How Acting With Integrity Improves Business Results

By Chris Hitch, Ph.D., program director of executive development, University of North Carolina

"Is cutting corners and hoping to not get caught simply the cost of doing business today?” This question came from one of our participants during a strategic leadership program. Simply put, absolutely not! While the news is filled with ethical lapses and corporate scandals, acting ethically and with integrity provides greater profitability to the corporation.

WHAT IS INTEGRITY?
In simple terms, integrity is doing the right thing toward direct reports, colleagues, and your various stakeholders, both internally and externally. On the surface, acting with integrity would seem relatively easy — stick to one’s values, be honest, and sleep well at night. Few people wake up one morning and decide to go against every value they were taught. The few who do are generally called psychopaths.

ETHICAL LAPSES ARE NOT DUE TO BAD MORAL CHARACTER
In reality, though, acting with integrity is more difficult, especially in organizations where leaders put profit above integrity by cutting little corners here and there. Dr. Alison Fragale and Dr. Michael Christian at University of North Carolina’s Kenan-Flagler Business School note that most people think of themselves as moral, ethical people. They found that lapses of integrity may start out small and may seem innocuous, but tend to grow over time — because once started, people tend to continue to rationalize small unethical behaviors, leading them to continue to behave unethically to cover previous lapses.

WHY INTEGRITY PAYS OFF
Lack of integrity can place an organization’s future at risk. These costs, however, occur after the lack of integrity has gone public. Yet many studies show that organizations with high levels of integrity actually perform better than organizations with low levels. Interestingly, one study found that an organization’s proclaimed values were less important than the employee’s perceptions of the CEO and senior leaders as trustworthy and ethical. In fact, some proclaimed values like those found in mission statements and other organizational communications may actually impede integrity, particularly if they are at odds with a CEO’s and senior leaders’ perceived trustworthiness.

HOW YOU CAN REINFORCE INTEGRITY
You can’t inoculate people to act with integrity. You can, however, reinforce the tenets of integrity, just like you focus on other key performance indicators. Reinforce the probability of consistent ethical behavior by applying the “safety tips” below from Fragale’s and Christian’s research. You should also be aware of the psychology of decision making and biases.

• HONESTY AND MORAL COURAGE
  Honesty means telling the whole truth, even when it is uncomfortable. This is increasingly important when encouraging people to have the moral courage to speak “truth to power.”
• CONSISTENCY
  Ensure your beliefs, words, and actions are consistently aligned with the ethical lens. Periodically meet with your team to analyze recent business decisions through that ethical lens.
• VIGILANCE
  Quickly address small “everybody does it” types of possible ethical lapses. Small lapses can translate to larger ones.
• SELFLESSNESS
  Great leaders emphasize “we” with organizational successes while using “I” with issues and problems. They respect and listen to their team at all levels, especially when their employees are speaking up about possible ethical and issues of integrity.
• NUDGE
  Great leaders at all levels provide “nudges” to help employees consider ethical implications when making business decisions. Help your team recognize and self-correct in possible issues of integrity.

By investing in integrity and ethical conduct, you and your company can reap the financial and nonfinancial rewards, including improved employee loyalty and retention, and more satisfied customers and stakeholders. That’s truly ROI (Return on Integrity).