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Be wary of rules – and the behaviors they induce

Posted by Tim Cummins, President of IACCM, Professor, Leeds University School of Law; Chair, International Commercial & Contract Management | Apr 28, 2016 4:59:12 AM

The Financial Times this week reported on a study that investigated the behavior and attitudes of New York cab drivers. The research led them to conclude that 'regulatory constraints can prompt sharp practices (including fraud) to recover lost ground'.

When taking passengers to Staten Island or to Newark airport, the ride involves passing through a tunnel and paying a toll. There is a special lane for cabs, to speed the journey. However, in some cases the driver deliberately avoids this lane and instead queues - often for lengthy period - in the 'standard' lanes. The reason, of course, is because the meter keeps ticking and they charge their passenger more money.

The researchers found that this behavior is 50 times more frequent for journeys to Newark than it is for journeys to Staten Island. The reason? It appears to be because cab drivers from New York are not allowed to pick up passengers at Newark - so must drive back empty.

Understandably, drivers feel aggrieved by this regulation, but rather than campaign against it, they take revenge on innocent and unsuspecting passengers. They see no moral issue with transferring their issue with the regulators into cheating the general public.

The Financial Times article makes the point that similar self-justification could apply at many levels. It may subconsciously affect the actions of corporate executives when they face rules that they consider unfair, or which stand in the way of meeting their goals. And for those of us in legal, procurement or contract management, it suggests we must think carefully about the rules we impose and the extent to which these induce negative behaviors by others in the business.

 

Topics: contract /commercial management, procurement, performance management, legal

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