Double Down Against Sweethearting

In extending special favors to the employees whose work they oversee, supervisors could be disloyal to their own employer. For instance, this might occur if the supervisor allows a restaurant hostess to go home early when the restaurant isn’t busy while ensuring that the hostess is still paid for the whole shift. University of Hohenheim and Ebonyi State University researchers find that such “supportive-disloyal leadership behavior” can lead to customer sweethearting, furthering the damage to the employer’s interests.
     Customer sweethearting refers to a store employee: 

• Giving away products or services for free or at a deep price cut 
• With plans to get, in return, an extra tip, increased social status, or a product or service for free or at a deep price cut from the sweethearting recipient 
• And all this violating policies set by the store owner/operator

     It’s the first prong of that definition which creates the risk to profitability and the third prong which qualifies sweethearting as a form of fraud.
     Employee sweethearting refers to a supervisor providing unauthorized privileges to supervisees, also with the motivation to obtain benefits in return from the supervisee and also in violation of policies. Employee sweethearting can stimulate customer sweethearting. The employee imitates the supervisor. The motivation includes a need to maintain relationships with customers. In addition, observing employee sweethearting persuades employees the chances they’ll be disciplined for customer sweethearting is low.
     The researchers also find an alternate route: The indulgent behavior by the supervisor satisfies a need to belong, in this case via a positive relationship with the supervisor. The need to cultivate relationships with customers is less, so sweethearting decreases. Related to this, the resulting loyalty to the welfare of the organization stifles sweethearting.
     The alternate route was more likely when the supervisor established mutual trust with employees. However, there’s still the possibility that the mutual trust will cause imitative behavior. Organizations should recognize the double-edged nature of employee sweethearting and double down with initiatives to curb it, say the researchers.
     To more directly reduce customer sweethearting, set special favor policies which are unambiguous and easily understood. What sorts of items can be given away or deeply discounted? Which employees are granted the discretion to do this and under what circumstances? What practices, such as trading discounts, are forbidden? To audit the extent and the effectiveness of the practices, what degree of reporting and accountability are required from those employees?

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