Ethical Behavior Coupled with Integrity

Continuing on the topic of Integrity from last week, let us look at how ethical processes support a leader's integrity in driving the business success.

A recent study performed by the Institute of Business Ethics (IBE) found that companies displaying a ‘clear commitment to ethical conduct’ consistently outperform companies that do not display ethical conduct. The director of IBE, Philippa Foster Black stated, “Not only is ethical behavior in business the right thing to do in principle, it also pays off in financial returns.”

Part of your commitment as a business leader is to create and maintain the processes and a culture that dictates ethical behavior. Ethical behavior is not an easy path, nor is it a path taken without thought and consideration. As a leader, decision with value connections will be presented frequently. Examples could include employees stealing from the company, doing personal business on company time, modifying accounting records, or extending a customer discount that was not earned, etc.

Clearly defined organizational goals and clearly stated organizational values are integral to your ability to make the best decisions and take the right actions. As you deal with different types of situations you are being evaluated very closely by your team. As you lead by example, you become a champion for the organization’s commitment to ethical behavior. As you look to enhance the ethical policies and processes within your company, here are some principles to take into consideration:

·         Be trustful: Recognize that customers and employees want to do business with an organization they can trust. When trust is at the core of an organization, it is easy to recognize.

·         Meet obligations: Regardless of the circumstances, do everything in your power to keep commitments and obligations to employees and customers. An incredible amount of trust is built when an organization honors its commitments. If unforeseen events stand in the way of meeting an obligation, immediately communicate the challenges and work together to find resolution.

·         Reevaluate all documents and materials: Make sure all department and organizational documents and literature are clear and precise. Make sure they don’t misinterpret or misrepresent.

·         Have documented processes: Every organization is structured differently. However, having documented processes and policies on how your organization interacts with customers and employees is critical. If processes are properly documented there is no question what a product or service should be or whether a customer exception falls within the acceptable guidelines. Take a hands-on approach to all accounting and record keeping as it will allow you to end an inappropriate action in a timely fashion.

·         Be respectful: Treat employees and customers with respect regardless of differences, positions, titles, ages, or diversity. Always treat others with respect and courtesy even if you agree to disagree.

Successful implementation of these five principles becomes a leader’s daily commitment and responsibility.

Oprah Winfrey said it quite simply, “Real integrity is doing the right thing, knowing that nobody’s going to ever know whether you did it or not.”

Integrity Really Matters

When preparing future leaders to take on greater responsibility, organizations are looking for integrity and excellent communication skills.

In a recent study conducted by Robert Half Management Resources, it was concluded that beyond technical and functional expertise, the following traits were high on an organization’s list of leadership requirements. The survey included 1,400 CFO’s from a random sample of US companies with 20 or more employees.

• Integrity – 33%
• Interpersonal/Communication Skills – 28%
• Initiative – 15%
• Ability to Motivate Others – 12%
• Business Savvy – 10%

Pay attention to any form of business news and it will quickly confirm that integrity in business is becoming a lost art. Companies want quick fixes, fast money, and magic bullets. Companies are not spending the necessary time to create and maintain cultures of integrity, values, and processes, or making the right decisions for the right reasons. Lack of corporate integrity has been the documented cause of organizational demise, severe embarrassment, and financial loss many times within the last fifteen years.

The examples start with the avalanche of accounting scandals in 2001 and 2002, which included the Enron debacle and companies such as Tyco, Arthur Anderson, and Kmart. Forbes magazine created a Corporate Scandal Sheet listing just accounting imbroglios like the companies listed above. The list was published on August 26, 2002 and sadly is quite long. In the last few years, we have seen similar challenges in the financial and mortgage world with AIG, Goldman Sachs, Freddie, and Fannie.

Corporate integrity is not a choice, nor should it be implemented for shear convenience. Integrity is the concept of consistency of actions, values, methods, measures, principles, expectations, and outcomes. In ethics, integrity is regarded as the quality of having a sense of honesty and truthfulness.

Fast Company conducted a study with the objective being to gather perceptions about specific characteristics of leaders. 95% of respondents said “yes” or “absolutely” when asked. Do the ethics of the CEO play a meaningful role in the way business gets done? Respondents go on to say “Good ethics is also good business. It builds the brand, draws customers, and saves money in the long run.” (Fast Track Leadership Survey August 2005)

Organizations must take the time to define their core values. Clearly defined core values create a sense of unity and help the company steer all of their resources in a focused and meaningful direction. It is the spirit that drives the company regardless of its industry or size and helps the organization make appropriate decisions in tough times. Core values provide answers to tough questions and act as a guiding light in situations of conflict. Leaders with integrity must have an unwavering commitment to the organization’s core values and they must be willing to defend them.

There are no quick fixes, or magic bullets. Money needs to be earned. Show your external and internal customers, as well as all of your stakeholders, that your organization stands for something and that it has self-imposed rules that guide all decisions.

Leading with integrity sends a powerful message to employees.

Your leadership by example is critical to creating an environment and culture of integrity throughout the entire organization.

Integrity really does matter!