#MiPDV – Act With Integrity

Every company I’ve worked for and with has been ethical in how they sell. In some cases, the ethics were written and required formal recertification every year, in other cases it was in the employee handbook, well understood, and an everyday part of conducting business. In all cases, acting with integrity and in an ethical manner were deliberate because it is the right thing to do. 

It is always interesting – and somewhat disconcerting – when we encountered people who do not act with ethical integrity. Here are a few examples: 

The first example comes from a large sales opportunity we were working. We were nearing the finish line, and all indications were that we were going to win. Our proposal was sound, showed great benefits for the customer, and matched their needs. 

One day, the executive sponsor inside the customer let us know that the rep for our competition offered the sponsor the keys to the rep’s brand-new luxury car. The customer told us that the competing rep tossed the keys on the desk and said, “The car is yours if you place the order with me.” 

The customer declined the offer from the competing rep and chose to block that competitor from doing business with their organization. 

The second example is a bid that we won with a government. The government’s team carefully went through their bid process to ensure it met all legal and ethical requirements. After months of due diligence, they awarded us the business. 

The competitor that came in second filed a protest of the award. Ultimately, the government decided to deny the protest. 

Then the sales rep for the second-place vendor filed a lawsuit against the government claiming that the bid was awarded illegally. The ironic part was that the rep filed as a “disinterested citizen” even though they were clearly involved in the potential sale and would earn a large commission check for the sale. 

How big? During the legal proceedings, it came out that if the second-place vendor won the contract, the rep would earn a commission that could buy several cars. The rep said under oath that the commission check would not be large, even though they agreed that the government was correct about how much money the commission check would be. 

The courts ruled in favor of the government, finding that all legal and procedural steps were done properly. After the suit was settled, the competitor struggled for years to win any business with that government. 

The last example comes from a rep at a company with just 2 competitors in their home country. This rep asked to get a meeting with the sales leadership at their largest competitor to set agreed minimum pricing for their offerings and to divide the country into “our part” and “their part”. Their logic was that they didn’t want to get into price battles where the company would lose money. 

The rep didn’t seem to care that collusion was illegal in that country. 

The rep made the mistake of bragging about this illegal approach to the company’s chief legal officer, who promptly had the rep dismissed from the company.

In all of these examples, the rep “went rogue” and did not follow company policy. Yet the company had to deal with the consequences. 

What’s interesting is that it’s generally well known that unethical behavior can have severe consequences, yet some people choose not to act with integrity. The upshot: lack of integrity destroys trust and damages reputations. 

But there is a larger question: if the consequences are well known, then why do some people show a lack of integrity through their unethical behavior? 

My hypothesis is that these people were allowed to make small errors that were overlooked, and that the magnitude of these errors grew over time until they became the egregious examples, above. 

Indeed, Warren Buffett wrote about lack of integrity and unethical behavior in his 2019 shareholder letter:

Over the years, Charlie and I have seen all sorts of bad corporate behavior, both accounting and operational, induced by the desire of management to meet Wall Street expectations. What starts as an "innocent" fudge in order to not disappoint "the Street" -- say, trade-loading at quarter-end, turning a blind eye to rising insurance losses, or drawing down a "cookie-jar" reserve -- can become the first step toward full-fledged fraud.

Playing with the numbers "just this once" may well be the CEO's intent; it's seldom the end result. And if it's okay for the boss to cheat a little, it's easy for subordinates to rationalize similar behavior.

His comments have two key points: 

1. Small transgressions grow if they are not stopped.
2. When a higher-level leader acts unethically, then it sends the message that it’s OK for everyone else to also act that way. 

Neither is acceptable in a company that acts with integrity. 

As leaders, we need to constantly be on guard for perceived lack of integrity in our dealings – what we say and do is closely watched by team members. 

At the same time, we need to always watch for small transgressions that a team member may make, even if innocent or with the best of intentions. When discovered, the appropriate coaching is needed to help ensure that the error does not recur. 

Otherwise, the small mistakes can grow and have devastating consequences. 

That’s mi punto de vista #MiPDV.