As a CEO, you need to know when employees are lying to you. For many companies it's an all-too-common occurrence, given that research shows that Americans lie twice a day on average. In a Harvard Business Review article, Tomas Chamorro-Premuzic, a professor of business psychology at University College London, writes about which types of people lie and how to deal with them. 

According to the recent study "Being Honest About Dishonesty: Correlating Self-Reports and Actual Lying," the bulk of all lies are told by a small number of people. Chamorro-Premuzic says frequent fibbers do not view lying at unethical and they do not lie because they're under pressure (as most people do), but rather because it makes them feel good or more in control.

But who on your staff is lying to you? Chamorro-Premuzic says neuropsychological evidence suggests that lying requires memory capacity and is related to high IQs. "Accordingly, effective lying also requires a vivid imagination, particularly when it comes to producing excuses and bending the truth; studies have indicated that creative people and original thinkers can be more dishonest," he writes.

Another study conducted by Harvard professor Francesca Gino and Duke professor Dan Ariely revealed that "creative personalities tended to cheat more than less creative individuals." The duo found that creative people have greater ability to justify their behavior, making them more likely to act unethically.

Furthermore, frequent liars are better at manipulating their emotional signals and reading other's reactions. They have greater control over their body language and can avoid giving away that they are lying.

Chamorro-Premuzic says that as the leader, it's not as important for you to outline all the lies a dishonest employee has made as it is to predict what he or she is going to do. Below, check out his description of the different types of liars and how to handle them effectively.

The self-defeating liar

When employees lie about objective facts, like where they went to college or that they're besties with Adam Sandler, it doesn't benefit you to punish them. These types of lies are self-defeating, Chamorro-Premuzic writes, and when exposed they hurt the liar's reputation. He says that exposing the lie, rather than figuring out a way to punish the person, is an effective response.

The systematic liar

The employee or employees who lie all the time, the systematic liars, are a problem. But just like the employee who is chronically late, you can predict their behavior and and plan around it, Chamorro-Premuzic writes. If you come to expect the lie, then you won't be duped or waste time trying to separate truth from falsehood. But if you want to make the effort to get them to stop lying to you altogether, "you can gently expose their deceptions to show them you are not as stupid as they think," he writes.

The insecure liar

When employees lie to feel secure about themselves, the impact on your business typically is minimal. Occasional lies borne out of insecurities, like when someone falsely claims to have read a new book, are made to "provide temporary psychological protection to the liar's ego," Chamorro-Premuzic writes. The liar is motivated by fear of rejection or fear of being an outsider. They also may lie to gain status, establish bonds with people, or receive credit for something they didn't do. "The best way to deal with insecure liars is to make them feel accepted. Insecure liars are extremely self-critical, so it takes time and effort to compensate for their neurotic perfectionism and make them feel appreciated," he writes. "Show them that you value them for who they are, rather than who they would like to be."

If an employee is lying to maliciously deceive you, steal from you, or ruin your business, you do need to directly confront them, expose the truth, and in some cases fire them. But the types of lies outlined here really are social tools. The keys to remember as a leader is to not take these types of lies personally. 

The author also says it is important as a leader to remember not all lies are immoral. He says some are "pro-social," such as praising your employee's baking skills when she brings in those burnt cookies. "Indeed, successful interpersonal functioning often requires the ability to mask one's inner feelings. Total honesty can take the form of amoral selfishness," he writes. "Self-control is a moral muscle that may inhibit not just dishonesty, but also honesty, when the goal is to behave in socially desirable or altruistic ways."

Published on: Jan 5, 2015