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Integrity - The New Leadership Story – Part 2

By Ed Konczal

(This article is published by the permission of the author and is the 1^st chapter of a forthcoming book “Simple Stories for Leadership Insight” to be published by University Press of America/Hamilton Books)

Part 1 of this article was published in the June 2004 issue of weLEAD Online Magazine

Despite the news about leader scandals, we find some examples of leadership integrity.

At Enron it was Sherron Watkins who had the courage to do a “skip level” and go right to Ken Lay with the bad news. This was dangerous because her boss, Jeff Skilling, was notorious for not wanting to hear bad news. She wasn’t in on the complex, off balance sheet partnerships that were starting to unravel, but she knew that there was trouble and she let Ken Lay know what it was.

In one of her earlier memos that have become public, her heroic efforts seemed to be ignored. "The viewpoint is that I can effectively play devil's advocate on the accounting issues and be sure we anticipate the tough questions answers. My personal opinion is that it's very hard to know who in the organization is giving us good answers and who is covering their prior work." Too bad for Enron’s employees and shareowners that her warnings were unheeded.

Here’s a great leadership story that didn’t get the same news attention as the classic J&J Tylenol case. Merck & Co.'s development of a drug for human river blindness is an example of leading with integrity. In West Africa, river blindness had affected millions of villagers and for years the disease was controlled with pesticides. However spraying could not be done on a large scale and river blindness continued unabated.

In 1978, a research scientist at Merck & Co. believed he found an agent that successfully combated similar disease-causing parasites in livestock. He asked the laboratory director, Roy Vagelos, for approval to develop a form of the drug for human use. This effort would cost millions of dollars and require extensive testing in African villages. And even if the drug was able to cure human river blindness, there was virtually no chance that there would ever be consumers who could afford to pay for the drug.

For Vagelos, denying the request, even knowing the financial risk, would conflict with the company ethic that health precedes wealth. So he approved the request and the drug, named Mectizan, was developed. One of his greatest challenges yet lay ahead - distributing the drug that took a decade to produce. Although Merck's credo made health its first priority, freely offering and distributing the drug was without precedent.

Ultimately, Vagelos, who eventually became CEO, decided to provide the drug to all who needed it, free of charge and for as long as the need remained. "Sometimes in your life," he said, "you've got to take a leadership position and make a decision.

(Adapted from a speech by Christopher P.A.Komisarjevsky
President and Chief Executive Officer-Burson-Marsteller Worldwide Ball State University October 3, 2002)

In our story “Wise Women Leaders”, we chronicle the leadership of an innovative woman executive whose vision saw that the real route to competitive advantage was through the hearts and minds of people.

Max De Pree in his book “Leaders Without Power”, addresses authenticity, “Vital organizations don’t grant their members authenticity, they acknowledge that people come already wrapped in authentic humanness. When an organization truly acknowledges the a priori authenticity of each person and acts accordingly, how many ways open up for people to reach their potential!”

Authentic leaders in certain companies understand this vital relationship. It might be helpful to look at a list of the Top Authentic Leaders. Seems that people like “Lists Of The Top (You Name It). Well, there isn’t any list of the Top Authentic Leaders. This didn’t get press because authentic leaders are hard to find. We have a suggestion for how we might find authentic leaders. Take a look at a list of The Best Companies To Work For. Compiled by Robert Levering’s Great Places To Work Institute. Here are the Top 20 US and UK Companies.

2002 Best Companies To Work For

USA Companies	British Companies
Edward Jones	Cisco
Container Store	Microsoft
SAS Institute	Capital One
TDIndustries	Timpson
Synovus Financial	Asda
Xilinx	Intel
Plante & Moran	Abbott Mead Vickers
QUALCOMM	Bacardi Martini
Alston & Bird	Morgan Stanley
Baptist Health Care	Pret a Manger
Frank Russell	Sun Microsystems
Hypertherm	Bettys & Taylors
CDW Computer Centers	Agilent
Fenwick & West	Wragge & Co
Cisco Systems	Hewlett-Packard
Graniterock	DLA
Beck Group	MBNA
East Alabama Medical Center	Pearson
Goldman Sachs	Churchill Insurance
JM Family Enterprises	Mondial Assistance

We should look at the leaders in these companies to find Authentic Leaders. “A company doesn’t become a Great Place to Work® by accident. It is the result of the attitudes and actions of a management that seeks to develop trust and co-operation. Good workplaces are not just about tangible staff benefits. The culture counts, too.”

Look at the Organizational Culture statement of SAS “If you treat employees as if they make a difference to the company, they will make a difference to the company. That's been the employee-focused philosophy behind SAS' corporate culture since the company’s founding in 1976. At the heart of this unique business model is a simple idea: satisfied employees create satisfied customers. From managers who work on projects alongside their staff members, to flexible scheduling that allows employees to work hard and play hard on the job, the environment at SAS is designed to enable employees to do great work and to have a life outside of work, as well.

It is also interesting to note that there aren’t many Fortune 500 companies on this List. Why don’t more big companies appear on this list? Because these organizations can’t seem to develop leaders that understand the vital relationships they need to develop with people and customers, and to inspire and align a compelling organizational culture.

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PROFILE OF THE 21^st CENTURY LEADER

While leadership is always important to corporate performance, there is a growing realization that effective leaders with integrity are absolutely crucial to successfully navigating the New Economy of the 21^st Century. In addition there is also a growing realization that the characteristics of the Leader of the 21^st century are dramatically different than the leader of the past, even the recent past.

