}

Tuesday, October 29, 2013

An Advertising Story: Curing An Expense Cheater



I thought I would try something a little different for this post.  I love telling advertising stories and this is one of my favorite. It is light hearted and may be  typical of a different time in the business. It happened to me many years ago.  

I was a young account executive at an agency called Delehanty, Kurnit & Geller (DKG).  I had an even younger assistant account executive working for me.  This was in the days when account managers were actually encouraged to entertain and get to know their clients.  My assistant turned in his expenses regularly.  However, I noticed that he had put in for a client lunch on the same date and with the same client as I had actually taken out for lunch.  I went back and looked at his expenses which I had signed and realized he was cheating.

I went to my supervisor who, like me, was not sure what to do.  He sent me to Larry Spector who was the CFO (several years later, the agency became Calet, Hirsch and Spector).  Larry was a great financial executive and very smart.

He asked me first if I thought this assistant was doing a good job.  I said yes.  Then he asked me if I liked him.  Again, I said yes.  He asked me how much I thought he was exaggerating his expenses. I guessed it was  about five hundred dollars, possibly less, a month 

He then gave me the hippest, smartest advice I ever heard.  He said, “ Tell him you like him and he is doing a good job.  Then, give him $1,000 and tell him that he can never again cheat on his expenses.”

I thought that was a brilliant solution.  It was a lesson which has stayed with me.

9 comments:

  1. Very wise way to handle. How did the AAE react? And did it end the problem?

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    1. Kathryn: Funny you should ask. I realized that I never told what happened. The AAE at first denied it, saying he put down the wrong date, but then he confessed. He never did it again.

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  2. "he never did it again?" At least not that you know.
    I had the same experience with a number of employees
    I always believed in telling them that it was stealing and that could be forgiven but that lying was worse. I never allowed them to give the denial because if they did I would have been forced to fire them, not on moral grounds but because it meant they were too stupid to avoid insulting my intelligence.

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  3. Paul, what a beautifully simple and effective way to deal with a sticky situation. Unfortunately, today's climate is more likely to support HR interventions and lawyers ;)

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    1. Andy: Unfortunately, I know you are right.

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  4. I disagree that this was the appropriate way to handle this - if they would lie on an expense sheet what else would they be dishonest about? The trust would be broken, not to mention it's unethical.

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    1. @Anon: I wish life were so black and white. Sometimes good people do bad things and can be taught. If it happened again, then I agree, trust would be broken.

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  5. First, “cheating” or “padding” one’s expense account is patently wrong in any case. As one commentator properly noted, it is “stealing”, which makes one a thief. And by dint of submitting a false expense report, one also becoming a liar. The two worst forms of life according to my beloved Grandfather, who basically raised me as a kid growing up in his home.

    Sometimes all of us spend money on client or agency business and simply stuff the receipts into our wallets without denoting at the time all the details of who, what, when, where and why. Then, a few weeks later, when we pull all of our receipts from the wallet to do our monthly expense report, we’ve forgotten the 5W’s, so we guess at them as best we can just to get our money back. That’s certainly sloppy accounting, but it’s not intended fraud.

    But the guy cited in this article, a lowly AAE, was estimated by Paul Gumbinner to have been padding his expense reports to the tune of about $500 per month (circa 1970s). That was a lot of dough back then, and it still is now. And that’s not forgetfulness … that’s stealing.

    Certainly, we’ve all been in situations where circumstances may have “justifiably” mitigated the fine line between personal and legit business expenses. For example:

    Once, back in the 80s, while out in LA for a week of client headquarters meetings, my EVP and I (my being a SVP, Mgt. Sup at the time), got snowed out of New York that Friday night and stuck in LA for the weekend. On Saturday we decided to go window shopping on Rodeo Drive and Wilshire Blvd. and wound up at Lew Ritter’s, one of the highest end retail clothiers in Beverly Hills. Noticing my admiration for a particular cotton V-neck, loose-knit summer sweater that I ordinarily couldn’t afford, George said, “Just get it. You’ve earned it. I’ve got it covered.” I don’t know what he ultimately called it on his expense report, but it was a nice thing to do for me and probably the “right call” under the circumstances of a lost weekend away from family back home.

    Another time, after another trip to LA much later for an extended week-long commercial shoot at Raleigh Studios, my ECD submitted his expense report to me for approval when we got back home. Car rental charges were through the roof. So I called him on the phone and said “What’s this?” Turned out that he and his Art Director partner decided to rent a Ferrari over the weekend from the top classic car rental agency in Beverly Hills, just for the fun of it. As the de facto “best” creative team in our 1,000 person agency, I told Joe to redo his expense report; break up the money; call it and bury it somewhere else under non-reimbursed agency expense; and never do it again under my watch. Was this the absolute truth? No? Was it the right thing for me to do? I think, Yes!

    But these and other such anomalies aside, honesty is always the best policy – in business and in life. But if you’re going to round some corners, and as James Cagney once famously said, “Never steal anything small”. LOL, Bill Crandall

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