The Integrity Dividend E-Book

Tony Simons

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 407

Veröffentlichungsjahr: 2008

Beschreibung

Corporate and government scandals continue to deepen our mistrust of leaders. While credibility is the foundation of effective leadership, most leaders struggle, and sometimes fail, to align their words and their actions. Now for the first time, leadership expert Tony Simons has measured the bottom-line value of business leaders who live by their word and actually do what they say they are going to do. In The Integrity Dividend, Tony Simons shows how leaders? personal integrity drives the profitability and overall success of their organization. This groundbreaking book is based in on solid research and reveals that businesses led by managers of higher integrity enjoy deeper employee commitment, lower turnover, superior customer service, and substantially higher profitability. This improved performance is the integrity dividend. Simons conducted dozens of focus groups, surveyed thousands of employees, collected financial and operational numbers, and interviewed over 100 senior executives and executive coaches. The book lays out the research clearly and provides proven tools for managing common integrity challenges. It offers guidance for building individual credibility and for creating an organizational culture of integrity and accountability. Throughout, Simons uses real-world insight and stories drawn from senior executives, line managers, and coaches. The Integrity Dividend is a fresh view of leadership at a time when it is most needed.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Foreword

PART ONE - WHAT IS THE INTEGRITY DIVIDEND?

CHAPTER ONE - THE DOLLAR VALUE OF YOUR IMPECCABLE WORD

BEHAVIORAL INTEGRITY: A RECOGNIZED FIT BETWEEN WORDS AND ACTIONS

LEADERSHIP, TRUST, AND THE INTEGRITY DIVIDEND

A SCIENTIFIC STUDY: THE DOLLAR VALUE OF AN IMPECCABLE WORD

THE INTEGRITY DIVIDEND IN PRACTICE: CHECKING WITH EXECUTIVES

CHALLENGES RATHER THAN EASY ANSWERS

SUMMARY

CHAPTER TWO - EXECUTIVE SIGHTINGS OF THE INTEGRITY DIVIDEND

INTEGRITY DRIVES EFFECTIVENESS

THE DIVIDEND IN THE ORGANIZATION: BUILDING A CULTURE AND MANAGING CHANGE

THE DIVIDEND WITH OUTSIDE STAKEHOLDERS

SUMMARY

CHAPTER THREE - BEHAVIORAL INTEGRITY DRIVERS AND PAYOFFS

FACTORS THAT DRIVE (OR CHALLENGE) CONSISTENCY

AN AMPLIFIER AROUND CONSISTENCY: DESENSITIZING

THE ROLE OF THE OBSERVER

A SECOND AMPLIFIER AROUND INTEGRITY PERCEPTIONS: PRIMING

CONSEQUENCES: THE INTEGRITY DIVIDEND

SUMMARY

PART TWO - MANAGING YOUR OWN BEHAVIORAL INTEGRITY

CHAPTER FOUR - PROMISE LESS, BUT DO IT MORE OFTEN

PROMISE FEWER VALUES

PUTTING SIMPLICITY INTO ACTION

MAKING PROMISES IN ONGOING OPERATIONS

SUMMARY

CHAPTER FIVE - THE LANGUAGE OF LIVING BY YOUR WORD

AVOID CASUAL OVERPROMISING

ACKNOWLEDGE UNCERTAINTY

SPEAK AWKWARD TRUTHS

DEMAND—AND GET—CLEAR COMMITMENT

RECOVERING FROM MISCOMMUNICATION

SUMMARY

CHAPTER SIX - BEHAVIORAL INTEGRITY AS A PERSONAL DISCIPLINE

PROMISSORY INTEGRITY VERSUS VALUES INTEGRITY

ELEMENTS OF A PERSONAL DISCIPLINE

MAKING THE COMMITMENT TO HONOR YOUR COMMITMENTS

SUMMARY

PART THREE - BEHAVIORAL INTEGRITY AND THE RIPPLE EFFECT

CHAPTER SEVEN - EASING THE MIDDLE MANAGER’S DILEMMA

THE BASIC DILEMMA

WHAT THE MIDDLE MANAGER CAN DO

WHAT THE SENIOR MANAGER CAN DO

SUMMARY

CHAPTER EIGHT - CREATING A CULTURE OF ACCOUNTABILITY

WHAT MAKES PERFORMANCE APPRAISALS SO CHALLENGING?

STRAIGHT TALK IN PERFORMANCE APPRAISALS

DEFINING EXCELLENCE

CREDIBILITY, ACCOUNTABILITY, AND ENFORCEMENT OF STANDARDS

THE PAYOFF

SUMMARY

CHAPTER NINE - MANAGEMENT FASHIONS AND THE FLAVOR-OF-THE-MONTH CLUB

THE COSTS OF REPEATED INNOVATION

COMBATING FLAVOR OF THE MONTH

SUMMARY

PART FOUR - BROADER APPLICATIONS AND SUMMARY

CHAPTER TEN - THE INTEGRITY DIVIDEND AND OUTSIDE STAKEHOLDERS

CUSTOMERS AND THE BRAND PROMISE: ALIGNMENT AND RECOVERY

SUPPLIERS: MANAGING OPPORTUNISM

ORGANIZED LABOR: GETTING PAST THE ADVERSARIAL STANCE

SUMMARY

CHAPTER ELEVEN - CAPTURING THE INTEGRITY DIVIDEND

BEHAVIORAL INTEGRITY AT THE PERSONAL LEVEL

MANAGING INTEGRITY IN AN ORGANIZATION

OUTSIDE THE COMPANY

TOWARD THE FUTURE

NOTES

Acknowledgements

ABOUT THE AUTHOR

INDEX

Praise forThe Integrity Dividend

“Living and leading by your words is so very difficult, but is critical for great leadership. This book has excellent real-life examples that will reinforce the value of the integrity dividend.”

