The business benefits of ethics, trust and taking the high road
A few years ago, in the hallowed halls of Harvard Business School, distinguished business guru Warren Buffett delivered a thought-provoking, often irreverent speech to the newest generation of MBAs. When he opened the floor, one question came from a student near the front.
“Mr. Buffett,” she asked simply, “How do you make hiring decisions?”
A snicker ran through the audience. But Buffett didn’t pause, he had been asked that question many times before.
“I look for three things,” he said. “The first is personal integrity, the second is intelligence and the third is a high energy level.” Then he paused, drawing closer to the microphone and his attentive audience. “But if you don’t have the first, the second two don’t matter.”
With the recent scandals at some corporate behemoths, corporate ethics and personal integrity are on many people’s lips these days — in the media, around boardroom tables, even across backyard fences. And in many of the world’s most successful firms, HR leaders are spending a lot of time worrying about the same thing Buffett does: the character of the people they bring into their organizations.
One organization that tries hard to bring in the right people is Canadian Tire.
“Integrity is a competitive advantage,” said Wayne Sales, vice-chairman of Canadian Tire Corporation. “And as proof of that, we have been voted the best company in all of Canada in which to work (by Report on Business magazine in 2000.) When we interview people today, you get the immediate sense that people just want to be part of this organization, even though we put them through heck in terms of the interview process because fit in the organization is very important.”
In the past HR spent a lot of time and effort helping leaders hire competent employees. They helped screen for the right background, education and aptitude, but spent very little time helping hire for character, giving managers the creative tools they need to identify people who match the organization’s values and ethics. That is changing.
Also changing is HR’s view of leadership and how leaders are coached to be more effective once a new hire has joined the organization. HR is now training leaders to be positive role models.
Diane Peck, executive director of human resources at Stanford University in Palo Alto, Calif., said: “How people behave tends to be dependent upon the environment in which they operate, the leaders for whom they work. Peer and organizational pressure do a lot to dictate how people behave. So when I read about what happened at Enron, I would bet money that it was a place where people were encouraged, if not required, to push the envelope.”
And, more often than not, employees are pushed to hit numbers or meet ever-increasing demands, creating a lack of trust in leadership. That trust gap is showing up in surveys across North America, such as one conducted in 2002 by Watson Wyatt that found worker trust and confidence in senior management have fallen in recent years. Out of 13,000 employees, two out of five (39 per cent) say they trust senior management at their companies. Yikes.
Based on our time spent observing and interviewing influential leaders and top executives around the world for our book The Integrity Advantage, we have identified 10 characteristics that are consistently displayed by people with a high degree of integrity. This model represents a sliding scale. Someone who does all 10 things all of the time has near perfect integrity. But that notion is, in many ways, unrealistic because everyone falls short in one way or another. The 10 integrity characteristics are:
•you know that little things count;
•you find the white (when others see grey);
•you mess up, you fess up;
•you create a culture of trust;
•you keep your word;
•you care about the greater good;
•you’re honest, but modest;
•you act like you’re being watched;
•you hire integrity; and
•you stay the course.
Of course, even great leaders and ethical organizations aren’t perfect on every one of these measures. But HR leadership plays an important role in helping leaders make constant, uphill progress. Not only do employees demonstrate greater commitment to leaders they believe are honest, but consumers are much more likely to buy from salespeople they trust, and companies with ethical cultures significantly outperform their less trusted competition in market valuation. In other words, the benefits of integrity are very real to the bottom line.
As Don Graham, chairman of the Washington Post, said: “Warren Buffet once said to a business school class, ‘I cannot tell you that honesty is the best policy. I can’t tell you that if you behave with perfect honesty and integrity somebody somewhere won’t behave the other way and make more money. But honesty is a good policy. You’ll do fine, you’ll sleep well at night and you’ll feel good about the example you are setting for your co-workers and the other people who care about you.”
