Integrity vs high performance

Should you replace an effective but dishonest guy with an honest but ineffective individual?

Integrity vs high performance

Let’s say, there is a star performer in your company operating at a high efficiency level. But you find out that he has been somewhat dishonest and is making a few bucks on the side. Would you fire him immediately or continue working with him, treating his dishonesty as a “small cost” of doing business? Or would you replace him with someone very honest, but who may not be as efficient?

The real question is not what I would do: the question is, what would you do? The truth is, there are many choices; each has its own consequences, both in the short and the long term. As the owner of the business or its chief executive, you must have clarity on one thing: what does the term “honesty” mean to you? What price would you pay for your own belief? Remember, there is no judgement I am expressing here. There are Indian organizations that make no distinction between honesty and high performance; yet there are those who, for whatever reason, have flexible interpretations.

Let me share a real example. A couple of years back, I was interviewing a candidate for a CXO-level position. He came from a very well-known Indian IT company. I asked him how the issue of integrity gets handled in his organization where he acts as a custodian of governance because of the nature of his role.

“It all depends on who is involved,” he said. I asked him to expand on that statement because I found it problematic. But that is me. So, he said, it all depends. “Let us say there is an infraction, maybe fudging of expenses, bribery, sexual harassment, whatever. And the person involved is someone from the delivery organization, then of course there is zero tolerance. Zero. But if it is a sales guy, he would get a rap on his knuckles and be told to be careful in the future,” he elaborated.

This organization is large, successful by Indian standards, the founder supports many charities. But his peers have more reputational capital. Should he care? It depends on him really. Do note that for a comparable revenue base, his three peers have a lot more market cap than him. It basically means that reputation, built on a sustained view of governance, has its own return on investment. Even the retail investor has eyes and ears.

Now, going back to your question, I have a favourite problem that I pose to young leaders while explaining the idea of integrity. It goes like this: your company is negotiating a really big deal, whose fate depends on a crucial negotiation due on Monday. For your company, a huge lot depends on the outcome. It is Friday morning. You just realized that the salesperson from your side, critical to the deal, the only one with access to and knowledge of the prospect, is in violation of the articulated (not assumed) principles of integrity of your organization. What would you do? Rap on the knuckles? Show the door? Hmmm.

There are companies that would say, why burn the house to roast a pig? There are others that would say, irrespective of who is involved and what the consequence to the business, we will ask the man to leave because the jungle has eyes and ears, and at this moment, people in the company, unknown to you, are watching how flexible would the top management be? People learn what is, and what is not, the accepted organization behaviour, not through “company policy”, but company action. Only action creates social memory which is the best investment, should you value reputational capital.

But right this moment, it is the sales guy who has the key to the prospect’s door and based on what you decide, chances are 50:50. You could lose the deal because you sacked the guy.

On the other hand, to the prospective client, your action may validate the idea of honesty. There are clients who know very well that the real character of people shows up in moments of great difficulty. If you brace it, you may come across as the better governed choice. Internally, for the honest employee, it sends out validation; it may get the fence sitters in the company to get to the right side and tell the rest of them, how far you would go to protect the organization’s values.

That said, on Friday morning, it is your personal conflict, which only you can resolve. And it is this: choose the right or choose the convenient?

In your question to me, you have alluded to the idea of “cost of doing business”. Let us dwell on that for a moment.

Someone in your shoes may say, you know what, this is India. I do not want to be the only one dressed up in a nudist beach. My job is to do whatever it takes to further my business. In a scam-ridden country, this is a prevalent mindset, whether or not expressed in so many words. There is a certain bravery, usually machismo, associated with doing things that contravene the law or flout morality.

On the other hand, there are people who play it by the book, who do not worry about what is the so-called Indian reality and they build their own world view. Because they do so, they end up attracting a certain kind of customer both from the private and the government sectors. Yes, even the government sector. Because, in the government, not everyone is corrupt and all deals are not tainted. In all of this, there is another angle worth considering: the global market. If you want to do business with the world, reputation is the new currency. So, you make your choice.

