The Importance of Integrity in Leadership

Leadership involves so many difficult challenges and exceptional behaviors and mindsets. These days, we ask much of our leaders.
 
When I ask workers to quickly name the qualities that arise in their minds when they hear the word “leader,” I am instantly assaulted by a barrage of words: vision, charisma, confidence, clarity, responsibility, results, judgment, emotional intelligence, coach, and much more.
 
What is the most important aspect of leadership? Have you thought about that?
 
In my view, the most important aspect of leadership is integrity, because everything else leaders do flows from it (or its absence), followed by the courage to uphold it.
 
Warren Bennis, the late scholar and author widely regarded as a pioneer of the contemporary field of leadership, once wrote, “Integrity is the most important characteristic of a leader, and one that he or she must be prepared to demonstrate again and again.”
 
Reflecting on his approach to hiring, Warren Buffett, chairman and CEO of Berkshire Hathaway, noted, “I look for three things in hiring people. The first is personal integrity, the second is intelligence, and the third is high energy level. But if you don’t have the first, the other two will kill you.” Yes, we have seen many leaders with smarts and ambition get into trouble when they lack integrity and make poor choices.
 
For our book, Triple Crown Leadership, we interviewed leaders in 61 organizations in 11 countries, and sought to find out how leaders build organizations that are excellent (exceptional results and positive impacts across stakeholders), ethical (doing the right thing, even when it’s costly or hard), and enduring (standing the test of time and operating sustainably).
 
When we interviewed Girish Vaidya, former Senior Vice President of the Infosys Leadership Institute, we asked him about the relationship between excellent results, operating with integrity, and sustaining these practices over time. He noted, “You might get high performance for a while even if there is no integrity, but for consistent high performance, integrity is absolutely important.” Notably, they view integrity not just as an aspiration or value but as something to bake into their culture and their organizational storytelling during onboarding and meetings.
 
During your career, your integrity will be tested. Have you committed to doing the right thing, even when it’s costly or hard? Do you have people around you with the courage to step up and ask the hard questions and push back when there are concerns? In her book, Fierce ConversationsSusan Scott wrote, “There is something deep within us that responds to those who level with us.”
 
Think of your own leadership at its best, whether at work or in community engagements, sports, or family. Think of the leaders you admire, and the ones who have influenced you in lasting ways and brought out your best. In all cases, you are likely to find people, though not perfect, who are deeply committed to honesty, fairness, and other fundamental moral principles. Integrity is essential in leadership.
 
“The supreme quality for leadership is unquestionable integrity. Without it, no real success is possible, no matter whether it is on a section gang, a football field, in an army, or in an office.”
Dwight D. Eisenhower, former five-star Army general and U.S. president

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Gregg Vanourek is an award-winning author who trains, teaches, and speaks on leadership and personal development. He runs Gregg Vanourek LLC, a training venture focused on helping you lead yourself, lead others, and lead change. Gregg is co-author of three books, including Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (a winner of the International Book Awards) and LIFE Entrepreneurs (a manifesto for integrating our life and work with purpose and passion). To get Gregg’s manifesto on how to avoid the Common Traps of Living and free book chapters from Gregg’s books, check out his Free Guide.

The Root Cause of Ethical Failings (and Our Political Dysfunction)

Scandals. Fraud. Abuse of power. Greed. Corruption. Tax evasion. Coverups.

Once rare occurrences, coming back to haunt us every decade or so, these are now front and center in our daily lives and our daily news cycle. We see them in government, in business, and even in nonprofits and some religious organizations.

It seems as if we are in a race to the bottom.

While these challenges and failings have always been with us, we are not particularly well equipped to deal with them, in part because we fail to understand their root causes—and to hack away at them.

Enter Professor Kenneth Goodpaster and what he calls the “three symptoms of ethical hazard”:*

1. Fixation: obsession with an overarching goal. For example, Enron executives were a group of hyper-ambitious overachievers with something to prove about being number one. Many were ruthless and uninhibited about doing whatever it took to get there. For NASA, it was fixation with set-in-stone space shuttle launch dates, contributing to tragic explosions and loss of life. Some mountain climbers get “summit fever,” where they are so focused on reaching the top that they recklessly risk their own lives and those of their teams.

