Integrity

Blog

23 July 2018

Integrity is a fascinating topic. It’s all the more fascinating now that in the media demagoguery and deception often seem take precedence over moderate and humane forces. In fact, it’s a miracle that integrity still increasingly features on the corporate governance agenda. A few levels higher, at the level of the Trumps, the Putins and the Erdogans, speaking about integrity seemingly sparks disinterest or even disdain. Hopefully this “development” will not take hold in the business world, which already has trouble enough as it is to find the way to the human dimension and mutual respect. What can we as directors and Supervisory Board members contribute to ensure this?

“Integrity within a company not only encompasses the combination of inner values and behavior (if these match, there is integrity), but also the component of trust.”

A few considerations:

  1. The motto “profit over integrity” is incorrect. For many years now, economists and business experts worldwide have been in agreement that managing a business with integrity is the only way to sustainable financial profit.
  2. Having integrity means that your behavior is in accordance with your inner values. It also means that your behavior is in accordance with what you preach: “walk the talk”. The priest who fondles little boys doesn’t have integrity, and neither does the minister who beats his wife. The same applies to the CEO who exhibits or allows behavior that lacks integrity.
  3. Integrity is often considered in an absolute sense. It is said that “people either have integrity or they don’t”. Just like a woman is either pregnant or not. There’s no middle ground. That’s not true, at least not when it comes to integrity. Integrity is about behavior. So, people can behave without integrity at one point and exhibit integrity at another. Everyone generally has integrity and everyone sometimes acts without integrity.
  4. If you want to promote integrity within your company, you shouldn’t start talking about the abstract concept of integrity. You should very specifically mention and discuss undesirable forms of behavior. Examples include ignoring, bullying, lying, insincerity, abuse of power, stealing, dodging, unwanted sexual advances, slacking off. Discuss those types of behaviors. Again and again.
  5. Integrity within a company not only encompasses the combination of inner values and behavior (if these match, there is integrity), but also the component of trust. By definition, trust is a social phenomenon. You can trust in yourself. In that case you’ll have self-trust. Self-trust is not solitary, though. By definition, self-trust is only meaningful in relation to a social environment. A solitary alpha male is pathetic. The mirror image of self-trust is the trust that others have in you. You can’t trust someone who you think is lacking integrity. As a result, you also can’t collaborate effectively with such a person. That could be a good stepping stone to put the need for integrity on the agenda within your company. Also when it comes to work relationships, a lack of trust is a definitive deal breaker for further collaboration.
  6. Integrity at the management level is characterized by the following key concepts: the right tone at the top; setting a good example; refraining from playing power games; making possible conflicts of interest open for discussion; taking the interests of all stakeholders into account. Each Supervisory Board must discuss its own integrity at least once a year. At the same time, the management must be asked what internal measures it is taking to promote integrity. If the answer is “We’ll have the compliance officer give a presentation” or “We have a code of conduct and a whistleblowing scheme”, your alarm bells should go off: the management doesn’t have much of a clue. If the Supervisory Board is satisfied with that answer, you should grab the fire extinguisher: it’s time to start making some changes in personnel. Also in this case the motto “walk the talk” applies.

This blogpost is also available in Papiamentu. Download the PDF version.

Do you have a question about corporate governance yourself? Please email it to governance@ekvandoorne.com and perhaps your question will be discussed in the next blogpost.