the final word
High Performance with High Integrity:
The Foundation of Global Capitalism
Bad and unethical business decision
making is the primary cause of the finan-
cial meltdown and, in turn, the global
recession. The failure to fuse high per-
formance 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 manage-
ment.
High integrity means robust adher-
ence 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, trust-
worthiness and reliability.
There are two reasons “why” high
performance and high integrity are
foundational corporate goals. First, their
fusion allows organizations to avoid cata-
strophic 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, em-
ployees, 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.
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-with-integrity
culture, which entails shared principles
(values, policies and attitudes) and
shared practices (norms, systems and
processes). Although this culture must
078 ETHISPHERE // Q4 / 2008
// BY Ben W. Heineman, Jr.
include some elements of deterrence knowledge and commitment
against ethical and legal wrongdoing, through stimulating, systematic
at the end of the day, it must be affirma- education and training;
tive. An underlying tenet of this culture >> Giving employees voice through
should be that people want to do the ombuds systems that treat
right thing because leaders make this a concerns professionally, fairly
real company imperative. Clear expecta- and promptly and prohibit
tions must be set for all employees that retaliation;
this culture applies in every nation and >> Recognizing that the top staff
cannot be bent by corrupt local practices, leaders—the CFO, General
regardless of short-term business costs. Counsel and HR leader—must
Companies like BP, which had cata- be not only partners to the
strophic plant safety issues, and Sie- business leadership, but
mens, which has been enduring a tower- ultimately guardians of the
ing bribery scandal, have faced major corporation; and
these major problems because they failed >> Designing compensation systems
to have such a strong global culture. so that top business leadership is
Based on my nearly 20 years of expe- paid not just for performance, but
rience in one of the world’s most complex also for performance with integrity.
companies, I believe that implementa- Without robust implementation of
tion of eight core principles and associ- these principles and associated practices,
ated practices are “how” CEOs and top “tone at the top” rhetoric from the board
management fuse high performance with and business leadership will be just so
high integrity: much eyewash.
>> Upholding committed and Increased regulation is an inevitable
consistent business leadership result of the poor and unethical business
that makes performance with decision making that has been a signifi-
integrity the foundation of the cant catalyst of the current economic cri-
corporation and does not hand sis. Yet, the future of healthy, sustainable
this responsibility off to staff capitalism still hinges on corporations’
leaders; ability to govern themselves properly.
>> Managing performance with This means balancing wealth creation
integrity as a business process and risk management, having compen-
by building the integrity infra sation systems that reward balanced
structure (risk assessment and growth rather than kowtowing to greed,
risk abatement to prevent, detect respecting customers and investors
and respond) into all business by embodying fairness and providing
operations, from sales and transparency---- and, most importantly,
marketing to engineering, by fusing high performance with high
manufacturing, finance, IT integrity.
and sourcing; This fusion is not the initiative of the
>> Adopting global ethical standards month. Now, more than ever, it is the
beyond what the law requires foundation of capitalism.
(e.g., no bribery in either public
Ben W. Heineman, Jr. is GE’s former Senior Vice
or private sectors anywhere);
President for Law and Public Affairs. He is currently
>> Using early warning systems to distinguished senior fellow at Harvard Law School’s
stay ahead of global trends and Program on the Legal Profession and senior fellow
expectations on formal rules, at the Belfer Center for Science and International
Affairs at Harvard’s Kennedy School of Government.
ethical standards and His most recent book is “High Performance with
country risk; High Integrity” (Harvard Business Press 2008).
>> Fostering employee awareness,
www.ethisphere.com