Backup Tuning in to Integrity

Integrity, the word, is getting lot of airtime in the organisational world these days. For instance, I was invited to dinner in Auckland recently at which the thorny corporate and investor issue of ‘continuous disclosure’ was debated.

What constitutes, and when to disclose, sensitive market information is tricky subject that greatly exercises the minds of public company directors and management, stock exchanges and, of course when things go awry, politicians. I don’t want to get into the nitty gritty of the night’s conversation suffice to say that New Zealand Stock Exchange representatives were there trying to explain their new rules of the game.

Since Enron, WorldCom, HIH and others, the regulators and legislators have been hard at it coming up with new reporting rules, new auditing standards and better governance procedures as show of ‘intent’ to keep us safe from marauding managers and directors.

The conversation that raged around the dinner tables suggested the investment market was now so dislocated from day-to-day management reality that perhaps the market was becoming irrelevant. Does the steadily mounting list of rules and regulations now in fact distort the market?

The share market is not, of course, reality based. It is emotion and publicity driven. As such, it is as secure and predictable as the story stream that flows from its listed companies. Enron and Co were built on fictional reality.

Joseph Healy, passionate advocate of corporate wealth generation, offered the most profound and commonsensical comments of the evening when he said, quite simply, “we can’t legislate for integrity”. He exposed the blindingly obvious that “you can never legislate for dishonesty” and that at board and top management level, it is the “spirit of compliance” which matters most.

Other commentators, like former Massachusetts attorney general Scott Harshbarger and consultant/author Robert Stringer suggest that “integrity” will become the world’s most valued management commodity. They believe that in the US, “thanks to the actions and alleged excesses of CEOs, the general public, the investing public and the media have lost confidence in the fundamental integrity of corporate America”. We may not be quite as sceptical in New Zealand, but few of us trust much of what we hear and read about corporate activity.

What is integrity? Well, say Harshbarger and Stringer, we “know it when we see it” because it induces trust. “The bigger the conflict between acting in accordance with our values and our self-interest, the more integrity we are perceived to have and the greater the trust.” And corporate integrity – the ethics and core values of an enterprise – “is nothing more than individual integrity writ large”.

They make the point: “We require integrity standards of almost every profession – medical, legal etc. The purpose of these codes, rules or laws is to ensure level of consistent behaviour across the profession regardless of personal values.” And they point out that corporate leaders are increasingly being held accountable for the personal behaviour of all members of their organisation.

I thought integrity was innate, you either have it or you don’t. I suspect for individual leaders lacking it, there’s not much to be done. But our commentators believe leaders – especially CEOs of large corporations – need tools and techniques “to create climate of integrity”. Their approach consists of six strategies which, when taken together “create framework for corporate reform and governance”.

They suggest:
* Articulate and discuss integrity standards and expectations. CEOs should articulate and clarify personal and corporate integrity expectations and goals.
* Assess existing integrity systems. Every organisation has an integrity system, be it unconscious or buried in the language and behaviours that shape the culture.
* Develop new systems to define and control integrity. Spell out the ‘shall nots’, not the ‘shoulds’ or the ‘we hope you wills’.
• Develop high integrity leadership practices. What people say helps determine organisational norms, but what they do has more profound impact.
• Redefine consequence management practices. What are the consequences of behaviour or performance, particularly bad behaviour or performance?
• Appoint an integrity point person. The CEO should nominate high-level executive to monitor the process of integrity reform.

Harshbarger and Stringer’s thoughts on “creating climate of corporate integrity” are published in the May/June issue of American Directors and Boards magazine (www.directorsandboards.com) and they are worth reading.

We shouldn’t need to think about leading and managing with integrity. But we do, and leaders need to set the example. If we adopt it for pragmatic commercial reasons, do the ends justify the means? Probably. In the meantime, as the commentators point out: “there is lot that can be done about corporate integrity from the inside.”

We might be giving the word more airtime. But will it catch on?

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