This past week I attended a client’s contractor integration program. It was what I expected, including the firm’s zero tolerance policy for its employees receiving gifts from vendors. They made it very clear: no dinners, no lunches, no hats, not even a cup of coffee. It seemed to me pretty drastic–until I thought more about it.

When I started in the construction industry, I assumed that everyone was working for the company’s best interest. We may not all agree on the idea of ‘best interest,’ but we all were working to help the company succeed.

The first time I had heard about an employee putting his own interest ahead of the company’s was when I was just out of college. On a large construction project, the project engineer had entered into a contract with a supplier for trucking of excess soil off the construction site. It turned out that the project engineer was getting free rent for a house he was living in. I was surprised, but I looked at it as an isolated incident.

In the early 1980s, I had a contract for a small remodel project. After we demolished department offices, our inspector mentioned he was building shelving at this son’s house and could use that shelving we had removed. It was not a big deal. Weeks later he mentioned he was installing weather stripping at his son’s home and could sure use some weather stripping and asked if we had a few left over pieces. I said sure and gave him weather stripping for a door. Now he mentioned he had many drill bits that he had collected, perfect for a contractor and would be willing to sell them to me for only $200. This time, I thanked him for the offer and but had no need for the drill bits. The offer was made several times and each time I declined. At the end of the project, we found ourselves defending against liquidated damages, despite finishing the project before the contract deadline. When discussing the situation with several subcontractors, they responded, “So, you didn’t contribute to ______’s building fund.” We successfully defended ourselves against the liquidated damages. Two years later, the inspector’s shakedown of contractors was discovered. He was given the choice to retire or be terminated.

Another situation occurred when a project we were completing was having contractual difficulties with the client. Change orders that should have been approved were not, and time extensions were also denied. We could not understand how we got off on the wrong foot. During final inspection, I was on the roof with the architect and several members of the school board. When I was alone with one of the school board members, I was told, “You would not have had these problems if you had bought _____ from me.” Again I was surprised: when I turned down the offer to buy the building material, I did not realize I was being solicited for a bribe. I just thought it was a normal business transaction. With the help of an attorney, we received the change orders and time extensions to which we were entitled.

One final example: we were one of four contractors providing construction services for a large corporation. We were the newest of the four contractors. But after a short time, we discovered the client’s specific needs and requirements. We were getting one-third of the work we bid; we made a good profit; and we saved our client substantial money over the other bidders. And we did not have the quality problems our competitors. Surprisingly, we found ourselves no longer being asked to submit proposals to the corporation. I discovered later that my competitors were providing golfing and fishing trips for the client’s construction manager. I was not doing that.

Looking back on it, I can’t believe I was that naive. You may ask, “If you know what you know today, and the cost to you and your corporation, would you have made the same decisions?” Yes, I would have.

This brings us back to the start of this blog. What is your company’s policy on gifts from companies that do business with your company? Is zero tolerance appropriate? This needs to be determined before your employees find themselves in very murky water.