Many people, including myself, extol the benefits of networking. Networking is good because networkers spend much of their time helping others. They remember birthdays and anniversaries. They cheer you when you’re sick and they congratulate you when you succeed. Networking is good, because it helps you meet people you want to know and to build relationships you want to have. It gets you information you need for your business. It is good because it helps you get you leads. Good because it gets you new clients. All of this overlooks networking’s evil side.
Yes, networking can be used to work for world peace, fight cancer and abolish poverty. More prosaically, it helps us sell work. But, it can also be used to fence stolen goods, sell illicit drugs and arrange for a hit man. Or, as we have recently seen, it can be used to trade stocks on insider information.
The trial of Raj Rajaratnam for allegedly using insider information to beat the odds in the stock market provides all networkers a cautionary tale. Whether innocent or guilty of the charges, Mr. Rajaratnam was a major node in elaborate network of people sharing information on companies and their stocks. He allegedly did all of things that a good networker does. . . and more. He allegedly helped his contacts, when they were in trouble, even giving large amounts of money when one person was in a crisis. He, again allegedly, gave advice and tips freely and also, if wanted, payments to an overseas account. More subtly, he gave them respect and treated them like players and friends, at least to their faces.
Several members of the network have already pleaded guilty to insider trading, including a senior partner with one of the most prestigious consulting firms in the world, a firm seen in the business world as the exemplar of propriety. The well-known, internationally respected, former-managing director of that firm faces civil charges for insider trading with Mr. Rajaratnam. Both consultants had built stellar reputations on the basis of their professional work and active contributions to charity. That people like these can become entangled in such a tawdry affair suggests that we should be none too confident that we are above it.
This is all a good reminder that networking is a tactic, an ethically neutral tactic that can be used for good or evil. Sooner or later, someone in your network will ask you to do something unethical or illegal. More subtly, an unethical person may do things for you and ask your help in return. Even if you do nothing wrong, you risk having your name sullied by association with theirs. Giving in to such people, even if you feel an obligation to them, puts you on a slippery slope. So, when you run into such people, remember that a good networker will neither ask for unethical favors nor do them for others. No matter how obliged they feel, they won’t let anyone use that feeling to compromise their ethics. They won’t try to persuade you to do something by telling you that everyone does it or that that’s the way the real players do it. Rather, they will make it clear that they want no such thing or they will advise you when you might be at risk of unintentionally doing something wrong.
When I was a young consultant, a client, recognizing my naïveté, cautioned me that I had just heard information only known insiders and that it wouldn’t be wise to trade in the company’s stock six months or so. That man was a true friend and a good networker.