The Tabloid Reporter Rule

I had a different topic in mind before the holidays. Something related directly to politics. But a new idea pushed to the front. A phone call this week reminded me of some sage advice. The advice came a long time ago, but you never know when something will pop back up.

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15 years ago I met a very wise lawyer. My memory of the conversation was this: you should always imagine that a tabloid news reporter is listening into your conversation and observing everything that you do. Assume they will report it without concern for your well being. Recognize this and you realize that your silly stories of justification, that we all try to employ when considering something questionable, do not matter. Hard for most of us to take, but just imagine that you are Gerald Ratner, Jeffrey Skilling, or some popular celebrity messing around. What would the tabloid reporter write that you are up to?


This week I was talking to a gentleman who helps coach CEOs make better decisions. They are very effective at what they do. The coach was interested to see if the consulting company I co-founded could help one of his coaching clients drive significantly better results. Stroud, my business, is great at solving hard technical problems and many business leaders appreciate this.


So my conversation with the coach went something like this.


The coach:
“I would like you to talk with a CEO I am advising. It is a great opportunity and they will benefit from your services. I am excited about connecting you.”


I had been introduced to him through a third party as they thought we could help each other. This opening sounded great to me. I love talking with people who see opportunity and value realizing it quickly. But there was a catch.


Sometimes the world does not work the way your heart hopes.


Before I could talk to this client of theirs, I had to agree to a 20% “affiliation fee”. Any business I won from his client, I had to pay a kickback to him. Apparently this sort of thing happens. That does not mean it’s acceptable. And of course it’s rarely called a kickback - and to be fair I am being harsh with this evil word.


Before you focus on the % he demanded, understand that it is irrelevant at this stage.


I asked:
“Will this be 100% transparent to your client?”


The response I got was a mixture of “well no one else has a problem with this arrangement, and think of all the extra money you will make from this extra business.”


So the answer was NO, He was hiding it. He would not tell his client about the proposed deal on the side.


If you have to keep a secret from your client then you are already astray.  Don’t tell yourself a story about it. You are hiding. Your own self judgment says you are wrong. Morally wrong.


My call to action is this: have your advisors sign a document affirming that any fees or “kickbacks” they receive will be returned to your company with no skimming. I hope that most businesses have a standard document on this, but if not, find one. If an advisor is not forthcoming on this point then fire them. End of story. You cannot afford misalignment. Especially in the C-suite.


I have found that the vast majority of people I have come across are scrupulously honest, and I have loved working with them.


So where do you draw your line? Do you have clear relationships with your advisors?