Command and control is out, organizations are getting flatter, the competitive landscape is chaotic, people are looking for meaningful work, customers are in control, these and more demands are being placed on today’s leaders. Transition to the New Economy are frequently compared to movement to the Industrial Economy, the Information Economy, but the breadth of developments and changes in the New Economy are so dramatic that there is little precedent.

The real job of leaders is to inspire and create meaning and direction in the midst of drastic change and even chaos. In such a world of change and ambiguity, a new leadership style is needed. This involves the need to grasp the paradoxes inherent in the New Economy and to master the competencies required by the business environment now being created. This new leadership relies on the leader acting as an authentic and inspirational force developing effective relationships with people in the company, partners, customers, competitors and any other stakeholders.

We developed a Profile of the 21^st Century Leader. Through our experience and research we defined the characteristics that will be needed to lead in an increasingly changing business landscape. This not to say that there is a definitive leadership model. Rather, we believe that leaders need to continuously adapt and change their approach as needs dictate. Leaders will need to apply these characteristics in an artful rather than a rigid scientific manner.

While all these leadership characteristics are needed, the most important is Integrity. We’ve seen too many leaders who lack Integrity. While most companies are not ethically (and now financially) bankrupt like Enron, there still exist leaders whose credibility is in question. Lack of Integrity must not be tolerated since they will undermine everything else that contributes to corporate success.

LEADERSHIP INTEGRITY GUIDELINES

Integrity is a delicate jewel. Building integrity in leaders and their organizations takes time, continuous effort and cannot be feigned. You must feel it in your gut, in your core beliefs that being honest and trustworthy is the right business practice. If you feel that integrity is the route to financial success you are doomed to failure.

Accountability is the foundation for authentic business relationships. At least it forces the process of identifying and resolving issues. Authentic people take full and complete ownership for their lives, their choices, thoughts, feelings and actions, without blame or faultfinding.

Not financial acumen. Not vision. Not creativity. What employees want most from their business leaders are basic principles in practice such as honesty, integrity, ethics and caring, according to the results of a survey conducted by Right Management Consultants.

Authentic people know their deepest values without hesitation and fulfill them in thought, word and deed. Integrity is their nature. They do not depend on their position for power. A leader with Integrity --

q delivers their message clearly and don’t worry about revealing themselves

q must have a clear vision of who they are and what they stand for

q creates clear intention by knowing the right questions to ask to create clarity and commitment

q firmly believes that doing the right and ethical thing is the overarching way to do business

SUGGESTIONS FOR BUILDING LEADERSHIP INTEGRITY

We offer some suggestions you might want to consider as you build integrity within your leadership team. The suggestions are aimed at integrating Integrity within the underlying organizational culture. You must address “the way we do things here in company x”, or the norms that govern how people make decisions each day.

q Integrity starts with Board of Directors who develops a statement of ethical practices and demand adherence. Anyone guilty of violating these practices must be publicly “beheaded” in a manner similar to what Jack Welch did at GE.

q Senior leaders insure that these practices flow easily throughout the culture and are embedded in the formal and informal company practices,

q Stop the scoundrels at the gate – when you are hiring people for leadership positions use new approaches to reviews and assessments that are designed to surface integrity issues. Companies such as Bristol-Myers, Pfizer and even smaller companies such as Spartan Stores are using innovative approaches to filter out candidates with Integrity issues.

q Put Integrity components in your compensation and incentives programs for all, not just executives.

q Communication between leaders and people in the organization has deteriorated despite polished multimedia techniques. Your message may be lost in the technology. Try a proven old technique. Tell stories about authentic leaders at company meetings, publish these stories in company newsletters.

q If you have Leader development programs, make sure the first course or seminar includes Integrity.

q Be seen by the people in your company. Let them see you and talk with you in a relaxed place. If you “hide” in your office, it will be more difficult to build Integrity. In our story “ Leaders Need To Be Seen”, we tell about how a simple change of venue can make a big difference in establishing a leader’s integrity.

q Turn bureaucracy on its head. In our story “Leadership By Not Getting in the Way”, a leader shows how to delegate and let people in his group really show their stuff.

q Communicate with your people. Let them know how the company is performing. If you are a publicly traded company, ensure they know about insider trading rules. Limit use of fancy slides, just tell them the facts.

q Establish a “safe haven” approach that permits employees to surface integrity problems without them fearing retribution.

q Tough decisions will always be a challenge to Integrity. At such times it takes courage to do the right things. Leadership with integrity acknowledges accountability and responsibility. Step up to the task, don’t waste time over-analyzing. If you embrace integrity you will know what to do.

q Get rid of the “yes men/women”. Surround yourself with a trusted team of people with diverse viewpoints who will tell you what they really think about your ideas. In our story “Leadership by Devil’s Advocate”, we explain the dangers of falling in love with your own approach.

Building Integrity takes time and continuous vigilance to ensure that it is maintained!

We admit that these guidelines are not conclusive. We of course don’t know the business context in which you live. But if you follow our suggestions you will be off to a good start.

Comments to: editor@leadingtoday.org

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About the author:

Ed Konczal is a former leader of the Talent Alliance, a consortium of Fortune 100 companies to enhance members’ workforce employability and business growth. He has been instrumental in helping to lead organizations from start up to a globally recognized enterprise. Ed has been co-founder of the Resource Link, AT&T’s innovative contingent management unit. He has an MBA with Distinction from the Stern School (NYU). Ed is author of 12 articles on various business topics.