Although it may seem weird at the first sight, at the largest companies CEOs are not just under pressure to perform well but they are also very close to do something illegal.
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When you are at the helm of a high-performing company, with nice sales, growth and good revenues, you are probably very well aware that the growth can't last forever. At some time you will have a stellar growth, and in some other times your company will grow 1 or 2 percent a year. However, no matter what you do, your shareholders expect more and more from you. If you grow 1 percent, they will expect 2. If you grow 10 percent, they will expect 20.
The pressure also comes from another very important source: Internal pressure of company officials' perception of how they're faring against the competition. Thus, you are doing well but still you are between the hammer and the anvil. So, what are your choices?
Unfortunately, too many managers see the way out in illegal activities. In fact, the more prominent and financially successful a corporation becomes, the more likely it is to break the law. As the companies are faced with continuously maintaining or improving their performance, the likelihood of illegal behaviour rises significantly. And indeed, that conclusion is based on analysis of 194 large public companies in the United States between 1990 and 1999.
The problem is that managers, as any other worker, want to keep their jobs. Now, a manager have two choices: To cut corners and try to meet high performance goals and maybe get caught, or to accept the results of not meeting goals and be punished by shareholders for sure. Facing that situation it's very easy to "slightly adjust the books" or "embellish numbers a bit". It's interesting that the fear of poor performance in the future and not the past is the main reason for illegal activities.
Every CEO wants that his company perform well from a revenue, stock prices and profitability standpoints. But, what is good performance? Is it a short term growth or maybe five-year growth or 10-year growth? Is it one-day stock price increase of behaviour that creates jobs and stimulates the economy?
Unfortunately, as it may be seen in number of cases in this global crisis, short-term success is more important than long-term. And in that case, books adjustment is just around the corner. ■