Dana Telford is a researcher at Harvard Business School in Cambridge, Mass. Adrian Gostick is a best-selling author. The two co-authored The Integrity Advantage, published by Gibbs Smith. For more information, visit www.theintegrityadvantage.com.
“Mr. Buffett,” she asked simply, “How do you make hiring decisions?”
A snicker ran through the audience. But Buffett didn’t pause, he had been asked that question many times before.
“I look for three things,” he said. “The first is personal integrity, the second is intelligence and the third is a high energy level.” Then he paused, drawing closer to the microphone and his attentive audience. “But if you don’t have the first, the second two don’t matter.”
With the recent scandals at some corporate behemoths, corporate ethics and personal integrity are on many people’s lips these days — in the media, around boardroom tables, even across backyard fences. And in many of the world’s most successful firms, HR leaders are spending a lot of time worrying about the same thing Buffett does: the character of the people they bring into their organizations.
One organization that tries hard to bring in the right people is Canadian Tire.
“Integrity is a competitive advantage,” said Wayne Sales, vice-chairman of Canadian Tire Corporation. “And as proof of that, we have been voted the best company in all of Canada in which to work (by Report on Business magazine in 2000.) When we interview people today, you get the immediate sense that people just want to be part of this organization, even though we put them through heck in terms of the interview process because fit in the organization is very important.”
In the past HR spent a lot of time and effort helping leaders hire competent employees. They helped screen for the right background, education and aptitude, but spent very little time helping hire for character, giving managers the creative tools they need to identify people who match the organization’s values and ethics. That is changing.
Also changing is HR’s view of leadership and how leaders are coached to be more effective once a new hire has joined the organization. HR is now training leaders to be positive role models.
Diane Peck, executive director of human resources at Stanford University in Palo Alto, Calif., said: “How people behave tends to be dependent upon the environment in which they operate, the leaders for whom they work. Peer and organizational pressure do a lot to dictate how people behave. So when I read about what happened at Enron, I would bet money that it was a place where people were encouraged, if not required, to push the envelope.”
And, more often than not, employees are pushed to hit numbers or meet ever-increasing demands, creating a lack of trust in leadership. That trust gap is showing up in surveys across North America, such as one conducted in 2002 by Watson Wyatt that found worker trust and confidence in senior management have fallen in recent years. Out of 13,000 employees, two out of five (39 per cent) say they trust senior management at their companies. Yikes.
Based on our time spent observing and interviewing influential leaders and top executives around the world for our book The Integrity Advantage, we have identified 10 characteristics that are consistently displayed by people with a high degree of integrity. This model represents a sliding scale. Someone who does all 10 things all of the time has near perfect integrity. But that notion is, in many ways, unrealistic because everyone falls short in one way or another. The 10 integrity characteristics are:
•you know that little things count;
•you find the white (when others see grey);
•you mess up, you fess up;
•you create a culture of trust;
•you keep your word;
•you care about the greater good;
•you’re honest, but modest;
•you act like you’re being watched;
•you hire integrity; and
•you stay the course.
Of course, even great leaders and ethical organizations aren’t perfect on every one of these measures. But HR leadership plays an important role in helping leaders make constant, uphill progress. Not only do employees demonstrate greater commitment to leaders they believe are honest, but consumers are much more likely to buy from salespeople they trust, and companies with ethical cultures significantly outperform their less trusted competition in market valuation. In other words, the benefits of integrity are very real to the bottom line.
As Don Graham, chairman of the Washington Post, said: “Warren Buffet once said to a business school class, ‘I cannot tell you that honesty is the best policy. I can’t tell you that if you behave with perfect honesty and integrity somebody somewhere won’t behave the other way and make more money. But honesty is a good policy. You’ll do fine, you’ll sleep well at night and you’ll feel good about the example you are setting for your co-workers and the other people who care about you.”
Dana Telford is a researcher at Harvard Business School in Cambridge, Mass. Adrian Gostick is a best-selling author. The two co-authored The Integrity Advantage, published by Gibbs Smith. For more information, visit www.theintegrityadvantage.com.