2. Rationalization: attempting to explain or justify behavior with logical reasons, even when not appropriate. Sometimes values conflict (e.g., truth vs. loyalty). Rationalization entails choosing based on one “privileged feature” (e.g., total loyalty regardless of the truth). This creates “blind spots” in ethical thinking. Examples of rationalization are legion:

  • My boss told me to do it.
  • Everybody else is doing it.
  • It’s just this one time.
  • No one will find out.
  • It’s not my responsibility.
  • It’s not lying. (It’s just not telling the truth.)
  • We really need/deserve this.
  • I didn’t do anything. (I just looked the other way.)
  • You don’t understand the pressure we’re under.
  • “Business is business”: we’re just “maximizing shareholder value.”
  • “Politics is dirty”: we have to do this so we can do X, Y, Z….

“I… rationalized that what I was doing was OK, that it wasn’t going to hurt anybody.” / “I will live with this pain, with this torment, for the rest of my life.”Bernie Madoff, former financier and operator of a Ponzi scheme considered the largest financial fraud in U.S. history

3. Detachment: the sense of not being personally involved in something or of having no interest or stake. On ethical matters, Goodpaster raises the alarm when our actions are detached from our personal values. When detached, people bypass their heart and soul as they privilege only their head, and they anesthetize their humanity in the face of temptations to win or be perceived as successful. Here he draws on psychoanalyst and author Michael Maccoby, who warned that “careerism” was a self-destructive affliction suffered by many successful executives (and politicians, presumably), fueled by an obsession with winning and a “gamesman” view of all actions in terms of whether they will help you succeed in your career or campaign. The person detaches from his or her sense of identity (e.g., as a mother or father, citizen, etc.) and integrity, and one’s sense of self-worth becomes measured by performance in the market, game, or arena. Such detachment corrodes character and degrades mental health, with people leading divided lives between work and home.

Two related dangers here are “ethical fading” and “moral disengagement”:

  • Ethical fading: “when the ethical aspects of a decision disappear from view,” such as when people focus so much on things like profitability or winning that they do not register unethical and illegal behavior (and the related aspects of harm, pain, conflict).
  • Moral disengagement: restructuring reality to make our actions seem less harmful than they are, convincing ourselves that ethical standards do not apply to us in a certain context, such as a political campaign. We mentally reframe destructive behavior as acceptable, and our brains are masterful at this misdirection.

Each one of these three symptoms is dangerous, but the real problem is that they converge into a single, terrible pattern. Goodpaster calls this “teleopathy”: the unbalanced pursuit of purpose. The word “teleopathy” combines two Greek roots: “teleo”: goal, target, or purpose; and “pathos”: disease or sickness.

We can think of it as a goal sickness—as being so focused on a goal that we pursue it destructively:

We must win.
We must be the best.
We must rule.

Thankfully, Goodpaster notes that there are “antidotes” for the three symptoms of ethical hazard:

1. From fixation to perspective. We must see that our goals are part of a larger mission, the common good. We need to transcend our perpetual busyness and reactivity and build in reflection time, renewal rituals, and sanctuary. Without a larger and longer term perspective of community, duty, stewardship, and sustainability, we will spiral down in self-destructive patterns.

2. From rationalization to frankness. Since our rationalizations tend to be subconscious, coming from the older and faster parts of our brain that do not engage our most advanced reasoning capacities in our prefrontal cortex, we need radical honesty and candor through searching and piercing dialogue and healthy conflict with colleagues who recognize the tremendous value of vetting and pressure-testing our ideas and decisions and inviting conversations about whether we are upholding our shared values. We need people who are willing to “speak truth to power,” even when they are a voice of one. Ideally, our organizational culture fosters such questioning and conflict, all in service of making wise decisions and proper actions.

3. From detachment to engagement. This requires engaging our heart as well as our head. A powerful way to do that is to be clear about the higher purpose of the work you are doing (beyond winning a campaign or maximizing profits:

  • What will you do once elected?
  • What value can you create for all stakeholders through the profits you generate?
  • What positive impact can you have via serving others, and are you doing your part for the common good?

Now more than ever we need to identify and hack away at the root causes of our ethical failings and political dysfunction. We need to stop our senseless race to the bottom—in business with our myopic pursuit of profit and growth regardless of the consequences on people and planet, and in politics with our zero-sum game mentality of “I must win and you must lose” with all its attendant cynicism and disdain for fellow citizens who happen to disagree with us on some issues. We need to look for shared values and mutual interests instead of stoking mistrust, anger, and resentment. This race to the bottom is so dangerous because it threatens to destroy the very foundations of our communities and society. With perspective, frankness, engagement, and a healthy pursuit of shared purpose, we can redirect the race upward.


