High Performance with High Integrity

Ben Heineman Jr

Contemporary companies must fuse high performance with high integrity.

Hi performance meansStrong sustained economic growthSuperior products and servicesDurable benefits to shareholders and stakeholders.

Hi Integrity meansTenacious adherence on the part of the orgn to rules and procedures, in spirit and letterVoluntary adoption of global standardsEmployee commitment to the core values of honesty,candor,fairness,reliability and trustworthiness.

I urge the CEOs to move beyond the ‘tone at the top 'platitudes to drive a robust high integrity and

high performance culture by reaching out deep into the

company.

If we want hi performance with high integrity, we should actually

focus on how the CEO actually governs the company.

The CEO and his team need to literally take thousands of actions with integrity implications every

day.

We will not repeal human nature , but we must reduce improprieties to a minimum. It is a quest taken in good faith, engaging most of

the people most of the time, in a human way.

Personal incentives driven by ‘making the numbers’ create

ubiquitous temptations. Employees may feel that their

bonuses etc. and even job security depends on those numbers.

I believe that the CEOs core task is to channel the financial pressures

by building systems, processes and articulating principles for

every decision.

Corporate governance has three dimensions:

a. The relationship betn shareholders and the company,b.The relationship between the directors and the top

leaders and c. The relationship between leaders and the employees.

Any business leader who has been through an intense government investigation, can testify to its huge and negative impact.

As a result, business leaders must work much harder and more effectively in a hostile, less forgiving environment.

High Integrity from leaders gets many benefits :It attracts good talent, it empowers employees to speak up, it contributes to meritocratic evaluations,helps create alignment between personal and professional values.

If you create the right systems and procedures, you create the right culture.

A company must have a robust set of practices to:track business disciplineshave real consequencesuse needed resources

Leaders must lead

Put integrity first

The CEO must make it clear that top executives of the company will not be spared or favored for any violation of the code, in fact they should be held to a higher standard.

An even more powerful message is the removal of senior leaders whose problem is ‘omission’ and not ‘commission’. They knew but didn’t act, that’s a bigger sin.

The CEO must remove all leaders who don’t commit to high integrity behaviors.

Communicate decisions candidly.

Leaders must embody values. Companies are exquisitely attuned to hypocrisy on the part of their leaders.

For a CEO, every employee event is a ‘public’meeting that demands the best personal behavior that is consistent with company values.

Senior executives must both be managers and leaders.

The hardest act for a hi performance hi integrity culture is the ability for business leaders to invest time and effort needed to embed integrity principles and

practices into key business processes.

Once detections of violations are seen, a good company responds effectively and quickly.

Responding to violations has four dimensions :InvestigationIndividual disciplineRemediation within the business unitRemediation across the company as appropriate

The impropriety such as cheating on an expense statement, simply grows out of a personal weakness and this poor behavior is borne out by poor risk mitigation.

The CEO must encourage the CFO and the GC to be strong voices at the table on such issues. The CFO

and the GC must represent the corporation’s interests and not the

CEOs.

All employees must commit to: Formal and ethical obligations

Do things right by following the duties

Live the values of candor, honesty, fairness, reliability

During my time at GE, whenever I was asked what I lose sleep over -

it was emerging markets.

The temptation to bend rules to suit local requirement sis great

and is the first step for a series of mishaps to follow.

When integrity issues surface, the CEO must accept full responsibility and start in play a set of actions to

set it right.

One of the most difficult aspects of managing an integrity crisis is to

allow the facts to develop in a searching, honest and

comprehensive way. There is a human tendency to defend

something.

Reputation like a forest takes years to grow but can burn down overnight.

A strong foundation is built on strong reality – the ability to tell the truth and add to the truth, not speak half truths.

A self confident CEO will present the company to the board and the employees in the most honest way, he will not lead either astray.