The Axis Corruption Cruise Returns

Author: John Honovich, Published on Jan 12, 2012

Last year, we examined how Axis paid for an expensive cruise for A&Es/security consultants and their wives, expressing ethical concerns. Unfortunately, this year, Axis is running yet another cruise that is basically a repeat of last year's. In this report, we further review the problems and recommend a solution.

[UPDATE Jan 18: Axis response to cruise criticism]

[UPDATE December 2012: Axis changes A&E event - drops cruise, adds charge for guests.]

The Key Concerns

The concerns focus on the 'extracurciulars' involved. While we have no objection to their 'education'/workshops, the cruise inherently packages that with two problematic elements:

  • Most of the time is dedicated to Axis funded parties, dinners, receptions and beach excursions
  • Axis is paying for consultant's spouses to join the cruise and attend various parties, dinners, reception, beach excursions, etc.

These elements are extremely expensive (our estimate: $1,500+ per consultant) and contribute little to no real education/ technical benefit. They are clearly gifts from Axis to the A&Es/consultants.

That noted, we would have no objection if these were Axis partners or employees. However, security consutants and A&Es are expected to be independent and to serve the interest of end users. Accepting significant gifts from a manufacturer violates the independence expected of consultants.

Restrictions Against Gift Giving

Most large companies or government organizations prohibit employees accepting gifts of anything more than nominal value. (see e.g., the US Department of Justice's strict rules against gifts to government employees or Wal-Mart's clear policy against accepting gifts). Indeed, a recent study showed that 32% of employees admitted that "a gift would actually influence their decision making." Because of these risks, typically companies restrict gifts to $20 - $100 at most, amounts far far below what Axis is gifting here.

A&E Code of Conduct Prohibits Gifts (Updated 1/15)

Get Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

In reviewing the Codes of Conduct of the world's largest A&E firms, they consistently have rules against accepting gifts. Here are a number of examples:

  • URS Corp: "Neither employees nor their family members may offer, provide or accept any gift or entertainment unless approved in advance by the employee’s supervising manager and not (a) a gift of greater than $50USD in value"
  • CH2M Hill: "Accepting or offering gifts or entertainment is generally discouraged and is permissible only in rare circumstances when gifts or entertainment are: Nominal in value"
  • Jacobs: "Accepting gifts of other than token or nominal value or excessive entertainment from an actual or potential competitor, supplier or customer is prohibited."
  • AECOM: "In order to maintain AECOM’s integrity and to avoid even the appearance of a conflict of interest, employees are generally required to decline all gift offers made in connection with their employment. Customary and inexpensive gifts of a promotional or seasonal nature or occasional courtesies ... may be accepted."

Accepting a cruise vacation for your wife violates gifts and entertainment rules typical for A&E firms. While A&Es and consultants should be held responsible for accepting such offers, one has to question why Axis would design an event that so obviously encourages attendees to violate their codes of conducts.

The Objections of the Community

When we ran the original article, nearly 200 community members voted in our poll. Nearly 2/3rds of respondents voted that attending the Axis event created a conflict of interest for security consultants.

Moreover, last year, the President of the Independent Association of Professional Security Consultant's flat out said that their "guidelines do not allow for manufacturers to pay for extended trips, vacations, expenses for guests, etc. Such activities would be reviewed as potential ethical violations." [emphasis added]

Indeed, similar trips / junkets are gaining international negative attention. Over the last few months, the New York Times has conducted an investigation of the 'Axis of education', Pearson, who has been funding vacations for their customers and drawing the ire of the public.

The Counterargument

The two most common counterarguments rebutting our concerns are:

  • "Everybody does it" - This argument emphasizes that lots of big companies do it -- whether in security, telecom, construction, etc. Nonetheless, a defense of 'But everyone's a criminal' simply has no ethical weight.
  • "It doesn't guarantee Axis gets the project" - This argument emphasizes that the cruise is not a straight payoff (which we agree with). However, the issue for most is gaining undue and unfair influence, not simply straight payoffs. Hardly anyone would agree that it's OK to slip consultants iPhones or hundred bills simply because it does not 'guarantee' a specific quid pro quo.

How This Corrupts

Such gifts are a powerful and unfair force in influencing business for three main reasons:

  • Ensuring the vendor is top of mind: Getting consultants to spend an extended weekend with a vendor gives that vendor a huge advantage in who the consultant thinks of and what technologies to consider when future projects come up. This is often called "Top of Mind Awareness" and is well regarded as a key element in sales and marketing. The problem here is that the vendor is achieving this through providing an expensive gift to the consultant (the dinner, drinks, beach trips)
  • Reciprocity: Paying for a consultant and their wife's vacation creates a natural expectation of reciprocity, making the consultant more likely to favor the vendor's future requests. This is a simple fact of human nature, shown repeatedly in psychological studies and most famously in Cialdini's 6 Principles of Influence.
  • Liking: Paying for extended partying, drinking and going to the beach with the consultant and their spouse gives the vendor's sales team an opportunity to build friendships that helps increase the influence the vendor has with future specifications of the consultant. Again, this is validated in psychological studies and in Cialdini's 6 Principles of Influence.

I can already hear vendor's objections - "But this is how sales work and how it always has worked." To the extent that the vendor does this through good service to the community and building up word of mouth among satisifed users, this is great for everyone. However, when it is funded by paid vacations, it creates undue and unfair influence.

What Axis is Paying

Think about what Axis is paying for this event. It is easily in the hundreds of thousands of dollars - minimally $150,000 in our estimate (~100 consultants times $1,500 each) for a 3.5 day event.

Since less than 15 hours are actual workshops/sessions, Axis could compress this into a day and a half or even a more streamlined single day event. Dropping the extended parties, beach excursions, etc. and the cost would drop dramatically to $10,000 or $15,000.