* Source: Kenneth Goodpaster, “Ethics or Excellence? Conscience as a Check on the Unbalanced Pursuit of Organizational Goals,”Ivey Business Journal, March/April 2004.

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Gregg Vanourek is an award-winning author who trains, teaches, and speaks on leadership and personal development. He runs Gregg Vanourek LLC, a training venture focused on helping you lead yourself, lead others, and lead change. Gregg is co-author of three books, including Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (a winner of the International Book Awards) and LIFE Entrepreneurs (a manifesto for integrating our life and work with purpose and passion). To get Gregg’s manifesto on how to avoid the Common Traps of Living and free book chapters from Gregg’s books, check out his Free Guide.

Sustainable Leadership on the 50th Earth Day

Today marks the 50th anniversary of Earth Day, a day on which we honor our planet and recognize the importance of environmental stewardship and our mind-boggling interconnectedness. Since 1970, the world population doubled, from 3.7 billion people to 7.6 billion today. We have made great progress on some fronts, but not nearly enough.

In our triple crown leadership model, there are three mains aims: excellent, ethical, and enduring. We define the latter one, enduring, as “standing the test of time and operating sustainably.” Sustainability can be defined as “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (United Nations) or, quite simply, as “the capacity to endure.”

We view sustainability as having two dimensions—external and internal—the latter of which is often overlooked:

  • External: ensuring appropriate and sustainable levels of resource consumption, while minimizing harm
  • Internal: sustaining people and maintaining the financial health of the organization

Business leaders of course must address cash, profits, and growth as they manage their organization’s financial health. Here, it turns out, there are not just costs associated with environmental stewardship but real opportunities. Businesses operating sustainably have the potential for:

  • Increased sales
  • Cost reduction
  • Risk mitigation
  • Reputation enhancement
  • Operational efficiency
  • Customer loyalty
  • Pricing premiums
  • Innovation benefits
  • Competitive advantage
  • Talent attraction, motivation, and retention

“We see that sustainability drives growth, cuts costs, reduces risk, and helps us serve a multitude of stakeholders.”
Paul Polman, CEO, Unilever

Of course, these gains are not automatic. Leaders must figure out viable business models and strategies, leveraging innovation and efficient operations while engaging with partners in the community and their supply chains.

None of this can happen without leading people well. Organizations must have a conscious culture that allows people to sustain excellent and ethical work over time.

Here too, we have much work to do. Take, for example, the problem of burnout:

  • 44% of employees report feeling burned out sometimes (Gallup, 2018)
  • 23% of employees report feeling burned out at work very often or always; 28% of millennials (Gallup, 2018)
  • Nearly all of the 72 senior leaders randomly surveyed reported at least some signs of burnout (Harvard Medical School, 2014)
  • 60% of health care workers felt burned out; 21% always or often (Harris Interactive, 2013)

“Creating the culture of burnout is opposite to creating a culture of sustainable creativity.” –Arianna Huffington, Cofounder, Huffington Post, and CEO, Thrive Global

Wise leadership can help create the conditions for “conscious capitalism,” including:

  • Long-term thinking
  • Better benefits and long-term employment for workers
  • Embracing diversity and inclusion in the workplace
  • Consumers valued as key stakeholders and not taken advantage of by deceptive practices
  • Responsible environmental stewardship
  • Reducing inequality (e.g., by addressing executive pay)
  • Uniting communities around common causes and solving problems

See John Mackey and Raj SisodiaConscious Capitalism (Harvard Business Review Press, 2013)

There have been big developments on this front in the business world. For example, in Larry Fink’s 2018 Annual Letter to CEOs, he wrote about how companies must have a social purpose and pursue a strategy for achieving long-term growth:

“Without a sense of purpose, no company, either public or private, can achieve its full potential.” -Larry Fink, CEO, BlackRock

This was big news coming from the CEO of BlackRock, one of the world’s largest asset managers, with trillions of dollars in assets under management.

In 2019, the Business Roundtable published a statement on the purpose of a corporationColumnist Barry Ritholtz wrote the following in Bloomberg about that dramatic statement: “For 47 years, the Business Roundtable has lobbied on behalf of corporate America. Much of that time, it maintained a fiction—that the sole purpose of a corporation was to maximize profits on behalf of shareholders. This philosophy has been under assault for several years now, and this week the Business Roundtable announced it wants to put it to rest. In a widely circulated memo, the 200-member organization reversed itself, writing that ‘shareholder primacy’ is no longer the sole purpose of a corporation. Instead, corporations must include a commitment to ‘all stakeholders,’ which includes customers, employees, suppliers and local communities.” By now, we should all be including the environment in our list of essential stakeholders, given our dependence on its resources and conditions.

