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Leadership and integrity: how to ensure it exists in your organization.

Throughout my career in Human Resources, I have had managers ask how, if they found themselves in a difficult situation, could they be sure to say the correct thing? When in doubt think about these two things: "treat people the way you would like to be treated" and "if you don't want to read it or see it in the news, don't say it!"

It's simplistic, yes, but advice that the VP HR at Enron could have been doling out. In the absence of strategic leadership and clearly reinforced corporate culture or values, these are two basic considerations for managers running an organization today.

There is a steady rise in the awareness of employees, shareholders, and the general public of serious lapses in good governance and corporate ethics. One needs look no further than the newspapers to read about the misfortunes of large, high profile corporations, quasi-governmental agencies, and nonprofit organizations. In just the last two years, we have been inundated with the likes of Enron, Hollinger, WorldCom, Boeing, Freddy Mac, and even the American Red Cross. Most recently, Nortel, a company Canadians were proud to 'call their own', is newsworthy and noteworthy.

There are now increasing demands on members of the Board of Directors in companies to take steps to 'avoid risk', to be more 'aware' of how the company is managed and to do 'risk analysis'. The current trend in measuring the quality of governance in organizations is to measure their success in applying good governance principles at the Board level. However, we must remember that members of the Board do not lead or manage an organization on a day-to-day basis and the overall general 'health' of the organization's integrity and ethics rests in the hands of the managers inside the company. Boards ask for reports. But where do those reports come from?

This is an important concept that bears repeating, The overall general 'health" of the organization's integrity and ethics rests in the hands of the managers inside the company--every day. I know the companies we've been reading about had policies--that's standard practice, a must! But simply having a policy won't instill integrity or consistently ethical behaviour in an organization today.

What consistent thread has been missing in the news reports we read on these companies? The fundamental issue is the lack of demonstrated ethics and Leadership Integrity. These have become lost treasures where they are not consistently and deliberately reinforced by example and through systems and programs. Strategic Human Resources management will build programs and processes that continually reinforce and reward integrity throughout the organization.

Effective Leadership

One thing effective leaders have in common is a strong set of core values and among the top values you will find ethics and integrity. Strong leaders use their core values as a set of guiding principles of a moral compass. If they work for someone else, they understand the need to ensure that the corporations' and their core values are in sync. If they are starting a new company of working in a start up, they know they must establish and communicate these values. These values will be the centre of the corporate culture and if used properly will reduce risk and increase productivity and profitability.

But in the face of the constant news of unethical behaviours in companies around the world, one might well ask, "Where have all the strong leaders gone?". Companies need to, and should, focus on sales and profit, but if those are the only considerations the organization can become sociopathic in its focus--to the exclusion of doing what's right for the company and employees.

Even good leaders can succumb to the profit driven sociopathic culture. Overcome by exceptions to policies and ill-defined compensation plans, they begin to believe that success is profit, no matter how attained. We've seen it happen. Yet sustainability cannot be achieved through profitability alone and great leaders know this. Great leaders work to build a culture that requires ethics and integrity in all actions; and if they are unable to do this, they leave.

Human Resources as an Integrated Business System

While some companies utilize their Human Resources staff to the fullest, others have failed to realize that HR can impact the bottom line positively. Worse still, they miss the mark by not looking for strategically minded HR staff to use as a key resource in the battle to reinforce integrity and ethical behaviours throughout the organization.

If the Human Resources role is expected to be a business support system in the same way as Finance or IT, it can be a powerful tool. Figure 1.1 shows the internal and external influences that HR staff deals with on a daily basis. However, the reason for including this graph is is to depict HR as a business system whose processes, policies and programs are built around the corporate value system. Some examples of how this works follow.

Recruiting & Selection

Looking for individuals who not only subscribe to the corporation's values but who also have integrity and are ethical is critical. If you hire for these behaviours your life becomes simpler right off the bat. I often hear people say "but how do I know if these people are a good fit until I work with them?"

Behavioural interviewing is the best approach to finding people that fit an organization culture of any I have used in my career. Anyone participating in the interview process in an organization should be trained in this process. Instead of looking only at technical skills, interview teams can ask well-designed questions that will gather information in these areas. You need to seek information on both technical and behavioural skills and experience in order to find well-rounded individuals. By doing this, you will select individuals with high levels of integrity and proven ethical behaviour. This is the first step to reducing risk.

Performance Management

Once you have people in place you need to reinforce behaviours by measuring them. Incorporating the values into the performance management system will do that. It also becomes a communication vehicle and an opportunity to send the message continually. It would be perfect to start a company using this process. If the company is already an entity, the performance management system can communicate the values to existing staff and identify those whose values are not in sync with the company's. The reality is that these people may have to leave.

Compensation & Rewards

If people do well in their performance assessment on their technical competence--we give them a raise. Measure their contribution on values and behaviour as well and have that impact the amount of their increase and you will get their attention. What if, for example, you have a great sales person who exceeds plan every year but leaves dead bodies in his or her wake internally because they treat team members badly? Identify this in a performance review and hopefully the individual will improve. If there is no improvement you have documentation that is the beginning of a termination process. Terminate a star sales person?! I know this sounds like lunacy but consider the impact that person has on productivity not to mention the cost to hire and train new staff.

Build a feedback survey process into the performance assessment to ensure decisions regarding pay are made with a broad view of the individual's performance.

Design incentive plans that build checks and balances into the calculations and reward only for the right business. Definitions should include words regarding the kind of business and be specific about how it is gained in keeping with corporate values.

Career & Succession Planning

A bad hire costs money to terminate or replace but the damage that person can do in terms of how employees view the company is phenomenal. Promoting a bad hire compounds the issue and sends a clear message to employees. It is critical to continually assess the behaviours of your high potentials. Leadership surveys, regarding values and 'walking the talk' should be conducted annually. Participants need to be selected by the company (360 degrees) and the individuals may add others to afford those making career and succession decisions a clear perspective.

Employee Communication

This is by far the most critical aspect to utilizing an HR Business support system to it's fullest.

Communicate, communicate, communicate!! Never miss an opportunity to talk about expectations, good work contributing to goal attainment, behaviours that support the corporate culture, and employees that set good examples.

Great Leaders take every opportunity to reinforce the right stuff!

Gay Miller is the Founder of the Partner-Firm, an independent consultancy specializing in Human Resources Planning & Pro/col work, Leadership Development and Communication Assurance Programs.

Gay is Co-Founder of Pental Consulting. Pental provides integrity and Governance assessment tools.

She is also a Co-Founder of HR-Fusion, an organization that markets one stop-shopping for every type of HR support required by small to mid-sized companies. Often these companies have no HR on staff or need to augment current resource levels.

The PartnerFirm - 905-521-5560, web: www.thepartnerfirm.com

Gay Miller The PartnerFirm
COPYRIGHT 2004 Canadian Institute of Management
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Author:Miller, Gay
Publication:Canadian Manager
Date:Dec 22, 2004
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