Why is Axis paying hundreds of thousands more than they need to inform these consultants? We think it is clearly an investment in gaining an undue and unfair advantage.

[Updated 9/15] Why does Axis charge integrators for training but gives a workshop and vacation for free to A&Es and consultants?

The Final Counterargument

One other strong counter argument from other manufacturers has been privately shared with me: Many feel forced to do these events or provide other 'incentives' to consultants; Many consultants expect these handouts as basically the price of admission. If the manufacturers do not play, their competitors will and they will be at a disadvantage.

How much responsibility goes to the manufacturer versus the consultant in this situation is hard to truly determine. No doubt though the result is a corrupted practice that favors those giving handouts.

Axis's Opportunity

In the last few years, Axis has established itself as a leading force in the industry, successfully championing technologies and practices (H.264, ONVIF, HD, etc.). Axis has the power and the opportunity to champion changes in business practices as well.

Rather than parrot good ol' boy ways, Axis should do the right thing and champion more ethical business practices in the surveillance market. Indeed, given their strong technology portfolio, Axis could actually benefit from pushing consultants and the industry to clean up these shady tactics.

These events will end. Social media and the Internet will increasingly shine a powerful and disinfecting light on corrupt practices that have been hidden for years (e.g., the number of people clicking on the consultant group photo last year was shockingly high). Axis should recognize this and get ahead of the curve.

However, if Axis is not willing, this is a real opportunity for Axis's competitors to take a stand against corrupt practices and differentiate themselves as companies who refuse to engage in such bad behavior.

Related Reports on Sales

Honeywell Sues Alarm.com For Violating Anti-Trust Laws on Feb 24, 2017
Is Alarm.com about to dominate the smart home software market? That is what Honeywell alleges in its new lawsuit, first reported by...
Artificial Intelligence Robot Assistant (ACTi) on Feb 23, 2017
Has artificial intelligence come to the video surveillance industry? ACTi has released 'SARA' which it bills as an 'AI assistant that brings...
Uniview (UNV) IP Cameras Tested on Feb 22, 2017
"We're #3," in China says Uniview (UNV). While the company significantly trails Hikvision and Dahua in total sales, one notable difference is that...
The Hot RMR Company - Electric Guard Dog on Feb 22, 2017
The financiers at the Barnes Buchanan conference praised a company named 'Electric Guard Dog'. While the name sounds fairly low tech, the money and...
Hikvision Leads Multi-Manufacturer Sales Promo on Feb 21, 2017
Earlier this month, Hikvision launched new 'super value' kits, with 40% discounts, and now Hikvision is offering another promo, but this time they...
Hikvision Hiring 50, Direct Out of College, Sales People on Feb 20, 2017
Hikvision is hiring 50, direct out of college, field sales people across the country. This is the next major expansion for the Chinese...
Hikvision Silicon Valley and Canada R&D Expansion on Feb 15, 2017
After massive growth in their sales team, Hikvision is now planning to add two new R&D centers in North America. In this report we examine...
Integrator's Top Selling Cameras 2017 on Feb 13, 2017
8 manufacturers accounted for 80% of the top selling camera lines for ~150 integrator responses. This report demonstrates which brands integrators...
Hitachi Taking On Security Industry on Feb 09, 2017
Hitachi, bigger than Sony and Panasonic overall, with $89 billion USD 2016 total revenue, is expanding into the security industry. They are...
Dahua USA To Triple To 200 Employees on Feb 08, 2017
Months ago, Dahua USA reported 65 employees. Now, by the end of 2017, the company plans to triple to 200 employees, becoming one of the largest...

Most Recent Industry Reports

Artificial Intelligence Robot Assistant (ACTi) on Feb 23, 2017
Has artificial intelligence come to the video surveillance industry? ACTi has released 'SARA' which it bills as an 'AI assistant that brings...
Cutting Costs 70% Using Milestone With HD Analog on Feb 23, 2017
HD analog and enterprise VMSes are often thought of as being on opposite sides of the spectrum, with HD analog best for small jobs due to its low...
Dahua 4K HD Analog Cameras Announced on Feb 23, 2017
HD analog has been gaining popularity (even if Axis hopes otherwise). Last year, HD analog's max resolution doubled from 1080p to 4MP (see our 4MP...
Uniview (UNV) IP Cameras Tested on Feb 22, 2017
"We're #3," in China says Uniview (UNV). While the company significantly trails Hikvision and Dahua in total sales, one notable difference is that...
Glass Doors and Access Control Tutorial on Feb 22, 2017
The biggest challenge for many access control systems are glass doors. Here's what happens when a maglock is improperly installed to an existing...
Exacq Favorability Results on Feb 22, 2017
For years, Exacq has been one of the most frequently favored VMSes in IPVM integrator statistics (e.g., see Favorite VMS Manufacturers...
The Hot RMR Company - Electric Guard Dog on Feb 22, 2017
The financiers at the Barnes Buchanan conference praised a company named 'Electric Guard Dog'. While the name sounds fairly low tech, the money and...
Hikvision Leads Multi-Manufacturer Sales Promo on Feb 21, 2017
Earlier this month, Hikvision launched new 'super value' kits, with 40% discounts, and now Hikvision is offering another promo, but this time they...
Washington DC MPD's Surveillance Equipment on Feb 21, 2017
The Washington DC Metropolitan Police Department's surveillance system was hacked in January 2017. Two immediate questions were: Whose...
Hikvision Ezviz Mini 360 Plus - $80 Autotracking Camera Tested on Feb 21, 2017
Autotracking, integrated IR, local storage, full HD, cloud access: $80. That is the claim of Hikvision EZVIZ's new Mini 360 Plus. But for this...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact