Chapter 5. Integrity

Acting Consistently with Principles, Values, and Beliefs

This is the primary moral competency that encompasses the others. Acting consistently with principles, values, and beliefs means being purposeful in everything you do and say. Integrity is authenticity. It is saying what you stand for and standing for what you say. Awareness is the first step to being able to act with consistent integrity. That's why it's so important to be clear about what's in your moral compass. Acting consistently with your moral compass also means letting others know the principles that are most important to you, as well as holding yourself accountable for decisions and behaviors consistent with that.

Before becoming an advisor with financial services company Thrivent Financial for Lutherans, Walt Bradley spent 20 years selling cars. One day, a young woman came on the used car lot to buy her first car. The only car she could afford had a lot of miles, a few dents, and a leaky exhaust. Walt told her that if she bought the car, they would check out the leak and fix it. “When we inspected it, the pipe was shot,” says Walt. “My boss said to just patch it. I argued with him, but he said, 'I don't give a shit. Just get it out of the building. There's no warranty.' Right in front of my boss, I told the mechanic not to do that—to fix the car right. My boss and I got into a shouting match about it, but the mechanic fixed it.” Asked how hard was it to stand up to his boss, Walt replies, “I hate confrontation, but the woman trusted me, and I know that if my word isn't any good, then my product isn't any good.”

The High Cost of Inconsistency. Leaders who blatantly ignore universal principles do great harm to their constituencies and ultimately to their bottom line. But just as bad are leaders who pay lip service to integrity while ignoring it in practice. Take this example of Kevin Reynolds (pseudonym), CEO of a $400 million dollar consumer products company. Kevin talked a lot about integrity in his speeches to shareholders, employees, and his board. But Kevin's direct reports didn't trust him at all, and each could cite numerous examples of betrayal or deception on Kevin's part. None of Kevin's direct reports was willing to go out on a limb for their company in the environment that he had created. Some of them spent a lot of time planning how to protect themselves from his treachery, while a few braver souls openly threatened to leave if the board did not fire him. The final straw came when, at the end of a financially troubled year, Kevin manipulated the bonus pool to get his maximum year-end bonus, leaving his team with unfairly low payouts. For a time, Kevin managed to conceal his bonus scheme by withholding information and presenting confusing data, but eventually, his mishandling of the bonus money leaked out. The board asked for his resignation. No one mourned Kevin's departure. His reputation for dishonesty dogged him in the industry, barring him from landing a top executive post anywhere else.

In corporate settings, a lack of integrity usually signals a lack of moral competence, as was the case with Kevin. But at times, a lack of integrity stems from a deeper lack of moral intelligence. There are some people whose moral compass is badly dented, like Jeff Walsh (pseudonym), who applied for a job as regional sales manager for a large Fortune 500 company. On paper, Jeff had a great track record in sales and management and an MBA from a prestigious university. The vice president of Sales was so impressed after interviewing Jeff that he was ready to hire him on the spot. “Don't let that one get out the door,” he told the recruiter. But when the recruiter checked his credentials, he discovered that Jeff had no undergraduate college degree, let alone an MBA. In fact, he had never taken a single college course. When the recruiter confronted him, Jeff broke into a sweat and admitted that he had faked his resume. You might think that the sweat on Jeff's forehead was evidence that he knew right from wrong. But Jeff recovered his composure quickly and promptly talked his way back into the VP of Sales' office to try to convince him that it really wouldn't matter that he did not have his MBA. Without a functioning moral compass, Jeff completely missed the notion that lying about his credentials was a big deal. He might sweat because he was caught—but not because he had a guilty conscience.

Telling the Truth

Susan Desimone (ficitious name) was chief financial officer for a major division of a huge financial services firm. Her CEO, a demanding and explosive character (in actuality a high-profile top executive), was determined to meet Wall Street's expectations for the quarter's profits—no matter what it took. The financial analysts who worked for Susan were stressed. “The CEO is badgering us to make these numbers work,” they complained. “If we show him the results we have right now, he will blow his fuse.” Susan knew they weren't exaggerating, but she also knew she could handle her CEO's tantrum without letting it unhinge her. “What is the worst thing he can do to us?,” she replied. “He'll yell at us for sure, but he's yelled at us before, and we are going to tell the truth.”

