In the Trenches: Acme's number fabrication leads to deep trouble

July 27, 2006
Acme's strong-armed technique to have an employee fabricate performance numbers to win a wrongful termination lawsuit ends with yet another firing and yet another lawsuit. Only the names have been changed to protect the innocent.

If you recall from last month’s adventure in human resource management excellence, Jerry Mander, Acme’s COO, fired Mel Batoste, one of Acme’s six managing directors of maintenance. The justification Jerry used for the termination was Mel’s alleged insubordination and inability to perform the job for which he was hired.

According to Mel, though, the basic issue was Acme’s underhanded attempt to renege on the lucrative bonus package he negotiated when he was hired, which was intended to compensate him for taking a big risk and joining the company. Mel, of course, settled the matter in the classical American manner by suing Acme for breach of contract, publishing defamatory reasons for his departure and refusing to honor the guaranteed bonuses that were promised.

Knowing the case might go to trial, Acme’s management team went into red-alert mode. Leo Tarde, Acme’s production director, went in search of the objective data that would justify Mel’s termination. He needed to deflect the absurd idea that Acme chiseled Mel out of a lot of money.

Leo’s best bet involved Cy Borg, Acme’s production manager and one of the few people left in the organization having encyclopedic knowledge of its manufacturing processes. Cy routinely compiles a range of key performance indicators covering Acme’s 27 manufacturing plants, including the four in what once was Mel’s domain. Cy is a quintessential numbers freak whose research and conclusions are generally considered to be rock solid, the ideal bedrock for any credible alibi that Leo could put forth.

Leo called Cy to his office and explained that Jerry was hopping mad over this fiasco and most anxious to get his hands on certain information. Leo was in a fidgety tizzy as he reported that Jerry threatened to have someone’s head if the data didn’t appear ASAP. Leo had calmed Jerry down with assurances that Cy is the go-to person for this sort of problem. That’s why, Leo explained, Cy must research the production data and key performance indicators to provide an accurate characterization of Mel’s leadership during the time he was a maintenance director. Jerry’s objective, Leo explained, was to show that Mel didn’t perform. As an example of what he needed, Leo told Cy of Mel’s failure to raise his plant’s overall equipment effectiveness numbers high enough after being directed to do so.

Cy walked back to his office, completely unnerved by the request. He’d been the subject of Jerry’s bullying over the years and understood how Leo might be feeling right now. But, as Cy saw it, Leo’s major premise just didn’t make sense. After seeing the effect of so many years of neglect, reactive maintenance and unscheduled downtime, Cy had considered it fortunate when Acme finally hired a seasoned maintenance manager who really gets it. Yes, downtime still might have been a bit too high under Mel’s supervision, but much of it was prearranged to allow the maintenance team to improve manufacturing line reliability. At every instance, Cy’s production team and Mel’s maintenance team were in full agreement and they coordinated their efforts to minimize the duration of each halt to a production process.

Nevertheless, Cy delved into the digital archives for the information Leo needed for Jerry. This targeted search uncovered historical data that indicated the overall equipment effectiveness for Mel’s region was actually slowly trending upward from a rather dismal starting point that prevailed when Mel took control. It certainly wasn’t anywhere near the 93% figure Leo quoted, but it was moving inexorably in the right direction.

Late in the afternoon, Cy returned to Leo’s office with a stack of printouts. That’s when Cy was informed that he was expected to back up Acme’s story that Mel was insubordinate in his refusal to raise the OEE to bogie. Leo added that Cy should prepare to be deposed soon and expect to make a court appearance to testify under oath that Mel’s performance numbers were inadequate.

Cy felt a rush of adrenaline over the prospect. Very patiently, he tried to explain to Leo that the OEE metric is a complex indicator one can’t control simply by strength of will. It exhibits extreme sensitivity to even small fluctuations in its three component variables. And it’s a fool’s errand to try raising a regional aggregate OEE to an arbitrarily high value that no individual Acme plant had ever achieved.

Leo now pressured Cy to go along with what was obviously in Acme’s best interest. Cy replied that his research indicated Mel was on the right track and doing the right things. Leo merely shook his head, grabbed the printouts and made a beeline for Jerry’s office.

When Mel’s legal team brought suit against Acme, Jerry and Leo descended on Cy’s office demanding support for Acme’s position that Mel’s performance as maintenance manager was inadequate. Feeling cornered, Cy became indignant and emphatic in his absolute refusal to testify that way on Acme’s behalf. It’s a matter of principle, Cy argued, and, considering what his research uncovered, he won’t perjure himself.

Mel’s trial came and went and Acme didn’t fare too well in the main event. Cy remained adamant about not being involved in any manner. Less than a month later, Leo fired Cy for insubordination.

Following Mel’s lead, Cy now sued Acme for a retaliatory termination.

How could this situation have been avoided? Are workers obliged to put the employer’s benefit above personal considerations? Should employees have access to company-wide data and metrics? Does command and control management offer any strategic or tactical benefits when a company is under siege?