—Doug Brooks, chairman, CEO, and president, Brinker International

“A culture of promise-keeping is a competitive advantage for any great company. If you want to lead such a company, read this book and take its message to heart.”

—Carl Camden, president and CEO, Kelly Services

“Living by your word makes good sense. Doing it in today’s business climate is another thing. Are you ready to take this journey? The Integrity Dividend is the only guide you will need.”

—Dick Axelrod, author, Terms of Engagement

“The Integrity Dividend is a delight, packed with practical advice and crystal-clear, proven insight. It should be read by all leaders and future leaders. You will be surprised to learn how powerful it is ‘to be seen as living by your word,’ and how much the integrity dividend means to you and your bottom line.”

—Allen S. Ibara, CEO, Phiam Corporation

“Dr. Simons’s groundbreaking work demonstrates the cost of not keeping our word to staff and, better yet, proves the economic benefits of integrity. Every executive I have introduced to his work has been impressed. You will be too.”

—Robert J. Wright, CEO, the Wright Business Institute

“The Integrity Dividend is a great book with an incredibly important message and helpful guidelines. I can see myself referring to it again and again in helping leaders bring more integrity to their role. This is an outstanding work!”

—Jeff Balin, leadership coach and facilitator

“The Integrity Dividend should be read by all leaders, and those whose goal is to become a leader. The examples were so clear and powerful, I felt I was having a personal discussion with top industry leaders.”

—Jack Gillis, president, Insurance Negotiating Service

“Tony hits the nail on the head with this book. If our sales managers all read his book and then followed the practices he lays out, I know we would see an immediate reduction in turnover and an improvement in productivity. A must-read for anyone responsible for developing leaders in their organization!”

—Tom Chelew, vice president, Fleet Management, Enterprise Rent-a-Car

“Integrity is in short supply in today’s professional world. Tony Simons offers a practical and insightful work for leaders in all walks of life!”

—Roy J. Lewicki, coauthor, Mastering Business Negotiation

“Finally! A book that connects behavioral integrity and results. Tony Simons’s book should be mandatory reading for anyone who seeks to lead others!”

—Lloyd Hill, former chairman and CEO, Applebee’s International, Inc.

“It’s about time that integrity in business has moved into the category of critical success factors. This book is an important contribution to this expanding conversation.”

—Steve Zaffron, CEO, the Vanto Group

“Tony Simons richly illustrates a powerful benchmark of leadership credibility. The Integrity Dividend vividly shows how an impeccable commitment to your word can affect business relationships, cultures, and performance. Then it shows how to get there.”

—Stanley T. Myers, president and CEO of SEMI (Semiconductor Equipment and Materials International)

“Tony Simons has taken enormously valuable academic research on trust and translated it into language accessible to all of us. I particularly commend this book to executives, managers, and others who seek to lead with integrity in corporate and public life. I will certainly be recommending it to clients of mine.”

—Charles Feltman, executive coach, Insight Coaching

“In The Integrity Dividend Simons captures the inherent value of a much-needed leadership practice: ensuring that your actions match your words.”

—Amy Lyman, chair, board of directors, Great Place to Work Institute, Inc.

“Given the volatile environment of business ethics today, and the daily reminders in the headlines, this invaluable resource should be in the back pocket of every executive who dreams of long-term business results.”

—Kerry Miller, Kerry Miller Executive Search

“Leadership integrity—often talked about, never objectively valued. Now Tony Simons is demonstrating its bottom-line impact. Every aspiring leader should own a copy, and some existing ones too.”

—Michael Z. Kay, retired president and CEO, LSG/Sky Chefs

“As leaders of people, 98 percent of how we produce results is by managing our conversations with others as well as with ourselves. Tony powerfully demonstrates the huge payoff when we align our actions with our words, and also the significant cost when we don’t.”

—Ted Teng, former president and CEO, Wyndham International, Inc.

“In light of the Enron horror, Simons’s powerful research in The Integrity Dividend is a must-read for any executive who wants to enhance her or his success in dealing with people.”

—Gary Patton, executive coach and adjunct professor of human resource management, York University, Toronto

“Tony Simons has revealed a fundamental but often ignored truth—that word-action consistency is at the heart of trustworthy relationships. Integrity drives engagement, commitment, satisfaction, productivity, and profitability.”

—John Lazar, executive coach and coexecutive editor, the International Journal of Coaching in Organizations

“This book is full of valuable wisdom and practical insight.”