Susan's moral stance did more than keep her company out of the scandal section of The Wall Street Journal. She provided “cover” for the people in her finance unit and by her actions made it safer for them to do what they knew was right. Her truthful response to the CEO's pressure was both morally skilled and fiscally smart. She motivated her people to keep working for the company during an economic boom when their skills were highly marketable and corporate attrition was at record high levels.

Leading with the Truth. In organizational settings, telling the truth often means defining reality under challenging circumstances. When times are tough, leaders need to be able to tell the truth while providing people with real reasons for hope and optimism.

Imagine that you are captain on a sailboat that is cruising through the Caribbean. When you left dock a few hours ago, it was warm and sunny with a gentle breeze pushing the boat forward. Then the weather turns suddenly ugly. Before long, the wind is fierce, the waves are pounding, and your passengers are afraid. What should you do? You tell them the truth. You say, “This is a dangerous storm. Something bad could happen. You need to keep your life jackets on and stay below deck while I get us through this. I have been through storms like this before, and I am very optimistic that we are going to weather the storm.”

Cindy Carlson, former president of Capital Professional Advisors (CPA), a financial services firm, faced her own storm. Her company was only in its second year and it wasn't likely to see its third. Breadwinners would lose their jobs, and she felt responsible. She had recruited top people by convincing them that they were signing on for a great opportunity. She promised them that the owners had the resources and the commitment to ride a rocky start up. But the owners had a short attention span—they were already itching to sell or, failing that, close up shop. It didn't matter much to them how they got out of the deal as long as they did.

On a frigid winter morning in 2002, Cindy called her seven senior managers into the boardroom of their Minneapolis offices. She recalls the scene vividly. “I told them that if we didn't have a solid buy-out offer in the next two months, we were history. I also told them that I believed in them and what they were doing. I said I hoped they would stay, but I wouldn't blame them if they left.” It was frightening to be that upfront with them. Cindy worried that they might bolt, lowering the company's market value and making it that much harder to sell. But she went ahead and told the rest of the organization what was happening. Much to Cindy's relief, no one on the management team left, and that encouraged the other employees to stay as well.

Cindy admits that she was afraid to tell her staff what was going on with the company, but she knew it was the right thing to do.She had promised to always be truthful about the state of the company. Though Cindy was honest as a matter of principle, she believes it paid off for her business. Her employees stayed—and stayed engaged—because they trusted her. She says, “I felt like I had failed them, but they stayed with me because I was both candid about the status of our business and optimistic about what could still happen if we found a buyer.” In a characteristic stroke of modesty, Cindy adds, “It wasn't because of me. Everyone believed in what we were doing.” CPA owners soon found a buyer, and within six months the sale was complete. Right on cue, the company began to perform better. In 2004, Capital Professional Advisors celebrated its fourth anniversary and it now is well on the road to profitability and success.

Telling the Truth about Performance. Many of us are afraid to discuss poor performance with a subordinate. We imagine that people will be upset, and we don't want to be responsible for causing them pain. Paul Clayton, former president of Burger King North America and current CEO of Jamba Juice, is not known for pulling his punches. The only time he can recall when he has withheld the truth was when he had to sit down with someone and talk about his or her performance. “I have made mistakes in not being direct enough. I had to give a negative performance review and circled around the issues, and I've had that happen to me as well. I've always been critical of my communication skills, but for a long time, no one said a word to me. I knew that if someone had the courage to tell me sooner that I needed work, it would have helped me.”

We have all heard horror stories about co-workers who got a glowing performance review coupled with a bonus, only to be fired a month later. When that happens, it is usually because the manager has not been honest about the employee's performance problems over some period of time. Some managers are so non-assertive that employees who are being given negative feedback have no idea that they are being criticized. We know of several extreme examples when an employee who was fired on a Friday showed up for work as usual on Monday because she didn't realize she had been terminated.