A corporate consultant says:

Way to go Cy! Shame on you, Acme. And Leo, how can you look at yourself in the mirror?
As for how this case could have been avoided, dare I be so simpleminded as to suggest that had Acme behaved honorably in the first place, none of this would have happened? It really isn't more complicated than that. You know, life is just so much simpler when, if we screw up, we own up. Instead, Acme complicated the matter by making the clear and deliberate choice to misrepresent the truth, to cheat, to harass, bully and tyrannize.

Regarding whether workers are obliged to put the employer's benefit above personal considerations, I think we've all seen enough cases of that in the news lately — Enron, Tyco — to make this question moot. And, ironically, Cy was doing anything but looking out for himself. He wasn't elevating his personal interests over Acme’s. Instead, he put himself at risk by refusing to distort the truth — something his employer should never have asked him to do.

Indeed, command and control tactics are useful when under siege, but let's not make the mistake of thinking that Acme was being victimized. In truth, Acme put itself under siege, using strongarm tactics to threaten and victimize others. They worked arduously to deceive, and exhibited the audacity to be self-righteous about it.

Sometimes, individuals and companies get away with such behavior. Happily, at least in this case, it looks like Acme will get exactly what it earned.

Francie Dalton
Dalton Alliances Inc.
(410) 715-0484
[email protected]

An academician says:

Corporations do weird things, and it’s not just Acme. I recently reviewed a case in which an employee was fired, and to justify this action the company wanted his supervisor to change (in a negative direction) the employee’s performance evaluation given a year before. The supervisor said no, and was quickly reassigned to a lousy job. It wouldn’t have worked anyway, as the employee had copies of his past evaluations and would have quickly spotted the deception. My advice is to keep copies of your own evaluations, employment contracts and whatever else might prove useful.

Are employees obligated to put the employer’s interests above their personal interests? Well, it depends. It’s one thing to ask an employee to work during the weekend (and to miss a family barbeque) to help get a proposal in shape that must be submitted on Monday. It’s another thing to ask the employee to falsify data to make the proposal have a better chance for acceptance. The first request is within reason, assuming the employee had some expectations that this might happen occasionally. The latter is both unethical and illegal, and the employee should decline.

The Acme incident shows the stupidity of unethical and illegal behavior. They were sued and lost when they were playing games with Mel. Now they’re being sued by Cy. In the process, they lost two good workers and a bundle of cash, and probably demoralized a lot of formerly loyal Acme employees. It just doesn’t pay to pull this crap.

There’s a place for a command and control leader, but not one who is unethical. Jack Welch was a command person when he needed to be, but he gave his direct reports a lot of room to make their own decisions, and anyone who even smelled unethical was quickly separated from GE.
How could this have been avoided? By playing it straight. Eventually, unethical and illegal behavior will catch up with you, as it did with Acme.

Finally, last month I suggested that Acme fired the wrong person, they should not have fired Mel. But now I say they should have fired Jerry. That might have avoided the current incident with Cy. My advice stills holds — Jerry goes, this time quickly.

Professor Homer H. Johnson, Ph.D.
Loyola University Chicago
(312) 915-6682
[email protected]

An attorney says:

Acme apparently wasn’t in enough hot water after terminating Mel. Now it faces a second legal battle with Cy. This might be another battle that Acme can’t win.

Most states recognize a claim for retaliatory discharge, that is, a discharge that penalizes an employee for exercising a legal right or for refusing to commit a legal wrong. Born several decades ago, the retaliatory discharge claim arose when employers terminated employees because they filed workers’ compensation claims. Since then, the tort has been expanded to encompass claims that employees were fired for serving on a jury or for refusing to commit perjury.

Cy’s claim presents an interesting twist on that theme. We can infer from the facts that Cy refused to testify because his truthful testimony would have been adverse to his employer. If Acme fired him for refusing to commit perjury, his retaliatory discharge claim likely would be successful. If, on the other hand, Acme fired him for refusing to testify, the decision to testify, absent a subpoena, is a choice that belongs to every individual, and nothing about a discharge for that reason would be illegal.

However, Acme could have approached the problem in a different manner. If the statistics revealed that Mel’s equipment effectiveness numbers were increasing, Acme should have searched for other evidence that Mel’s performance was ineffective. For example, what about his management and leadership skills? Did he exhibit a team approach to problems? How did he interact with his peers? Did he complete reports on time? There may have been a handful of areas in which Acme could have criticized his performance legitimately without trying to manipulate statistics.

As for Cy, he should have told Acme’s legal team that the statistics revealed Mel was increasing equipment effectiveness in his sphere of responsibility. The lawyers would have made their own decision not to call Cy as a witness, because lawyers have an ethical obligation not to present perjured testimony. Cy would have been off the hook. After all, Jerry could hardly blame Cy if the numbers were unfavorable to the company. Or could he?

Julie Badel, partner
Epstein Becker & Green, P.C.
(312) 499-1418
[email protected]

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