—Philip Truelove, owner, Island Inn, Monhegan Island

Copyright © 2008 by Tony Simons

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Library of Congress Cataloging-in-Publication Data

Simons, Tony. The integrity dividend : leading by the power of your word / Tony Simons ; foreword by Jim Kouzes. p. cm. Includes bibliographical references (p. ) and index.

eISBN : 978-0-470-44521-1

FOREWORD

“Credibility is the foundation of leadership.”

I must have delivered this line five thousand times over the twenty-five years Barry Posner and I have been researching and writing about leadership. Maybe more. This is no idle claim. It’s exactly what we’ve found after asking hundreds of thousands of people what they look for and admire in a leader, someone whose direction they would willingly follow. People tell us that, above all else, they want leaders who are credible. They want leaders in whom they can believe. And just what is credibility behaviorally? When we’ve asked people to define it, they consistently use one simple phrase to sum it up: when you are credible you do what you say you will do. DWYSYWD. Remember that phrase. It’s the most important leadership lesson you’ll ever learn.

Now Tony Simons has come along and nailed the manifesto to the door. He’s taken this commonsense notion of doing what you say you will do, tested it in the real world, crunched the numbers, and discovered something profoundly meaningful to businesspeople. Without giving away the richness of this book, here’s the punch line: if you walk the talk, practice what you preach, stand up for your beliefs, put your money where your mouth is, follow through on your promises—do what you say you will do—your business will make more money. You will also be more trusted, more powerful, more personally successful; have more loyal and committed people; and be more at peace with yourself. Tony calls this the integrity dividend. It’s what you get in return for behaving in ways that are consistent with your, and the organization’s, stated values.

In this book, you’ll meet influential leader after influential leader who testify to the power of behavioral integrity. You will read story after story about the payoff of living by your word. You’ll see why promising less but doing it more often is a far better way to maintain your integrity than promising more but doing less. You’ll understand why those who take strong stands and really mean what they say are far more credible than those who have trouble clearly stating their beliefs. You’ll discover that none of this is easy and that you can’t have personal integrity without personal discipline. It means that once you make a promise, you have to organize your life around ways to keep that promise. Simple things like a meeting agenda, the people you see, the stories you tell, the rewards you give, the language you use all send signals about what matters to you.

Tony also addresses the realities we all face in our organizational life. He knows that middle managers often feel tension around the personal values that guide them, or a corporate mission that inspires them, and certain organizational policies they must champion. He knows that this conflict can sap personal energy and weaken resolve. He dispenses no cheap drugs to ease the pain. Speaking the truth to power requires personal courage, and you have to make your own decisions about the “bright line” that defines the boundary you won’t cross. Just knowing that can help you retain control of your own life. But Tony also asks us to consider the possibility that we may not always have all the data and that if we’ve chosen our organizations well, then there are times we just have to trust our leaders.

In the end, to have an organization full of people who behave with integrity, we have to be able to create a culture of accountability. That means, dare we say it, appraising people’s performance against the values that are espoused. None of us needs a lot of research to understand how behavior changes when you measure performance. If we truly believe in what we say, then we’re willing to be measured against it. There have to be clear, visible, and understandable metrics for our behavior. After all, if you’re going to count on me for something, then I want to know what counts.

There is one final observation, though, that I’d like to add to Tony’s treatise on the importance of doing what we say. Leadership is a humbling experience. Anyone who’s ever been in a leadership role quickly learns that you’re squeezed between others’ lofty expectations and your own personal limitations. You realize that while others want you to be of impeccable character, you’re not always without fault. You find that you sometimes get angry and short, and that you don’t always listen carefully to what others have to say. You’re reminded that you don’t always treat everyone with dignity and respect. You recognize that others deserve more credit than they get and that you’ve failed to say “thank you.” You know that sometimes you get, and take, more credit than you deserve.

In other words, you realize that you’re human.

The people we work with and count on are also human, and despite their best intentions, they don’t always do what they say they will do. We need to give them the same opportunities we afford ourselves to try and fail and try again. We need to give them the chance to be the best they can be, even to be better than they thought they could be. We need to support them in their growth and help them to recognize that the journey is not about perfection but about becoming fully human.

Reading Tony Simons’s book, The Integrity Dividend, is a wonderful place to begin the exploration of what it means to live by our word. The rest is up to us.

Orinda, California July 2008JIM KOUZES Coauthor of The Leadership Challenge

PART ONE

WHAT IS THE INTEGRITY DIVIDEND?

CHAPTER ONE

THE DOLLAR VALUE OF YOUR IMPECCABLE WORD

Stan Myers, president and CEO of SEMI, a global semiconductor industry association, tells the following story about the impact of keeping his word. When he was CEO of Mitsubishi Silicon America, he had to move his R&D department from the San Francisco Bay area to Salem, Oregon. Many employees were not interested in moving, so he offered an incentive: a retention bonus to people who would stay the full eight months until the move and help to recruit their replacements. If they took another job before the eight months, they would still get a severance package but not the retention bonus. One young engineer, Alan, got another job, did not get his retention bonus, and finance did not pay him his legitimate severance of several thousand dollars. He never asked for it. About a year later, Stan, the CEO, learned about the mistake. He had his people cut the check, found and visited Alan’s new workplace, and asked the president of the company to bring Alan up to the conference room for a conversation.