Just as you do that, let me clear two myths. One, if you are honest, you needn’t be effective. Two, if you are honest, there is a special prize waiting for you.

If you choose the right over the convenient, there is a price you have to pay. Don’t assume there is a red carpet, a separate fast lane and special handling for those who are honest.

Building an organization of honest and competent individuals takes a great deal of perseverance; it can well be the longer road to success. Of course, everyone’s definition of success need not be the same.

Now the ultimate question: do you replace the effective, but dishonest guy with an honest, but ineffective individual? In truth, these are not the only two choices. It really depends on how much you are willing to stretch. You would be surprised how many honest and capable people are there all around. But there is a catch.

Do know that right this moment, they are quietly researching you on the World Wide Web on what decision you are taking on Friday morning.

Source – http://www.livemint.com/Companies/bWHtdBle2SwpgkaiDfunpI/Integrity-vs-high-performance.html

Comments
Smit Says
Wednesday November 18th 2015

Amazing……I am surprised by the wonderful insight you given as i have seen many leaders and entrepreneurs who just want to grow business by doing anything whether it is ethical or unethical. But as you, as a leader of IT industry write something like this, it just tremendous. By following ethics, you created a multi billion dollar company. Hope you will carry on your approach in true sense as always. As i am investor, i always see the management quality of the company before investing, and i found this company competent(As per my research regarding management team and available resources).

Prashanth Thimmavajjala Says
Thursday November 19th 2015

Wonderful read and it puts across several subtle yet powerful points. I was just trying to draw a parallel with using the Utilitarian principle of decision making that states to take the decision that does greatest good to largest number of people and by following ethics you are doing good to the people by sending a strong message and the firm which is by far much more greater than not following ethics for just one deal that you might win.

N.G. Krishnan Says
Thursday November 19th 2015

Thanks for the Very nice and concisely thoughts.

“If we really want to fuse high performance with high integrity we should focus more on “third dimension” of governance, how the CEO actually govern the company rather than-shareholders-company relationship and director management relationship” High Performance with High Integrity (Memo to the CEO)by Heineman.

In other words “CEOs must create a culture of integrity through exemplary leadership, transparency, incentives, and processes, not just rules and penalties”.

In my experience spanning four decades working in a high tech Public Sector company as a supply chain manager it was an invariable experience of “don’t tell how you do it but do it”! No wonder the quality of the products were shamefully abysmal, compromising the security of the nation.

Manjerekar Rao Says
Thursday November 19th 2015

Well explained sir 👍

Murali Says
Thursday November 19th 2015

IMO: To calm the smart dishonest person increase work expectations, increase monitory benefits and convoy intolerant aspects wrt organisation DNA.

Thimmaiah Says
Friday November 20th 2015

This question has indeed pricked me many times, and the dilemma has haunted me. I would also like to add that the decision taken at various levels also do matter, what if your immediate boss dis-approves your decision. And there are people who preach honesty and integrity, not because they are honest, but because they are not exposed to the situation. Will they stand to the test of time…many cases that we see or read – they DO NOT…!!

shishir dutt Says
Sunday November 22nd 2015

I think there are two things which I have to say :
a. Continue with the dishonest but efficient personnel and earn profits in the short term or near future.
b. Continue with the honest and even if it is inefficient to some extent , so what , and make your foundation stronger , let your organization roots penetrate more and more and be there with small profits in the long run . Your organization will have a reputation for your integrity .
Those who love this culture can survive within , those who do not , will either be shown the door , or else , will leave themselves as they cannot dwell in such an environment.

Dr. Arun Kumar Says
Saturday November 28th 2015

This is good debate but every one (for eg: CEO, CIO, BDM) will be cautions in making generalized statement.
Stronger the foundation, the building will sustain longer.

