A View from the US: High Performance with High Integrity?

Bad and unethical business decision making is the primary cause of the financial
meltdown and, in turn, the global recession believes Ben W. Heineman, Jr. of Harvard
Law School's Program on the Legal Profession and past General Counsel at GE Global.

The failure to fuse high performance with
high integrity '” to achieve the
foundational goals of the modern
corporation '” has eroded trust in the
free enterprise system and created a crisis in
global capitalism.

High performance means strong, sustained
economic growth; provision of superior goods
and services; creation of durable benefits for
shareholders and other stakeholders; and a
sound balance between risk taking and risk
management.

High integrity means strong adherence to
the letter and the spirit of formal rules, both
legal and financial; voluntary adoption of global
ethical standards that bind the company and its
employees; and an employee commitment to
core values of honesty, candor, fairness,
trustworthiness and reliability.

There are two reasons 'why' high
performance and high integrity are
foundational corporate goals. First, their fusion
allows organisations to avoid catastrophic risk
that injures the company and its stakeholders.
But it also confers affirmative benefits inside the
company, in the marketplace and in the broader
global society. Ultimately, performance with
integrity creates the fundamental trust among
shareholders, creditors, employees, recruits,
customers, suppliers, regulators, communities,
the media and the general public. This trust,
which is so essential to sustaining corporate
power and freedom, has been so sadly lost in
the current crisis.

p>
But the hard question is 'how' companies
can achieve this all-important combination in a
complex, fast-moving global enterprise. The
fundamental task of the CEO is to create a
strong, uniform and global performance-withintegrity
culture, which entails shared principles
(values, policies and attitudes) and shared
practices (norms, systems and processes).

Although this culture must include some
elements of deterrence against ethical and legal
wrongdoing, at the end of the day, it must be
affirmative. An underlying tenet of this culture
should be that people want to do the right thing
because leaders make this a real company
imperative. Clear expectations must be set for all
employees that this culture applies in every
nation and cannot be bent by corrupt local
practices, regardless of short-term business costs.

Companies like BP, which had catastrophic
plant safety issues, and Siemens, which has
been enduring a towering bribery scandal, have
faced major problems because they failed to
have such a strong global culture.

Based on my nearly 20 years of experience in
one of the world's most complex companies, I
believe that implementation of eight core
principles and associated practices are 'how'
CEOs and top management fuse high
performance with high integrity:

• Upholding committed and consistent
business leadership that makes
performance with integrity the foundation
of the corporation and does not hand this
responsibility off to staff leaders;

• Managing performance with integrity as a
business process by building the integrity
infrastructure (risk assessment and risk
abatement to prevent, detect and respond)
into all business operations, from sales and
marketing to engineering, manufacturing,
finance, IT and sourcing;

• Adopting global ethical standards beyond
what the law requires (e.g., no bribery in
either public or private sectors anywhere);

• Using early warning systems to stay ahead
of global trends and expectations on formal
rules, ethical standards and country risk;

• Fostering employee awareness, knowledge
and commitment through stimulating,
systematic education and training;

• Giving employees voice through ombuds
systems that treat concerns professionally,
fairly and promptly and prohibit retaliation;

• Recognising that the top staff leaders'”the
CFO, General Counsel and HR leader'”
must be not only partners to the business
leadership, but ultimately guardians of the
corporation; and

• Designing compensation systems so that
top business leadership is paid not just for
performance, but also for performance with
integrity.

Increased regulation is an inevitable result
of the poor and unethical business decision
making that has been a significant catalyst of
the current economic crisis.

Yet, the future of healthy, sustainable
capitalism still hinges on corporations ability
to govern themselves properly. This means
balancing wealth creation and risk
management, having compensation systems
that reward balanced growth rather than
kowtowing to greed, respecting customers and
investors by embodying fairness and
providing transparency '”and, most
importantly, by fusing high performance with
high integrity.

This fusion is not simply the fashion of the
month. Now, more than ever, it is the
foundation of capitalism.