Alan came in, and he said, “What are you doing here? I haven’t seen you for a while.”

Stan said, “Yes, Alan, but I wanted to tell you that we forgot to pay you your severance.”

Alan was overwhelmed. More than fifteen years later, Stan heard again from Alan, who had started up a successful electronics company. He sought out Stan to present him with an engraved iPod Nano, thanking him for his leadership and friendship.

I draw two points from this story. One is that the simple act of keeping a promise can have a huge impact on a person. The second point gives pause: Alan did not expect his employer to keep his word. The fact that Stan acted as he did struck Alan as extraordinarily unusual. CEOs are very busy, and nobody likes to admit a mistake. There probably would have been no fallout if the check had never been written. There would have been understandable reasons for Stan Myers not to have acted as he did. But the fact that he did says something about the man as a leader, and it helps to explain his great success in that role.

It’s easy to break a promise, and it’s even easier to forget the price of breaking it. After all, who can measure that price? Few would deny that a broken promise lowers the morale of employees, but what’s the real dollar cost—the bottom-line impact? Or what is the payoff of keeping a promise? It should be simple to align your words and actions in a way that employees can see. But if it’s so simple, why do most employees say their managers do not do it? Maybe it is not so simple.

Consider how two executives described to me the benefit of an impeccable word—and the cost of lacking one:

Good leadership is, “Whatever I say I’m going to do, I’m going to do.” That means I have to know what my limitations are and what I’m capable of delivering. As a leader if you don’t fulfill your commitments, I can’t think of anything that can hurt you more than that.—Frank Guidara, president and CEO, Uno’s Chicago Grill

If your staff see you cutting corners, then they’re not going to take you seriously. And then they’re not going to take the values you’re trying to instill seriously. Because you’re not taking the values seriously.—Deirdre Wallace, President, The Ambrose Collection

Like these successful executives, you too most likely want to be an honest and respected leader. But this book is about more than being respected. As its title says, it’s about the integrity dividend—and why and how keeping your word as a leader pays off on the bottom line. One thing that sets this book apart from others that discuss the importance of integrity is that it tells how I have been able to accurately measure its positive dollar impact. As you will see in later chapters, successful executives I talk to recognize the dividend too, but until now it has not been well measured.

I am not asking you to be motivated by any intrinsic payoff, though I think there are several. Integrity for me is about being more effective, because people see you as consistently following through on your word and demonstrating the values you profess: more effective as a leader, because you more readily capture the hearts of your followers; as a communicator, because people know you mean what you say; as a partner, because you can be counted on; as a customer, because you complete business transactions efficiently; as a supplier, because buyers know what they will get; and as a brand, because you keep your promises—and promises are all that a brand is. Integrity contributes hugely to executive effectiveness.

BEHAVIORAL INTEGRITY: A RECOGNIZED FIT BETWEEN WORDS AND ACTIONS

Most successful executives intuit the importance of a reputation for integrity. It plays a major role in our public discourse, as politicians of all stripes revel in accusing their opponents of lacking it. People sense its importance, perhaps especially in today’s climate, as corruption scandals break careers, lives, bank accounts, and the faith of millions. But in 2005, integrity was the single most looked-up word on Merriam-Webster’s Dictionary Web site, which implies that people are not exactly sure what integrity means. Think about that for a minute: people know integrity is important, but they are not sure what it means.

Often people use the word integrity to describe a general quality of acting ethically. Ethics are important, but they are not what this book is about. For the purposes of this book, integrity means the fit between words and actions, as seen by others. It means promise keeping and showing the values you profess. This book is about keeping your words lined up with your actions—keeping promises and living by the same values you talk about—seamlessly, as in the integrity of the hull of a boat. It means being seen as living by your word.1

Behavioral integrity is not about the content of a person’s values, though I believe that content is very important. It is about how well a person follows through on the values he or she espouses. I can judge people despicable for what they value, but if they walk their talk and keep promises, I will—grudgingly—concede that they have behavioral integrity. A colleague of mine once proclaimed at a department meeting that his decisions would be guided strictly by self-interest and that he had no concern for what the department or the school needed. I did not like working with him, and I did not trust him. But he was living up to his word, and I had to give him credit for behavioral integrity.

It is not enough to keep your word; others have to be aware that you are doing it. And here is where it gets sticky. Like beauty, behavioral integrity is in the eye of the beholder. Consistently keeping promises and living by your stated principles are difficult tasks. Being seen as consistently doing these things is harder still. People we manage spend a lot of time watching us and trying to figure us out. They generally notice and understand more than we realize, but they also carry their own baggage—their own hurts, cynicisms, and biases. Their judgments about our integrity are colored by everything from their own parental issues from childhood to previous bosses to personality to the particular moments they happen to witness. As effective leaders (or business partners, or suppliers, or board members, or whatever else), our challenge is to penetrate the veil of others’ subjective perceptual processes and convey integrity regardless of them.