Which also means there should continuous guidance and nurturing needed from time to time for the building to sustain longer even if the foundation is stronger. Its not about what is right or wrong rather, how decisions taken affects economically in value creation is it all that matters.

For sales person the focus is it to meet his target, however for an investor he is bother if the organization stands by what its values – here commitment is all it matters may be honestly will be driving force.

However would say, if you are not able to decide seek help before taking the decision, put every thing on the table – right or wrong discuss with like minded or intellect team within organization then come to conclusion. This will work well for at any given time then can decide if its worth taking risk or how much he can stretch to achieve or is the deal worth a compromise. Most of time, there will little thought implied on consequences due to time constraint.
Hence discussion will make them think and give new perspective.

Sometime, discussion also brings the feeling questioning leadership skill however this opens up your mind and the way of thinking that’s learning. Only by making mistakes or taking incorrect or wrong decision will know… Then should focus on continuous improvement.. and become perfectionist like Germans.

PS: Above are my personal thoughts and views definitely do not want to influence or conclude

Wednesday December 2nd 2015

Core principles and values do not come in a days time. It takes efforts, dedication, awareness. .. Well said sir.

Darshan Says
Thursday January 7th 2016

Sir – firstly, very well articulated. Generally, i enjoy reading your write ups – so did i with this article.

Just to extend the discussion: Isn’t all of these issues caused because of extreme competitiveness among peers? Imagine an organisation where, sales person or a delivery team member is not tagged with sales targets or margins (after expenses). This could sound a bit ridiculous for a services organisation’s philosophy. Let me expand my thoughts with a real example:

We have Bata showrooms in India as well as in other countries (say Switzerland). From a Swiss outlet, If i purchase a product and want to return, i can do it without any fuss – no explanation required. Now imagine if i want to do the same in an Indian Bata outlet. Firstly, they will say they do not have a return policy. If you fight for your rights, may be with repeated visits to the same outlet cribbing about ‘A’ problem in the product, they will eventually take the product back. The outcomes could be anything out of the below ’No return policy’, ‘only exchange’, ‘return with a gift voucher but no cash’, ‘we will repair and fix the problem’. Are you getting my point?

While the customer should have all the rights to return a product if he wishes to, then why is a return possible only with repeated visits to the same outlet cribbing about ‘A’ problem in the product – i feel it is because the customer facing person is being put a target to sell the products – increase the business. A return means decline in sales. This whole episode results in unsatisfied customer, who will not return to the stores again – eventually resulting in loss of potential future sales.

On the other hand, in a Swiss outlet, the customer facing person is not set the targets, resulting in a smooth return process – customer returning to the stores in future – And importantly, no bad reviews about the stores/brand.

My point is, organisations in today’s set up are inducing competition at a harmful pace/form (to be in par with their competitors) which could affect harmony in working conditions resulting in people finding different ways to fulfil their set objectives. Not all employees are of same capability to perform and be measured by a standard performance appraisal model. Basically we need to find peers who can, by themselves, work out a working combination to achieve a final goal. But what is happening is, we only try to find a working combination with the benchmark that are being set on individuals. How long will this work?

Finally, How can one expect people to be creative when they are set with boundaries?

Knight Says
Monday February 29th 2016

I will start a one liner from cricket “CLASS IS PERMANENT, FORM IS TEMPORARY” and Mindtree has the CLASS to address such situations. I agree that it takes time to bring in integrity and honesty at core. We at mindtree already are preparing the strong core from Kalinga. Any individual, irrespective of his position in the company needs to adhere integrity rules of the company. Social Actions are the need of the hour, if we look around our corporate sector. What if the Sales guy comes up with a serious personal problem on presentation day, someone hast to pitch-in for him, right ? Integrity prevails over others. Strong actions from top management will always encourage people to perform better. It also makes clear that someone above is watching your actions and be careful with the deviations from processes and policies.

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