If we're being honest about honesty, the first thing we have to accept is that everyone lies, whether it's on a resume, on a test, or to our parents. The question is, to what degree?

Behavioral scientist Dan Ariely, author of The Honest Truth About Dishonesty, asked the question: how flexible are we around our honesty and what actually affects it? In the years preceding the 2012 release of his book, Ariely and his team ran several experiments to find the answer.

In one, people took a test knowing that they would be paid for each correct answer. They corrected their own answers, told the experimenter how many they got right, and handed in their tests. 

Then Ariely and his team ran an alternate experiment. In this one, people marked how many answers they got right but, rather than handing in their sheets, their work was put in a paper shredder. What the unsuspecting test subjects didn't know was that the paper shredder never shredded the work, and the experimenters could see how dishonest they were in their reporting. Unsurprisingly, they found that more people lied about their results when they thought no one would know.

In another variation of the experiment, Ariely planted participants who "completed the test" in an impossibly short time, handed in their exam, and claimed a perfect score, gaining the maximum amount of points and money. This added the element of potential cheating to the mix. Interestingly, people cheated more when they believed they were surrounded by other cheaters. People often justify their behavior with the rational, "if everyone else is doing it, why shouldn't I, it's only fair." 

The Fudge Factor

Ariely concluded that there's a range in which people are willing to be deceptive and feel OK with ourselves. He coined this the "Fudge Factor." What is interesting, is that your "Fudge Factor" can change dramatically based on circumstance. When you are doing something creative, the range of your "Fudge Factor" increases and you become more creative in your justification. 

If at work you see others fudge the billables a bit, take home a few office supplies, or secretly take an afternoon off, you might think it's fine if you do these things too. If everyone else is doing it, what's the harm? And if no one is watching, no one will know you're doing anything wrong. The fact of the matter is if you work in a culture where deception is common, when less than honest behavior is accepted and even encouraged, the company's success is greatly reduced.

Research by Robert Cialdini found that if companies allow for dishonest behavior, it encourages a culture of mistrust. This not only motivates dishonest people to stay and take advantage of the system, but it also causes the best and most honest employees to leave, ultimately reducing the value of the company. After all, if people are defrauding customers and think it's fine to take from the company, how soon is it before the employees are being taken advantage of themselves? 

Overall, people aren't simply honest or dishonest, all of us are susceptible to circumstances, environment, and the people around us. If you find that you are cutting corners and justifying the behavior, or misleading customers and employees and then telling yourself you have to "fake it till you make it", you may be right in the short run. Unfortunately, over the course of months or years you may find yourself developing a questionable culture where you only attract talent that will take advantage of your company. Honesty is generally much harder in the short term, but the long term value on your career and company are immeasurable.