The added step of managing others’ perceptions makes the challenge more difficult than it might have seemed. It is not enough to manage your own level of consistency. You have to manage others’ perceptions of it without lapsing into cynical manipulation, which probably would not work anyway.

LEADERSHIP, TRUST, AND THE INTEGRITY DIVIDEND

It is difficult for anyone to define, measure, and develop leadership, in part because leadership involves trust, inspiration, challenge, strategic vision, and much more. But leadership is critical to just about any company’s performance, and there are numerous books about it, many offering terrific insights. Still, I suggest that the basic insight of this book—a fundamental, challenging one with a demonstrated financial dividend—has not received the kind of attention it warrants.

Consider the issue of trust, which has recently been a popular topic. Most agree that trust is a critical ingredient for leadership, since few people follow someone they do not trust. Most also agree that trust is complicated, encompassing reliance, emotion, respect, and a sense that the trusted person will look out for you. This book argues for looking particularly hard at reliance as a crucial ingredient for building and keeping trust. Reliance is the belief that leaders keep their word, fulfill their promises, and show the same values they profess. That is what “walking the talk” means. If people do not see this consistency, leadership cannot happen at all. You cannot even get out of the starting gate as a leader if others do not believe your words. Behavioral integrity is a simple idea, but it is hard to put into practice. To the extent that you do so, your powerful word pays off in powerful, concrete dividends.

Later chapters of this book say how to capture the integrity dividend. Before moving on to them, however, let’s look at some of the growing evidence that the dividend exists.

A SCIENTIFIC STUDY: THE DOLLAR VALUE OF AN IMPECCABLE WORD

A few years ago, a colleague of mine at Cornell University’s Hotel School, Cathy Enz, was fascinated by the idea of clear corporate values as a powerful tool for contributing to effectiveness. At the time, I had not yet latched onto behavioral integrity as a key to leader effectiveness. Through many of our conversations, I kept coming back to the notion that talking about values was one thing, acting on them was another, and aligning those words and actions might be the most powerful combination by far. By that time, I had also begun to regard as toxic the common exercise of drafting up a statement of values that sits in a desk drawer. It gives rise, I thought, to cynical employees who see their bosses pretending to adhere to values they do not implement. Cynicism kills spirit, and so undermines the company’s bottom-line performance in a thousand small and large ways. But at that point, my thoughts were just theory; I had no clear supporting evidence.

Management scholars have generated significant recent research on several concepts related to the alignment of words and actions. Trust is widely recognized and demonstrated as a key performance factor in teams and leadership in general. A study of National Collegiate Athletic Association college basketball teams found that players’ trust in leadership drives the quality and consistency of team performance.2 Several studies have shown that trust in leadership drives subordinates’ positive attitudes and their willingness to expend effort beyond formal job definitions.3 Fairness perceptions4 and perceived violations of “psychological contracts”5 have also been shown over many studies to affect employee attitudes, discretionary effort, and retention. But with a very few exceptions, the previous relevant research had focused on individual outcomes rather than companywide outcomes. No one had zeroed in on the idea of leaders living by their word and linked it to company performance as its final outcome.

I began to look for ways to test the bottom-line impact of word-action alignment. Testing the bottom-line impact of anything in the real world is not easy. To test a single factor like integrity, you need a lot of businesses that you can compare directly to each other. Franchises make a good testing ground, as you can filter out a lot of variation, comparing the performance of independent business units that are very similar in most ways but have different managers who lead with different styles.

I found help in this investigation from Pete Kline, then the CEO of Bristol Hotels and Resorts, which operated over 110 hotels in the United States and Canada. Pete is a brave man who also intuited the truth of the claim I wanted to test. We focused on 76 of his Holiday Inn franchises that were in the United States and not unionized. Bristol agreed to share the financial performance, employee turnover, and guest satisfaction information for each hotel. Pete asked me to design an employee survey to include penetrating questions about how much people trust their bosses and how good they think that boss’s word is.

For the project, I collaborated with Judi McLean Parks of Washington University, an expert at measuring employee perceptions of their implicit and explicit employment deals—what she calls the “psychological contract.” By applying solid scientific practice (focus groups, careful pretesting, prevalidated questions where feasible, multiple questions triangulating on each underlying idea, and objective operational performance measurement), we created a survey that could measure a chain of impact running from behavioral integrity perceptions to employee attitudes to behaviors to the business unit bottom line.

At a few hotels, we ran focus groups about what behavioral integrity looked like and pilot-tested the survey, which had been translated into five languages. Then we asked employees at all seventy-six hotels to complete the survey. They did so anonymously, on company time, with a raffle for sweatshirts and dinners out as an incentive. Most employees filled out paper surveys, but we set up “read-aloud” tables for the roughly 7 percent of employees with limited literacy.6 At each hotel, we asked line employees, supervisors, department managers, and the general manager to say how strongly they agreed or disagreed with statements like these:

• My manager practices what he/she preaches.

• When my manager promises something, I can be certain that it will happen.

• I would be willing to let my manager have complete control over my future in this company.

The first two questions measure behavioral integrity and the third measures trust. The questions are phrased as extremes, so that a statement of strong agreement indicates a deep belief in integrity or a deep feeling of trust. I did not want to ask questions with which it would be easy to agree.

