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Insights

Integrity Is Imperative for High-Performing Teams

Tuesday, May 28, 2013
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“I look for three things in hiring people.
The first is personal integrity,
he second is intelligence,
and the third is high energy level.
But if you don’t have the first,
the other two will kill you.”

-Warren Buffet, CEO of Berkshire Hathaway

When most people think about the critical ingredients of high-performing teams, they list things like execution, clarity, alignment, and communication. Integrity doesn’t even make the list. Big mistake.

In our research for Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations, we interviewed leaders in 61 organizations in 11 countries and unpacked some important insights about integrity. Ethical behavior matters. Not just a little. A lot. Building a high-performance team demands what we call the “ethics imperative.”

Ethical means acting according to accepted principles of right and wrong—acting with integrity. It means paying attention to how the results are achieved.

We know you confront ethical challenges and dilemmas in your work. All leaders do. Yet research has shown that people overrate their own ethical fortitude and are surprisingly good at rationalizing unethical behavior.

Some people oversimplify ethics as merely upholding the law. Though they overlap, there is an important difference between ethics and law. Some laws are fuzzy and leave room for interpretation about what is right. Other laws—as we’ve seen in rare but important cases in our history—are unethical and warrant civil disobedience.

Most ethical failures occur because there is pain or discomfort involved with ethical behavior. People feel fear or pressure, and they rationalize unethical decisions to avoid hurting others. Ethical behavior is tested most under duress.

Often, the ethical path is the harder one, relying on courage to face adversity and pressure. However, even courage is not enough. Sometimes, ethical dilemmas arise that require not only character but judgment, and our judgment can be flawed or impaired.

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Recognizing that we all have blind spots and make mistakes, smart leaders solicit input from team members and trusted confidants when confronting ethical dilemmas.

It helps to apply some simple standards such as:

  • “Would this violate any of my core beliefs?”
  •  “How would I feel if this were on the front page of the newspaper?”
  • “What would my family think about this?”

Leaders should also analyze the situation from the perspective of all the relevant stakeholders and brainstorm alternative responses—holding out for a good solution.
In addition, leaders should create systems and processes for instilling ethics into the enterprise, from screening for character in the recruitment process to recognizing and rewarding people for upholding the organization’s shared values to reporting abuses and maintaining transparency.

In his book, The Speed of Trust, Stephen M. R. Covey made a convincing case that teams with a high degree of trust not only perform better but also faster in the end. He said that trust is built upon integrity, intent, capabilities, and results—what he calls the “cores of credibility.”

Echoing Covey, a growing body of evidence—from Ethisphere Institute, Corpedia, CEB, and Trust Across America—suggests a possible link between ethics and excellent results. According to the Ethisphere Institute, for example, firms on its “World’s Most Ethical Companies” list have outperformed the S&P 500 since 2007 in terms of shareholder returns.

This correlation makes sense because many stakeholders reward organizations for ethical behavior, fair treatment, and responsible practices. Consider the impact of ethical behavior on brand equity, customer loyalty, employee engagement and retention, contracting terms with key partners, and even lower regulatory costs or avoidance of legal fines.

In the end, though, leaders should not need return-on-investment calculations to insist upon ethical practices. Ethical practices have inherent value and should be non-negotiable. 

Core concept: Integrity is imperative for high-performance teams.

Practical Applications

  1. Does your organization do only the bare minimum of legal compliance?
  2. Is ethical behavior a top priority—and non-negotiable commitment—on your team?
  3. Do your team members trust one another?
  4. Do you have processes and systems for instilling ethical behavior such as recruiting screens, reward and punishment systems, and confidential reporting channels?
  5. Do you discuss ethical dilemmas with your colleagues?
About the Author
Bob has served as CEO of New York Stock Exchange companies during his thirty-year business career. As the former CEO, Bob guided Sensormatic (a $1 billion security company) and Recognition Equipment (a $250 million high-tech company) through successful turnarounds. Bob is co-author of Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (McGraw-Hill), a 2013 International Book Awards winner. Bob has served as Group Vice President and Division President of two major divisions of Pitney Bowes and Vice President, General Manager of two divisions of Avery International. Bob has led businesses and teams that have won numerous local, state, and national awards, including a state-level Malcolm Baldrige Quality Prize and the Shingo Prize for Manufacturing Excellence (shortly after Bob left). Bob is co-author of Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (McGraw-Hill), a 2012 USA Best Book Awards finalist. His writing has been featured in or reviewed by Fast Company, American Management Association, Center for Creative Leadership, Leader to Leader, Leadership Excellence, CNBC Bullish on Books, Investor’s Business Daily, and more. Bob has taught leadership at the University of Denver and Colorado Mountain College and is Chairman Emeritus of the Vail Leadership Institute. Bob has served on the boards of and consults with numerous businesses and community organizations. He is a Baker Scholar graduate of the Harvard Business School, a magna cum laude graduate of Princeton University, and served as an officer in the U.S. Army.
About the Author
Gregg Vanourek teaches at the Stockholm School of Entrepreneurship and the Royal Institute of Technology. Previously, he taught at the Euromed School of Management, University of Denver, and Colorado Mountain College. Vanourek is founder of Far Horizon, a training enterprise that connects the realms of leadership, entrepreneurship, and personal development. Before that, he co-founded New Mountain Ventures (an entrepreneurial leadership development company) and served as Senior Vice President of School Development for K12 (an online education company) during its startup years. While at K12, his team launched a number of innovative virtual schools all over the U.S., helping the company become the market leader in the space. Previously, Vanourek helped to launch and served as Vice President for Programs at the Thomas B. Fordham Foundation (an influential education reform foundation) and research fellow at the Hudson Institute (a think tank). Vanourek is coauthor of three influential books: Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (published by McGraw-Hill and a 2012 USA Best Book Awards finalist), Life Entrepreneurs: Ordinary People Creating Extraordinary Lives (Jossey-Bass), and Charter Schools in Action: Renewing Public Education (Princeton University Press). He has written several book chapters and reports, as well as numerous articles for leading journals and media outlets, including Harvard Business Review blogs and Washington Times columns. His writing has been featured in or reviewed by Fast Company, BusinessWeek, U.S. News & World Report, New York Times, Leader to Leader, Publishers Weekly, Entrepreneur, American Management Association, Center for Creative Leadership, and more. Gregg is a featured speaker and trainer on the topics of leadership, entrepreneurship, and personal development. He is a graduate of the Yale School of Management (M.B.A.), London School of Economics and Political Science (M.Sc.), and Claremont McKenna College (B.A.). He serves on the board of the Vail Leadership Institute.
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