A culture of integrity adds value to the firm. Research shows that the more employees perceive top managers as trustworthy and ethical, the better the financial performance of the firm and the more attractive the firm to potential employees.
The true measure of integrity in a firm is not comforting slogans on the home page of the company website, but how employees feel about whether top management, through its actions and behaviours, is living up to the promise. A culture of integrity exists when employees perceive top managers as trustworthy and ethical.
"The higher the measure of integrity, the better the firm performance."
For that reason, the Trust Index Employee Survey (TIES) conducted annually by the Great Place to Work Institute (GPTWI) offers an accurate measure of a company’s level of integrity. Through its 58 statements (to which respondents agree or disagree on a 1 to 5 scale), the TIES survey covers a broad range of topics, such as job satisfaction or fairness in the workplace, that capture the employee’s level of trust in management. Two statements in particular focus on integrity: “Management’s actions match its words,” and “Management is honest and ethical in its business practices.”
GPTWI, a global organization conducting surveys on workplace satisfaction in 45 countries, also compiles its Culture Audit Survey (CAS), which is submitted by a company representative and provides information about pay and benefits programs, corporate practices and any other relevant information.
With access to five years of data from TIES and CAS surveys of American companies, representing results from more than 400,000 employees, a research team measured the culture of integrity in 679 American firms, both public and private. Using a variety of sources, the team then compared the results of their integrity research to the financial performance of the firms, as measured by return on sales (ROS) and Tobin’s Q (which indicates whether a firm’s stock is over- or under-valued).
The results were unequivocal. The higher the measure of integrity, the better the firm performance. Using other sources of data, such as statistics on unionization and an annual survey that asks students which companies they hoped to work for, the research showed other positive outcomes of integrity:
How do you create a culture of integrity?
The results show a statistically significant positive impact in results for firms that measure high on culture of integrity — positive results not only in terms of profitability, but also in terms of higher productivity, better industrial relations, and higher level of attractiveness to prospective job applicants.
How do you create a culture of integrity?
1. Identify and communicate your values.
1. Identify and communicate your values. The first step is to clearly identify the firm’s core values and communicate them across the organization. Let your employees, customers and other stakeholders know which values you’ve identified as most important. Integrity should be at the top of the list.
2. Live the values. One of the simpler exercises in business is to declare or advertise a certain culture for the organization. One of the most complex is to implement that culture. Integrity and trustworthiness are often featured in company advertisements and materials, but research shows that there is little correlation between advertised and actual integrity. A PR campaign focused on integrity might be just that: a PR campaign.
2. Live the values.
Thus, once you’ve identified your values, and communicated them to the firm’s stakeholders, the next step is for top management to live those values, every hour of every day. Top management actions, policies, and behaviours must be consistently aligned with the declared values; any deviance destroys the credibility of the message.
3. Don’t fool yourself: Are the values real?
3. Don’t fool yourself: Are the values real? To determine whether you have a culture of integrity, don’t read the marketing copy. Instead, ask yourself:
The measure of a culture is not in the directions from the top but in the perceptions from the employees. They are the final arbiter on whether or not a true culture of integrity has been instilled.
Ideas for Leaders is a free-to-access site. If you enjoy our content and find it valuable, please consider subscribing to our Developing Leaders Quarterly publication, this presents academic, business and consultant perspectives on leadership issues in a beautifully produced, small volume delivered to your desk four times a year.
For the less than the price of a coffee a week you can read over 650 summaries of research that cost universities over $1 billion to produce.
Use our Ideas to:
Speak to us on how else you can leverage this content to benefit your organization. firstname.lastname@example.org