Each hotel employed about one hundred and thirty employees spread over six to eight departments. Typically the biggest departments by far were housekeeping and front office. Around two-thirds of all employees (more than sixty-five hundred total) completed our surveys. For every manager with four or more employees, we generated feedback reports that described employees’ relationships with that manager. For each hotel, we collected employee turnover information, the results of independently conducted customer satisfaction surveys, and financial performance information for the months following the employee survey.

We averaged employee perceptions at each hotel and applied path analysis to evaluate all the links in the proposed chain of impact at the same time. We expected to find a chain that runs from employee perceptions of their managers’ behavioral integrity, to employee trust in their managers, to their commitment to the company, which in turn would drive both employee turnover and discretionary service behavior. We expected, furthermore, that discretionary service behavior would drive customer satisfaction, and profit would be affected by both employee turnover and customer satisfaction.

The results of the study were so clear that they surprised even me. As Figure 1.1 shows, the average employee perception of how much the employee’s manager kept promises and lived by stated values drove hotel profitability more strongly than the five other attitudes measured by the survey.

FIGURE 1.1. STRENGTH OF ASSOCIATION BETWEEN BUSINESS PROFITABILITY AND DIFFERENT EMPLOYEE ATTITUDES.

Let’s take a minute with that result alone: how strong your employees feel their managers’ word is—their assessment of their managers’ behavioral integrity—is more important to your company’s financial performance than employee trust, sense of fairness, commitment, or satisfaction. These other attitudes also matter, to be sure, but behavioral integrity came out as the single most powerful driver of profit. It might be more important that the workers know you mean what you say than whether they like you or the company or their work. First comes the word. Everything else follows.

The survey had asked employees to respond to statements with a number from 1 (strongly disagree) to 5 (strongly agree). Results showed that one-eighth of a point difference between two hotels in the average employee behavioral integrity ratings pointed to a difference in profits of around 2.5 percent of revenues. The difference raised the portion of each dollar of revenue that the company got to keep as profit by two-and-a-half cents. Typical revenue streams for that size and tier of hotel run around $10 million annually, so that difference in behavioral integrity could be expected to raise profit by an average $250,000 per hotel per year. Many of the hotels with high management integrity converted over ten cents more of each revenue dollar into profits than others. Does behavioral integrity make a difference to the bottom line? The evidence said emphatically—and hugely—yes. We had detected the integrity dividend.

Here are the details of the chain of impact that we saw:

• Where employees feel their managers keep promises and live by the values they describe, they trust their managers more.

• Where they trust their managers more, they become more emotionally committed to the company—caring more deeply about its mission and taking pride in working for it.

• Where they feel greater emotional commitment to the company, they are more willing to stay in their jobs and to go beyond their formal job descriptions by providing discretionary service to satisfy guest requests.

• Guests who experience discretionary service from hotel employees like it and feel more satisfied.

• Satisfied guests translate to repeat business, which boosts profits. Employee retention boosts profits as well.

Here is a simpler way to describe the chain: where employees reported high integrity on the part of their managers, we saw:

• Deeper employee commitment, leading to

• Lower employee turnover and

• Superior customer service; all leading to

• Higher profitability.

This study took place in a single industry: the hotel business. Is there evidence of a similar bottom-line integrity dividend in other industries? After all, the hotel business is unique in some ways. It is a service industry that sells positive guest experiences. The pivotal role of customer contact in determining the quality of the final product suggests that employees’ emotional response to their work might be more important for hotels than for, say, a manufacturing business. Hotels also employ a less educated labor force than most other white-collar businesses. However, there is no evidence that sensitivity or response to managers’ integrity issues depends on education level.

As a framework for systematic studies, the notion of behavioral integrity is new, even if the essential idea has long been discussed as an element of good leadership. Other scholars have already started to build on this initial work and are creating a research community with sessions devoted to the topic at annual Academy of Management conferences. In coming years I expect to see similar research results in other industries as more scholars explore the causes, consequences, and management of the issue. Apart from that future research, there is already strong evidence that the behavioral integrity effect holds true in other industries as well. For one thing, the attitudes and behaviors that are driven by behavioral integrity—trust, perceived fairness, employee commitment, turnover, and discretionary effort—are already well-demonstrated performance drivers in a variety of both service and manufacturing industries.7 Furthermore, all the executives I spoke with, in a wide variety of industries, agreed that behavioral integrity plays a pivotal role in determining attitudes toward leadership and, ultimately, driving performance. Chapter Two begins to discuss what the integrity dividend looks like in other industries.

THE INTEGRITY DIVIDEND IN PRACTICE: CHECKING WITH EXECUTIVES

Braced by my evidence that managers’ promise keeping and living by stated values drives profitability, I interviewed about a hundred successful executives to learn more about how behavioral integrity works. I spoke with leaders in high-tech manufacturing, health care, real estate, restaurants, hotels, food service, and nonprofit, as well as union leaders and a handful of executive coaches and consultants. My primary criterion for selection was that the executives be successful in their chosen fields, as shown by a pattern of promotions and executive positions. I sought to understand the payoffs and the challenges around behavioral integrity through their eyes, figuring that most successful managers have something to teach me and others working on this issue.

