Books Special: Why CEOs need to focus on integrity

Ex-GE general counsel Ben Heineman talks to MT about his new book, 'High Performance with High Integrity'.

Last Updated: 31 Aug 2010

There are hundreds of books on how to squeeze better performance out of organisations, and a growing number that consider corporate responsibility demands – but not many address the rather more thorny issue of how to combine the two. After all, a CEO under huge pressure to deliver financial results might pay lip service to CSR – but they won’t necessarily want to spend money on it...

But in his new book, ‘High Performance with High Integrity’, ex-GE man Ben Heineman argues that combining these two concepts has become an essential concern – ‘the very foundation of the corporation’, as he puts it. For one thing, it reduces the ‘catastrophic risk’ of Enron-style corruption scandals. But it also has more positive benefits too, by creating trust: ‘Businesses are built on the trust they engender in all their different stakeholders’, he insists. Heineman reckons globalisation has made this issue more significant – because big companies have to behave themselves if they want to avoid a backlash.

So where should this weighty responsibility lie? According to Heineman, it has to be with the CEO – the role of the board may be the favourite topic of corporate governance specialists these days, but they just don’t have enough day-to-day involvement (he reduces their role to hiring the right CEO in the first place). About half the book is dedicated to explaining exactly how the CEO goes about creating this ‘performance with integrity’ culture – but his basic point is that actions are more important than words. The key is to get things like processes, training and compensation right (the author calls this ‘the hard blocking and tackling’ but those less familiar with American football metaphors might prefer ‘the boring nitty-gritty stuff’), while at the same time giving employees a chance to voice their concerns.

As GE’s Senior VP-General Counsel from 1987 to 2005, Heineman saw star CEOs Jack Welch and Jeffrey Immelt both try to operate a similar system (apparently: ‘Jack was always very supportive; Jeff probably owns it more, but that’s more because the world has changed so much’). But he doesn’t hold out GE as a paragon of virtue – and he recognises that most CEOs will struggle to balance the long-term benefits of this approach with the short-term financial demands of shareholders. Still, as Jack himself apparently used to say: ‘It’s not about the short term or long term, it’s about both.’

We can’t help feeling that many of the recent offerings on CSR (or ‘corporate citizenship’, as Heineman prefers to call it) don’t focus enough on this performance element; after all, the most impressive CSR policy in the world is not much use if you’re not making enough money. So even though it’s a bit hard to imagine ‘Neutron Jack’ Welch being quite as progressive as Heineman makes out, it's a compelling thesis...

'High Performance with High Integrity', part of the 'Memo to the CEO' series, is published by Harvard Business Press.

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