Baseball’s Cheating Scandal Has Lessons For All Employers

Assume you just found out that some of your managers and their direct reports had implemented a scheme to use technology to unlawfully steal your competitor’s business secrets.  That is exactly what happened in Major League Baseball (MLB) and the fallout has been dramatic.

The Houston Astros, winners of the 2017 World Series, were found to have used a video camera in center field to spot the opposing catcher signaling the next pitch the pitcher should throw (one finger for a fastball, two for a curve, etc.). The video feed was monitored by a team employee near the dugout who would then loudly bang a bat on a trash can to signal that an off-speed pitch was coming (no bang meant that the batter should anticipate a fastball).  Armed with this knowledge, the batter could better anticipate the pace of the pitch and adjust his swing to enhance his ability to hit the ball squarely.

Team Gets Caught

This ploy went public two years later when a former Astros pitcher detailed the scheme in an interview with a sports journal.  MLB investigated and confirmed that the sign stealing had in fact taken place.  They therefore issued the following sanctions:

The team’s Field Manager, A.J. Hinch, was suspended for one year. Hinch did not participate in the scheme and actually took some steps to disable the technology but MLB concluded that he never actually directed the players to stop (the team subsequently fired Hinch);

The team’s General Manager Jeff Luhnow was also suspended for a year (and also fired by the team) because it was determined that he likely knew about the scheme as well.

The team was fined $5 million and deprived of their first and second round draft picks in each of the next two years.

No players were punished despite the fact that MLB’s report concluded that “[v]irtually all of the Astros’ players had some involvement or knowledge of the scheme.” Baseball Commissioner Rob Manfred explained it was impossible to determine the degree of accountability that each player might have had, and that punishing them was “impractical” due to the large number of players involved and the fact that many of them now play for other teams.  While not said, it is likely that the players’ contracts and the collective bargaining agreement with the players union might also have contributed to the decision not to pursue individual punishment.

Cheating Sends Wrong Signals

The scandal has impacted other teams as well.  The Astros’ 2017 bench manager, Alex Cora, was found to have been intimately involved with the scheme and was therefore fired by the Boston Red Sox, who had hired him to manage the team in 2018.  Former Astros player Carlos Beltran, supposedly one of the ringleaders of the video ploy, subsequently stepped down from his job as the just-hired manager of the New York Mets.

The Astros have paid a heavy price for their anti-competitive behavior.  Their championship is forever tainted in the eyes of many as having been won unfairly.  Two previously respected managers have been jettisoned and their careers jeopardized, and the forfeited draft choices will impede their ability to secure new on-field talent in the near future.

Lessons Learned

The lessons that can be learned from this cheating scandal should not be ignored just because it happened in the sports arena and not the real world.  What if employees seek a competitive edge by improperly using secrets learned from hiring a competitor’s former employee? What if a manager disregards safety issues or a hostile work environment in the interest of maintaining production? What if employees are hesitant to report wrongdoing out of fear of retaliation?

Here are some critical points to consider:

Culture Matters. How a company does things, how employees carry out their duties and how everyone represents the organization to the public are critical drivers of the operation.  Employers should make sure that the organization’s culture influences everyone’s behavior and decisions, and that it is not merely a phrase to be cited at orientation and ignored thereafter.  The situation involving the Houston Astros demonstrates that wrongs attributable to a deficient culture are likely to garner harsher scrutiny and greater punishment than those involving merely a few bad actors.

Role Modeling is Critical. Managers must demonstrate through both words and actions that doing the right thing is demanded. This includes supervising their employees effectively and holding them accountable when they lapse.  The Astros’ manager did not approve of the sign stealing but he failed to stop it and did not appear to try very hard to do so.  This creates the impression that such lapses are tolerated or condoned in the interest of advancing the bottom line.  When that attitude is aired in court or in public, responses are usually more severe and consequences more long-lasting.

Stop the Behavior. If an employee does act contrary to organizational culture, the manager must act to correct the behavior.  Failure to do so just embeds the practice further into the employer’s culture and breeds an atmosphere where employees focus more on not getting caught than on advancing the employer’s mission. Consequences are required and must be severe enough to truly garner everyone’s attention.

See Something. Say Something. Hear Something. An employer must make it clear that employees can feel safe raising concerns and that those concerns will be listened to. Merely having a policy or telling the employee that they did the right thing in coming forward is not enough – an effective response is needed.

Bottom Line

It seems reasonable to assume that when an organization decides to cheat, they waste a great deal of time, effort and resources into trying not to get caught.  Despite those efforts, they often do get caught and pay a heavy price.  A judge or jury is likely to be more sympathetic to an employer that tries hard to do things correctly than to one who tries to get away with something or just does not seem to care.

An employer that devotes all of its energies to doing business the right way is likely to come out ahead, and their managers will sleep better at night too.