I conducted hour-long interviews, usually by telephone. The result was over two thousand pages of transcription, which my research team and I broke down into discussion themes. We looked for patterns, extracted and developed stories that related to those patterns, and massaged the pooled insights of these many executives to yield the book you are now reading.

I asked the executives about how they perceive the challenges and consequences of word-action alignment or its lack. I also asked them for both general and specific advice. Their responses are valuable in two main ways. First, they demonstrate that the integrity dividend is not unique to the hotel industry. Second, they flesh out the whys and hows of behavioral integrity in deeper, more practical detail. The techniques the executives propose are grounded in the sense that they drive the kind of integrity perceptions that create the dividend shown in the Holiday Inn research. However, it is also true that the process of talking to these executives and drawing out and combining their insights may resemble art more than it resembles science. I am learning about integrity along the way. I expect that you will too.

The interviews yielded four main themes, which we explore in coming chapters:

• The payoff of behavioral integrity is greater personal and organizational effectiveness. It builds personal credibility and trust, which contribute to your ability to get things done through people.

• Employees who trust their leaders work harder and with clearer direction. Trust also leads to greater efficiency in customer relationships, supplier relationships, and union relationships.

• Some of the greatest challenges of behavioral integrity management come down to recognizing and reckoning with our own personal habits and the ways we have learned to interact with people. Some of our well-intended actions serve to undermine our integrity and thus our credibility. Elements of self-knowledge and self-control are integral to managing behavioral integrity. You have to be willing to occasionally sacrifice in the service of keeping your word. To create a word as good as gold, you sometimes have to demonstrate the value of your word by paying for it.

• Executives can extend behavioral integrity and its dividends through leaders and practices throughout the organization. It is not just about personal relationships. Through careful modeling, training, coaching, accountability and incentives, impeccable follow-through can become a mutual expectation that forms part of the structure and the culture of the company. Make it a shared priority, and watch your effectiveness build.

CHALLENGES RATHER THAN EASY ANSWERS

You may be thinking that behavioral integrity cannot be easy. It isn’t. Accepting one’s word as one’s absolute bond and making that bond as solid as steel is hard work. The payoff, of course, is that your word of steel is as valuable as gold, because great integrity is rare and people are drawn to it. The challenge is especially great for people who take on the job of managing others in a company hierarchy. Most managers’ days are filled with brief tasks, noise, and fires that need putting out. It isn’t easy to keep track of commitments. Sometimes your boss countermands your decisions—at the cost of your own credibility. Sometimes the need to keep relationships smooth leads you to sugar-coat the truth, and sometimes that sugar coating causes feelings of betrayal on the part of those who mistook the frosting for the cake.

Managing behavioral integrity demands careful communication, as described in Chapter Five. People misunderstand each other all the time, and they feel no less betrayed when the promise that was broken was wrongly understood. People often ignore the escape clauses we insert into our promises, such as “I’ll try” or “I hope” or even “probably.” They often hear the message they hope to hear or the message they expect. They bring their own cynicism and other kinds of baggage to interactions and sometimes they assume you are lying before you speak.

Your position within the company sometimes adds other challenges to living by your word. Leaders are sometimes expected to project confidence and certainty even when they lack it. Managers are sometimes asked to produce short-term results at any cost or publicly endorse policies with which they do not agree. As subordinates, leaders and managers sometimes face bosses who prefer deference over honesty. As negotiators, they often fear that truthfulness sacrifices a competitive edge.

When companies face change, the challenges become greater still. Policy shifts are often confusing, and sometimes, as a manager, you have to introduce changes that violate values you yourself promoted. Sometimes in your ambivalence, you send mixed messages. And sometimes the policies themselves seem to contradict each other in the values they imply. Then there are initiatives about which you may not be allowed to speak, like layoffs, acquisitions, and mergers.

These challenges are often attended by other difficulties you must face, including trade-offs, the need to forsake expedient solutions, hard conversations you must have, and personal weaknesses you (like all of us) must acknowledge and confront. The executives and coaches I interviewed for this book have faced them too, and sometimes they made mistakes. But more often they overcame them—and collected the integrity dividend.

I cannot say with certainty that integrity will always yield the practical outcomes you want. But I can say that over time, its lack kills spirit among those who follow and that excellent leadership is fundamentally about building and focusing spirit toward extraordinary achievement.

As a leader, you should finish this book a little wiser, a little more insightful, and a little more effective. It is not about how you can feel better about yourself or how you can better live up to your moral values or those of society. It is about creating more effective relationships and more effective businesses through alignment. Develop a powerful word, because it will serve you well.

SUMMARY

This book is about building an impeccable word in order to increase your effectiveness and that of the people around you. Behavioral integrity is about having that impeccable, powerful word. It is about keeping promises, showing the values you profess, and being seen as doing so. It is not at all easy, especially as the goal is to do so all the time.

Make no mistake: others evaluate your integrity constantly. And the challenge is harder still when you consider the subjective biases they bring to that evaluation.

