Personal Integrity and Business Success

In the age of huge corporate business scandals such as Enron, Volkswagen, and Wells Fargo, it’s understandable that the personal integrity and character of business leaders everywhere is coming into question. Who are these people? What do they stand for? What are their motivations? Can they be trusted?

The Issue

According to Dictionary.com, integrity is an “adherence to moral and ethical principles; soundness of moral character; honesty.”

In business, that means adhering to ethical standards while pursuing a profit. It means fair and humane treatment of all stakeholders, even if exploitation would mean a greater personal gain. CEOs and other C-Suite executives are in a prime position to manipulate and exploit others because they have the most power. They are the leaders and set the tone for the entire business. It’s why their personal integrity matters the most. 

So, what if a leader has exceptional personal integrity? Can it be a benefit to their business? I believe that not only is personal integrity necessary to avoid a crippling downfall, but it’s what the strongest and most beloved brands are built on.

“Power is really a test of character. In the hands of a person of integrity, it is of tremendous benefit; in the hands of a tyrant, it causes terrible destruction.”

— John Maxwell, American Author

In the News

The 2019 WeWork fiasco will likely go down as one of the clearest examples of corruption in a startup business. WeWork is a real estate leasing company that buys long-term leases, value-adds popular office amenities, and sub-leases the office space at a prime rate to other businesses and entrepreneurs. The problem is, the company was spending at a furious rate and locking itself into long-term debt. The company was accumulating huge losses at the same time as its valuation was skyrocketing (as high as $47B in January, 2019). An IPO was the best logical choice to infuse some much-needed cash into the business, but the IPO attempt crashed and burned in September as the new valuation fell to less than $15B, and the IPO was placed on an indefinite hold.

When looking at personal integrity, it may be that Adam Neumann, the CEO of WeWork, was the single greatest flaw of the WeWork model. Here are just some of the things that contributed to the debacle.

• Stock restructuring gave Neumann 10x the votes and board control
• Neumann had the power to hire and replace board members 
• Neumann hired his wife as Chief Brand Officer
• JPMorgan gave Neuman a $500M line of credit
• A $63M jet was purchased at Neumann’s insistence
• Neumann’s office included a sauna and ice bath
• Neumann’s behavior was erratic and included drinking and marijuana use
• Neumann regularly missed board meetings and spent his time surfing

Source: (Farrell & Brown).

As part of the preparations for WeWork’s IPO, all of this information became public knowledge, and investors were not impressed. Neumann routinely put his own personal interests and desires above the wellbeing of his company, his investors, and his employees. His eccentricities were seen as part of the startup culture, but eventually Neumann’s lack of personal integrity ended up costing the business its IPO and costing him his job. He stepped down as chairman, cut his votes in half, and may not start a competing business for four years.

The Challenge

Stockholders want profits. Employees want bonuses and promotions. Customers want low prices. How do you main personal integrity when the pressures of business are working against you?

“You will be confronted with questions every day that test your morals . . . Think carefully and, for your sake, do the right thing, not the easy thing.”

— Dennis Kozlowski, Former Tyco International CEO, arrested for tax evasion.

There are many times when it might be easier (and more lucrative) to do the wrong thing. Perhaps the wrongthing isn’t even illegal. For a person of moral integrity, it’s about doing the right thing, even if the law doesn’t require it and even if no one is watching. 

Here are some scenarios to consider:

• You learn about a work deal that will affect stock market prices. Do you ignore the information or use it to leverage some profits for you and your friends?
  • Insider trading is illegal, but it is also unfair to others who are in the dark. 
• The work you’ve put into a project isn’t panning out. The deadline is near. Do you manipulate the results, put together some reasonable excuses, or give up?
  • These options may not be illegal, but the best thing to do is to be open, humble, and transparent with your boss and colleagues about what’s not working and why. Then you can work together to fix it.
• A major mistake was made, and your boss is quick to blame your colleague when, in actuality, the blame is mostly yours. Do you step in and own the mistake, or quietly let your colleague take the fall?
  • Again, it’s not illegal, but it’s easy to think that doing nothing is different from doing wrong. The right thing to do is to set the record straight.

The Importance

Small-level interpersonal scenarios like the last two discussed above may not seem like game-changing questions of integrity. The thing is, it’s not integrity if you pick and choose when to do the right thing and when not to. 

This becomes especially important in the higher ranks of corporate office, as it begins to affect the business in bigger and more obvious ways. According to a study by the Center for Creative Leadership, integrity is the most important contributor to C-Suite executives’ performance ratings. CEOs who act with integrity set the standard for their company. They create a culture of ethics instead of just a post-and-pray ethics code like Enron. They attract ethical employees and have more satisfied customers, avoid lawsuits, create sustainable profits, and have a better brand image overall.  

Recommendations

The Center for Creative Leadership offers this advice to executives striving to maintain their integrity:

• Be transparent
• Be honest
• Be mindful
• Check your ethics (Would your mother approve?)
• Take time for executive coaching and development
• Model behaviors of respected icons
• Make space for deliberate intervention from outside sources

Lastly, it’s important to measure how the C-Suite integrity affects the corporate culture and business outcomes, in order to reinforce good habits and draw attention to the efforts. Does the culture match the ethics and integrity of the company’s executives? Are there clear channels for reporting? Are honesty and transparency rewarded? How has the business improved? Keep sight of your own personal integrity as you navigate the business world so that you and your company thrive.

—Written by Nina Ottman

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