terms of new thinking, events and research. Alas, the figures suggest that bad behavior at work is on the increase, rather than the decrease. Despite – and sometimes because of – all modern sur- veillance cameras, knowledge of desirable management techniques and prac- tices, there is abundant evidence of the steady increase in counter-productive work behaviors (CWBs). New technology brings its own prob- lems. We have cyber-crime and identity In July 2010, BDO – one of theft. Political changes in countries can the UK’s largest accountancy cause destabilization, and a rise in cor- firms – reported that fraud ruption and opportunistic crime. High broke the £1 billion barrier in levels of unemployment influence peo- the first six months of 2010, ple to behave badly. almost the same as for the Managers have a great deal to worry whole of 2008. about along with how to increase profits and reduce costs. Law-makers do not always make it easier for the manager. The 2010 UK Bribery Act has made a number of quite normal practices overseas illegal in the UK. An employee of a company operating in the UK who pays a foreign customs official a “facilitation fee” to speed up the release of essential goods puts top management in that company at risk of imprison- ment and a fine. The message to top management is clear, but how should they respond in countries where corruption is endemic? Business is now global, technical and fast-moving. Society is chang- ing and, with it, old loyalties and forms of behavior. Managers have to recruit, select and engage employees and set up policies and procedures that ensure efficient, effective and flexible working. And all this in an economic climate that is demanding and unpredictable, and where staff have ever-increasing demands and rights. Cyber-crime, shrinkage and fraud are on the increase – most of it conducted by people being paid by the company. The evidence is clear: CWBs are increasing. Reports from Pricewat- erhouseCoopers, KPMG and BDO all show that fraud is on the increase. Shoplifting has increased and whistle-blowers continue to thrive with the ever-hungry press and the ease and universality of the Internet. PREFACE xiii

We concluded the preface to The Dark Side of Behaviour at Work by acknowledging that we had embarked on a journey of research, but that we were only at the beginning. We have moved on and there is greater aware- ness of the problems and, more importantly, what employers need to do to minimize the problems. This is another stepping stone in that journey.

ADRIAN FURNHAM, Bloomsbury JOHN TAYLOR, Fonthill Bishop xiv Acknowledgements

The authors and publishers are grateful to the following for permission to reproduce copyright material: KPMG for Table 2.3 (Perpetrators of fraud, 2009), taken from the KPMG Fraud Barometer, 2010; Elsevier for extracts from M. McDaniel and D. Whetzel (2005) “Situational Judgement Test Research”, Intelligence, 33(5), 515–25; John Wiley & Sons for Table 5.1 (Top 20 typical CWBs), taken from B. Marcus, H. Schuler, P. Quell and G. Hümpfner (2002) “Measuring Counterproductivity: Development and Initial of a German Self-Report Questionnaire”, International Journal of Selection and Assessment, 10, 18–35; John Wiley & Sons for Table 5.3 (Items comprising the OCB and CWB measures), taken from E.K. Kelloway, C. Loughlin, J. Barling and A. Nault (2002) “Self-Reported Counterproductive Behaviors and Organizational Citizenship Behaviors: Separate but Related Constructs”, International Journal of Selection and Assessment, 10, 143–51; John Wiley & Sons for Table 6.5 (Overview and descriptions of the non- verbal behaviors), Table 6.6 (Specific verbal indicators) and extracts, taken from A Vrij (2000) Detecting Lies and Deceit; Elsevier for Table 7.1 (A veiled purpose test), taken from D. Whetzel and M. McDaniel (2009) “Situational Judgement Tests: An overview of current research”, Human Resource Management Review, 19, 188–202; and John Wiley & Sons for Case Study 4.1 (“Dave”) and extracts, taken from P. Babiak (1995) “When Psychopaths Go To Work: A Case Study of an Industrial Psychopath”, in , 44, 171–88. Every effort has been made to contact all the copyright-holders, but if any have been inadvertently omitted the publishers will be pleased to make the necessary arrangement at the earliest opportunity. xv List of Abbreviations

AP antisocial potential APD antisocial personality disorder (also known as ASP) CI cognitive interview CIB Complaints Investigation Bureau CV curriculum vitae CWB counter-productive work behavior FCPA US Foreign Corrupt Practices Act OCB organizational citizenship behavior PACE Police and Criminal Evidence Act PwC PricewaterhouseCoopers