According to management theorist R. Edward Freeman (creator of stakeholder theory), “Managing for stakeholders is not about trade-off thinking. It is about using innovation and entrepreneurship to make all key stakeholders better off and get all of their interests going in the same direction.” John Mackey and Raj Sisodia note that the way to enable such stakeholder synergy (avoiding trade-off thinking) “is to focus on value creation rather than on value division,” taking us back to the innovation imperative.

When it comes to the external aspects of sustainability, we are today seeing great advances in areas such as biomimicrycircular economy business modelscarbon sequestration, regenerative and restorative practices, and more, in part capturing the attention of the world through the U.N.’s Sustainable Development Goals (SDGs).

These matters are not only the province of CEOs, entrepreneurs, philanthropists, and policymakers. They are our own.

“If the success or failure of this planet, and of human beings, depended on how I am and what I do, how would I be? What would I do?”
Buckminster Fuller

On this 50th anniversary of Earth Day, we must take careful stock and act appropriately—and urgently. So much is at stake.

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Gregg Vanourek is an award-winning author who trains, teaches, and speaks on leadership and personal development. He runs Gregg Vanourek LLC, a training venture focused on helping you lead yourself, lead others, and lead change. Gregg is co-author of three books, including Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (a winner of the International Book Awards) and LIFE Entrepreneurs (a manifesto for integrating our life and work with purpose and passion). Twitter: @gvanourek

What This Pandemic Teaches Us About Business and Society

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty and we must rise with the occasion. As our case is new, we must think anew and act anew.” –Abraham Lincoln

As an insidious virus spreads around the world, we are wise to stop and ask: what can it teach us?

Much, I think. One question I am drawn to lately is this: what does the pandemic teach us about the role of business in society?

“This moment is the curriculum.” –Jon Kabat-Zinn

First, some context. For half a century, an epic battle has been raging in board rooms and business schools about the purpose of business. Economist Milton Friedman took the first shot:

“There is one and only one social responsibility of business—to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” -Milton Friedman

His work laid the groundwork for “shareholder primacy theory,” the idea that shareholders should come first when business executives make decisions, that the primary purpose of business is to increase shareholder (owner) wealth, and that the ultimate measure of a company’s success is the extent to which it rewards shareholders. Jack Welch, former CEO of General Electric (in the 1980s and 1990s), is also credited with fueling this idea in practice.

This idea was so successful that, now, many people take it for granted, as business school gospel, as a law of nature. Of course the role of business executives is to maximize profits and reward shareholders. Right?

Not so fast. Edward Freeman, a business school professor, had a different idea:

“Business is not about making as much money as possible. It is about creating value for stakeholders.” -Edward Freeman

Freeman’s “stakeholder theory” focused not just on shareholders but also employees, customers, suppliers, communities, and the environment, since these are all necessary for the business to survive and thrive. This was not an exercise in wishful thinking or naive altruism. There is a systemic view and innovation imperative that fuels the engine of value creation:

Managing for stakeholders is not about trade-off thinking. It is about using innovation and entrepreneurship to make all key stakeholders better off and get all of their interests going in the same direction.” -Edward Freeman

The battle was afoot, continuing even to this day.

What does this have to do with a tiny virus (SARS-CoV-2) that causes a global pandemic due to the rapid spread of a novel coronavirus disease (COVID-19)? Much, I think.

Today we see that our health care systems are strained, in some places to the breaking point. These systems are complex, relying on private, nonprofit, and public hospitals and chains and their personnel, equipment, technologies and related links like supply chains, research, labs, insurance providers, laws, regulations, information flows, and data models.

These complex health systems rely heavily on business products and services (e.g., ventilators, masks, vaccines, etc.), which arise from an amalgamation of complex business systems: raw materials, suppliers, manufacturers, distributors, customers, etc., each with their own business models, incentives, and limitations.

These business systems are heavily influenced by complex government systems at different levels—federal, state, and local—which are not used to close collaboration amidst the cascading timing crunches imposed by crises. These government systems include the three branches of government (executive, legislative, judicial) purposely designed to provide checks and balances to each other (i.e., slowing things down) and an array of challenges and sometimes bizarre influences (e.g., laws, regulations, court orders, campaigns, elections, lobbying, committees, messaging, press briefings, inspectors general, etc.).