Exceptions to the Rule of Honesty. A seemingly contradictory aspect of the competency of telling the truth is that it includes knowing when not to tell the truth. Consider an example posed by eighteenth century philosopher, Immanuel Kant. Imagine that a murderer comes to your door, wanting to know where your friend is—so that he can kill her. Your friend is, in fact, hiding in your bedroom closet. Most people would probably agree that your obligation to your friend overrides your general obligation to tell the truth. For some brave World War II Europeans, this scenario was not hypothetical—they risked their lives sheltering Jews from the Nazis. The Diary of Anne Frank is a famous telling of the story of a Dutch Jewish family hidden by a former employee of Ann Frank's father. When the Nazis made their regular sweeps of their Amsterdam neighborhood in search of Jews, the family protecting the Franks would have failed in moral competence if they had told the truth about what they were doing.

Honesty is often complicated for business leaders as well. At times, a leader has information that cannot be divulged. This is common in situations involving downsizings, initial public offerings, and mergers and acquisitions. When planning workforce reductions, for example, leaders know that employees would find it helpful to get advance warning that their job could be at risk. On the other hand, leaders have a responsibility to owners not to divulge information that could be harmful to the market value of their companies. To tell the truth prematurely would be a disservice to the business, yet to say when asked that no reorganization is looming would be dishonest. If there are legal requirements to withhold information, the leader should simply acknowledge that. A leader can still be truthful by saying something like, “We do have plans but we cannot discuss them at this time. Please know that we will implement the plan with high regard for our employees, our customers, and the people who own the company.”

Withholding information is also justified to protect the privacy of employees. Consider computer programmer, Jeanetta Shaw (pseudonym) who discovered that her husband and his family were all involved in criminal activity that was about to hit the newspaper headlines. Her distress was obvious to her co-workers, and they began to ask their manager what was going on. The manager decided to tell the truth, but not the whole truth. He told Jeanetta's colleagues that there were personal circumstances beyond her control that were causing her a great deal of stress. He expressed his commitment to help her get through a rough time and asked others to do the same.

The Painful Truth? Telling the truth and tact are not incompatible. Some of us pride ourselves on being honest to a fault. We might say things others would be afraid to say, but it doesn't necessarily add up to more truth. Some of us use “honesty” as an excuse to vent our hostility. We might make very cruel, competitive, or aggressive comments under the guise of “calling it like you see it” and then excuse ourselves by claiming, “I'm only being truthful.” According to Jefferson Bus Line's CEO, Charlie Zelle, the disclaimer “'I'm just being honest' is a classic Minnesota passive-aggressive way of being hurtful.” When we go out of our way to communicate a hurtful truth, we are usually not being honest with ourselves. So, when we feel obligated to tell another something “for his own good,” we need first to examine our own motivations. Are we competitive? Are we jealous? Are we trying to even up an old score?

Good Intentions. Truth telling works best when paired with the emotional competency of self-awareness. We need self-awareness to understand how our own goals and desires influence what we say to others. Leaders who limit information about pending changes should rigorously examine their motivations. Although it is important to protect their companies, leaders who withhold information because they put personal stock option considerations over employee well being, clearly violate principle of integrity.

We also need emotional competencies to understand other's emotions and be able to discuss the truth in ways that people can accept and use productively. Employees sense when their leaders make self-serving decisions or shade the truth about pending changes. The resulting negative impact on morale and performance can undermine the implementation of any change effort.

How Truth Fuels Performance. Truth telling has a huge impact on leadership effectiveness and workforce engagement. When people work for a dishonest leader, they censor information to protect themselves from a negative or unpredictable reaction. The dishonest boss creates a climate dominated by political intrigue. Instead of working productively, people who work for dishonest superiors spend a lot of time wondering about their manager's agenda, trying to gather information, trying to jockey for power, and doing only those things they think will keep them out of harm's way. In contrast, leaders who are known for being honest generate a powerful climate of trust. People who work for honest superiors relax because they know there will be no hidden surprises coming out of the organizational woodwork. People accomplish more and are able to work with great creativity when they don't have to waste energy watching their back.

Standing Up for What Is Right

Leaders who live the principle of integrity inevitably must take principled stands. David Risher recalls this incident during his tenure as a Microsoft executive:

Honda Motors VP, Gary Kessler, recalls a time 20 years ago when he took a quiet but vital stand. He discovered that a member of his team who was also a personal friend had fabricated his academic background. Gary knew that he could forgive his friend, and he knew he could keep anyone else from finding out what his friend had done. But Gary believed that to ignore his friend's deception would be deceptive on his part. It would devalue the efforts of others who were expected to have a certain level of academic training. So he steeled his courage and fired his friend.