Behavioral integrity is not the whole challenge of leadership; there are many other skills and abilities involved in leading. It is not even the whole challenge of building and maintaining trust; there is more involved in that too. But neither trust nor leadership happens without behavioral integrity—without certainty that the leader means what she says. Behavioral integrity is, in the language of logic, a necessary but not sufficient condition for trust or leadership. It is a cornerstone on which trust and leadership must be based.

A careful scientific study tracked the consequences of behavioral integrity and measured the dollar impact of it as it operated through hotel worker attitudes and actions, affecting service delivery and the bottom line. The study suggested that employees’ sense of their boss’s strong behavioral integrity might be a more important performance driver than employee satisfaction, commitment, sense of trust, or feelings of fairness.

Extensive conversations with executives have confirmed both the impact and the challenge of behavioral integrity and have provided ideas about how others have met the challenge. This book is aimed at helping you to master that challenge and so to reap the integrity dividend.

Chapter Two explores the integrity dividend in a variety of industries. Chapter Three deepens our model of behavioral integrity’s drivers and payoffs. Chapters Four through Six explore common challenges to managers’ behavioral integrity and how to address them. Chapters Seven through Nine focus on developing behavioral integrity at the company level. Chapter Ten briefly applies the same framework to relationships outside the company.

Each chapter ends with brief points designed to help you apply these ideas to your workplace. The first three chapters have a set of questions labeled “consider.” Later chapters add a section with specific tools and techniques, labeled “act.”

Into Practice

Consider

• Where have you seen high or low behavioral integrity on the part of your current or a previous leader or boss? How did it affect your work attitude? Your level of discretionary effort? Your peers?

• How high a priority is keeping your word? How much would you sacrifice in order to keep your word?

• Where do you find it challenging to keep promises or live up to stated values? How much does the resulting gap cost you?

CHAPTER TWO

EXECUTIVE SIGHTINGS OF THE INTEGRITY DIVIDEND

I interviewed about a hundred successful executives to learn more about how behavioral integrity works. I spoke with leaders in high-tech manufacturing, utilities, real estate, restaurants, hotels, food service, financial management, and nonprofit, as well as union leaders, and a handful of executive coaches and consultants. In essence, I asked them questions about consequences, challenges, and guidance:

• What consequences have you seen for word-action alignment or its lack?

• What situations arise that challenge your own word-action alignment? When are good managers inclined to be less than forthright, to break promises, to fail to live up to their stated ideals?

• What is your advice about how to manage these pitfalls?

In the interviews, managers described the integrity dividend as it shows up in different business contexts: daily operations, change management, service delivery, union relationships, supplier relationships, and brand management. These executives and executive coaches talked about challenges managers face in a host of different business settings. There are unique elements to different industries, but there are also common threads, and the integrity dividend is one of them. Every manager and coach I spoke with reported grappling with integrity issues and seeing their consequence.

Michael Kay, former president and CEO of LSG Sky Chefs, describes the integrity dividend like this:

It’s all about results time. It ain’t about feeling good. It ain’t about being a nice place to come to work. It’s that heightened levels of trust produce heightened levels of results. Because people feel better, work better, are better, in a trusting setting and environment than they are in one where distrust saps their energy.

The reason to read this book is not to feel better about yourself or to create a happier workplace, although those outcomes may well follow. The reason to read this book is to get better results—to be more successful.

Lin Coughlin, CEO of Great Circle Associates and former chief administrative officer of Cendant Corporation, speaks about transparency, a close cousin of behavioral integrity:

The way you enact transparency has an awful lot to do with the frequency, consistency, and clarity of your communications. The more transparent you are as a leader, the more you will engender trust; and so the more productive, effective, efficient, and innovative your organization will be. And the convergence of those factors gets you to the breakthrough results.

Lin and Michael see the integrity dividend every day. Lin says simply that people work better when they understand what their boss is doing—because he is doing exactly what he said he would do. As a result, the company works better than the competition, and the dividend shows up in performance. When I talk with Lin and Michael, I do not get any sense that they are naive in their approach. But some readers, I am sure, will think they are. Let’s look behind their claims. Here are some of the mechanisms by which executives in various industries say that behavioral integrity drives performance.

INTEGRITY DRIVES EFFECTIVENESS

Behavioral integrity forms a foundation for trust and interpersonal warmth and loyalty. It builds credibility and leads to a personal reputation. By creating predictability, it enables others to predict your judgments and act on reliable, accurate information. It all but eliminates the need for employees to wonder about and discuss what your true agenda might be and whether you mean what you say.

These immediate consequences of integrity echo far beyond the attitudes and behaviors of employees. Improving their attitudes and behaviors would be enough. But leaders’ behavioral integrity also affects the culture of the organization and its managers. It determines the effectiveness of change efforts. It profoundly colors relationships with organized labor. It shapes supplier relationships and their potential value contribution. It determines the efficiency of negotiations and problem solving with all stakeholders. And it goes to the heart of the value of your brand. In short, this issue touches every aspect of your business. Managed properly, behavioral integrity stands to enhance value at each of these connection points. Consider these as the many forms of the integrity dividend.

THE DIVIDEND AND LEADING