During this health + economic crisis, those of us who are parents are also seeing how reliant we are upon a functioning education system, with its own complexities (federal, state, and local laws, regulations, and funding streams). When schools are closed, the impacts on families, workplaces, communities, etc. are vast.

All these systems are affected by a complex financial system. And transportation system. And travel industry. And food industry. And media industry. All of which are complex systems under strain.

All these complex systems exist not only within nations but also across borders, with each country having its own systems and context.

And all of this sits on our planet, itself a vastly complicated system of oceans, winds, climate, biology, chemistry, physics, and more.

Meanwhile, our own personal virus risk profile comes down to an interplay between our own internal systems, including our respiratory and immune systems but also our overall physical and mental health and our own decisions and context related to our work, families, home, movement, and social milieu.

In short, we see compounding strains on systems of systems of systems. In all the death, suffering, and disruption, we are faced with a powerful reminder of just how interdependent we all are, and how relevant systems are to our life, work, and leadership.

In an age of global pandemics that threaten our lives and livelihood, business has a vital role to play. Many business executives are facing their greatest professional trial. A retreat to previous thinking about narrow shareholder focus and short-term profits will be a recipe for disaster—for the business and its stakeholders (us). We need more—and must demand more.

This brings us to a newer idea: “conscious capitalism.” John Mackey and Raj Sisodia wrote a book about it and conceptualize it to include higher purpose, a focus on stakeholders (not just shareholders), conscious leadership, and conscious culture.

Conscious businesses believe that creating value for all their stakeholders is intrinsic to the success of their business, and they consider both communities and the environment to be important stakeholders. Creating value for these stakeholders is thus an organic part of the business philosophy and operating model of a conscious business.” -John Mackey and Raj Sisodia, Conscious Capitalism

The conscious capitalism movement is dynamic and growing, but up against an entrenched ideology and powerful array of forces, interests, and funds. It is not wrong to view it as an epic battle between two versions of capitalism, but we should place this war of ideas in historical context: capitalism has been around for centuries. Many view Adam Smith’s classic book, The Wealth of Nations (published in 1776), as a landmark of capitalism, but we forget that his prior book, The Theory of Moral Sentiments, provided important underpinning to it.

Capitalism, business, entrepreneurship, and leadership are all social phenomena with ethical dimensions, and have always been so. What’s more, we have always had “flavors” of capitalism. Some are crass, mercenary, brutal, and short-sighted. Others not. Look to the current practice in northern Europe and the Nordic countries as intriguing examples, and that sync well with the way that many family businesses have operated for centuries (e.g., valuing workers, stewarding resources, taking the long view).

No, Milton Friedman does not have a monopoly on the industry of business ideas.

No, the choice is not between capitalism and socialism.

No, the answer is not to discard the dynamic engine of progress created by a capitalist system of enterprise that has lifted so many worldwide out of abject poverty and taken so many into days of prosperity.

No, businesses cannot just hunker down and maximize profits in a pandemic. They are part of the social fabric, with a vital role to play in getting us through the crisis.

And no, the purpose of business is not to make a profit.

Profit is the oxygen which allows the business to survive so that it can create value and pursue a higher purpose, for its people and its customers, and ideally also for its community and our world.

The purpose of business is not to make a profit. The purpose of business is to find profitable solutions to the problems of people and the planet.” -Robert Fish, co-founder, Biggby Coffee

This is not about turning business into charity. It is instead a challenge to recognize the role of business in society and to look for ways for business to “do well by doing good”—a bold creative challenge. The idea, then, is not profit versus purpose. It is both.

Just as happiness is best experienced by not aiming for it directly, profits are best achieved by not making them the primary goal of the business.” -John Mackey and Raj Sisodia, Conscious Capitalism

These are the hidden lessons of the virus. They are calling us to think and act anew. And the call is urgent.

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Gregg Vanourek is an award-winning author who trains, teaches, and speaks on leadership and personal development. He runs Gregg Vanourek LLC, a training venture focused on helping you lead yourself, lead others, and lead change. Gregg is co-author of three books, including Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (a winner of the International Book Awards) and LIFE Entrepreneurs (a manifesto for integrating our life and work with purpose and passion). To get Gregg’s manifesto on how to avoid the Common Traps of Living and free book chapters from Gregg’s books, check out his Free Guide.