Unlike Gary's admirable private stand, most principled stands must be taken in the face of stiff resistance. Don Hall, Jr. is the CEO of Hallmark Cards. Early in his career, Don headed product development. Don had a fine-tuned sense of what customers expected from Hallmark. He steadfastly resisted proposals to save on production costs by cheapening their product. To maintain customer loyalty, Don insisted that quality, rather than cost, be the company's primary focus.

Defying conventional wisdom to make a principled stand can be challenging. In most organizations, there is a lot of pressure to agree with popular positions. People who take unpopular stands can put their career advancement or their livelihoods at risk. Acting with integrity means that you accept the risks that come with taking a principled stand because the moral consequences of looking the other way are unacceptable. Think of the hazards that have resulted when no one stood up for what was right—buildings that collapse because of poor construction, bankruptcies caused by predatory lending practices in low-income neighborhoods, the explosion of the space shuttle Challenger after NASA executives ignored engineers' concerns about faulty O-rings.

Keeping Promises

Keeping promises is a hallmark of integrity because it demonstrates that we can be trusted to do what we say we will do. Keeping promises is a competency highly valued in organizational settings, but in our wired 24/7 world, it's a competency many of us have a hard time practicing consistently. We have good intentions but may let our ever-expanding “to do” list overtake our earlier promises. This was the case with Kari Wang (pseudonym), a senior executive in a professional services firm, whose career was in jeopardy and whose team was delivering inferior results. Kari had lost the respect of her colleagues because of her poor track record in keeping her commitments to them. When a high-profile project came her way, Kari dug in and took over all the detailed work herself, saddling herself with more work than even an overachiever like Kari could handle. Kari resisted delegating, rationalizing that she'd be happy to delegate if only she could find someone who could do a good enough job. When Kari did reluctantly delegate, she routinely forgot to provide all the information needed for the work to be done successfully. She changed her mind about priorities seemingly every hour and then failed to communicate those changes to her staff. Kari was incapable of saying “no”—she agreed to do so many things that she inevitably dropped the ball on some important commitments. People who knew Kari well did their best to work around her bad habits, believing that though her execution was poor, her motives were good. People who did not know Kari personally saw only her lapses. They mistrusted her and labeled her a liar. Her harshest critics viewed her missteps as deliberate efforts to advance her own career by sabotaging others. Fortunately, Kari's boss proposed that she use a leadership coach to help her make the transition from high-powered individual performer to leader of others. As a result, Kari came to recognize the costs of her actions and was able to develop the disciplined work habits that would eventually allow her to rebuild her credibility with her team.

Keeping promises usually requires assistance from a few emotional competencies—the self-awareness to recognize the inconsistency between our intentions and actions and the self-control to adopt disciplined work habits that allow us to keep our promises.

Honoring Confidences. One of the most frequent promises leaders are asked to keep is to preserve the privacy of others. A common complaint about low-integrity leaders is that they have failed to keep confidences. Some leaders betray confidences with good intentions because they believe that sharing the information with someone else will help the person who revealed private information. Others wrongly believe that it is acceptable to share confidential information about a third party that they trust will not pass the confidential information on to others. It's ironic that some of us expect a third party to keep a confidence that we ourselves have betrayed. When you discuss private information about another person with anyone, you can assume that it will become public—and that the person whose confidence you betrayed will know that you were the source.

When leaders betray confidences, they lose more than the respect of their work associates. They also dry up valuable sources of information because their employees and colleagues learn to withhold sensitive information from a loose-lipped leader.

Leaders who pass on confidential personal information do not suffer as much career damage as those who lack other dimensions of integrity. If the leader has an otherwise good reputation, people may try to compensate by emphasizing forcefully to the leader that certain information must be held in confidence. When a well-intentioned leader hears the urgency of the request, he will usually get the message.

Integrity competencies are clearly central to your effectiveness as a leader. Recall Cindy Carlson, who kept Capital Professional Partners afloat and secured her employees' trust in large measure because they knew she would always tell them the unvarnished truth about the company's condition. Mike Hughes, a senior VP with the insurance company Safeco Corporation, is convinced that leadership integrity is his most powerful retention tool. Mike says, “People see my leadership and they want to be part of a team where moral leadership is shown.”