Integrity Is Free
In 1979, Philip Crosby wrote Quality Is Free: The Art of Making Quality Certain, a bestseller that outlined the counterintuitive economics
fueling the quality revolution in the U.S. and Japan. His logic was
straightforward: It is always cheaper to do things right the first time than to
go back and do them again. Crosby showed that investments in prevention more
than paid for themselves by reducing the costs of poor quality—inspection,
measurement, rework, repairs, or lost customers—that could run as much as 30
percent of total expenses. Those downstream benefits weren’t always easy to
track, but they were invaluable. In that sense, he wrote, “Quality is free.
It’s not a gift, but it is free.”
Quality methods are usually applied
in manufacturing or repeatable services, but if we relegate these lessons to
the factory floor we may miss their broader implications for leadership. For
Crosby and his contemporaries, W. Edwards Deming
and Joseph Juran,
quality was a question of integrity. When there were problems with quality,
they usually arose because senior leadership had not been clear about what they
were committing to deliver (by setting requirements) or acted in ways that did
not align with those commitments in practice (through consistent budgets,
rewards, recognition, and so on). And when companies transformed, it was
because senior leaders became convinced that defects were not inevitable and
that accepting the status quo was costing too much.
Integrity—or lack thereof—remains a
critical challenge for companies today. Whether it involves promising a client
that our software will work in their setting, adhering to investment guidelines
with people’s retirement savings, or performing the correct medical procedure,
we owe it to our customers, employees, shareholders, and the world at large to
be responsible about what we commit to and what we deliver. But integrity isn’t
easy: It stretches the imagination to envision a world in which businesses
deliver on 99.99966 percent of their commitments, as factories do with Six
Sigma quality methods. Every day, every leader faces opportunities or even
pressure to side step the truth, fudge the numbers, play politics, or pass the
buck on hard decisions. In the moment, doing the right thing, or doing things
right, always seems to cost more.
In the moment, doing the right
thing, or doing things right, always seems to cost more.
As a result, it is easy to view
compromise as inevitable, and become accustomed to “commitment drift.” But although there are very real personal and professional
costs involved in telling the truth, keeping a promise, and living our
values—consider, for example, what it means to be a whistleblower—there are
also great benefits. Acting with integrity prevents the unintended “costs of compromise,”
such as damaged reputation, stress, and added complexity, which are detrimental
to companies but often hidden from view. Honesty and transparency make things
simpler. When you have the courage to own your values and make clear
commitments and keep them, employees, partners, suppliers, and customers are
more likely to commit and engage, as well. And when yes means yes, and no means
no, people can make decisions because the facts are out in the open and they
know you are serious. In relationships, courage of conviction prompts you to
have the crucial conversations needed for alignment and engagement, rather than
letting issues fester.
Researchers are now able to show that
companies with high integrity cultures reap financial benefits. In The
Integrity Dividend: Leading by the Power of Your Word, Cornell University professor Tony Simons outlines a 2000
study of 76 franchise hotels that revealed a 3 percent difference between two
hotels’ average employee “behavioral integrity ratings” translated into a
difference of US$250k in profit per hotel per year. More recently, when
University of Chicago professor Luigi Zingales and his colleagues analyzed employee survey data from 1,000 U.S.
companies, they found that those with a
culture of keeping their word were significantly more profitable.
Perhaps the most important, but also most concealed, benefit
is that integrity forces individuals and companies to invent. When we commit to
confronting reality head-on, we close the door to managing impressions. Rather
than looking like we are achieving results, we are left with no choice but to
really achieve them. I spoke with one leader who had been on a team tasked with
developing a “zero-to-landfill” printer—just the sort of green initiative that
often falls short of the goal. Week after week, the project team met and
checked off their status reports on various tasks, but never tackled the
difficult challenges: the toxic chemicals and outdated production processes
that made zero-to-landfill a moonshot goal. One day, a team member stood up and
said, “I think zero-to-landfill is a good goal. How about we make it real?”
That was when they began the work in earnest—and ultimately delivered.
Waffling on integrity almost always
involves some element of avoidance. The problem is that too much of our
attention goes to managing appearances and putting out fires, and too little to
the actual work. Conversely, when you make a clear commitment to integrity, you
face your mistakes and your limits, and you step up to the sorts of honest challenges
that galvanize employees and senior leaders alike. Yes, this will mean making
sacrifices. Initially, the results are likely to look worse, simply because you
are telling more of the truth. Yet, as in the quality movement, the single
biggest barrier to improvement may be overcoming assumptions about what is
possible. Over time, you will propel your results to a level where others ask
how you can afford to do it. And your answer? “Actually, contrary to popular
belief, we have found that integrity is free.”
Elizabeth Doty
http://www.strategy-business.com/blog/Integrity-is-Free?gko=d30
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