Return on-character-excerpt

Part I
ROC and the
Path toward
Leadership
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1
Character Defined
Populating the Character Curve
Whether they express their opinion or keep it to themselves,
hardly anyone is neutral on the subject of leadership char-
acter. In meetings, seminars, professional consultations, and private
conversations, the topic of character can generate strong reactions.
Some of this heat may be sparked by the lack of a widely shared defi-
nition of just what character means. And many people are uncomfort-
able talking about character at all, because they view it as something
deeply personal and largely unchangeable.
According to that common view, character is something we acquired
as we were growing up, a set of ideas and operating beliefs that just
sort of crept up on us while we weren’t looking and then calcified into
a framework that would, ever after, influence our view of the world
and our way of living in it. These ideas about character help place it,
along with politics and religion, in the category of somewhat untouch-
able subjects. What good can come, after all, from talking about a
personal quality that you don’t really understand, can’t fairly assess or
categorize without bias, and, in any event, cannot adapt or influence
in any meaningful way? Any talk of “morals” or “values” became
suspect in the last decades of the twentieth century, as a series of reli-
gious, political, and business leaders who claimed great reverence for
those ideals revealed themselves to be not even loosely bound to them.
Doug Lennick and I stumbled into that minefield when we published
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14 ROC and the Path toward Leadership
our book, Moral Intelligence, in 2005.1
In that climate, character and
the morals that shaped it had become topics best left undisturbed.
In less than a decade, however, attitudes have shifted. A 2014 Google
search on the phrase “morality and business” yields over thirty-one
million results. From business analysts to academicians, economists,
and everyday citizen investors and consumers, people worldwide are
paying increasing attention to the morals demonstrated in the character
of business, political, and religious leaders. But while today’s business
world may be much more open to a conversation about the value of
character than it was ten years ago, all of the vague and unfounded
ideas that circulate around the concept of character continue to cloud
the discussion with misunderstanding and controversy. So my KRW
research team and I prepared to enter a social minefield when we de-
cided to study the connection between leadership character and busi-
ness results—a study whose findings formed the basis for the ideas and
processes of Return on Character or ROC.
As business consultants with many years’ experience working with
CEOs and senior executives, we were convinced that character shapes
leadership decisions, tactics, and workplace behavior—all of which
play a direct role in business results. To map the connections between
all of those factors, we structured a research project aimed at bringing
crystalline clarity to our understanding of what constitutes charac-
ter, how it’s formed, the role it plays in our self-concept, and how it
shapes our interactions with the world. (See appendix A for a detailed
description of the research design.) We may have been venturing into
explosive territory, but we knew that beyond it lay the answer to the
big question: Is the strength of a leader’s character an important driver
of business success?
Our first step in that journey was to arrive at a workable definition
of the term character. That single task triggered an entire series of
questions: What is character? How do we demonstrate our character
through our actions, and—most particularly—how does leadership
character make itself felt in the workplace? Further, just what role
does character play in the CEO “value equation”? These are just some
of the questions we’ll be answering in this chapter, as we begin our
discussion of ROC.
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Character Defined 15
Coming to Terms with Character
When you think of the term character, what definition comes to mind?
Many people immediately respond with answers such as “honesty” or
“truthfulness,” but human character actually encompasses much more
than those fundamental elements. It’s also much more than loyalty,
or integrity, or spiritual beliefs, fairness, or any other single value or
principle.
Of course, there are many definitions of character, but American
biologist, naturalist, and author E. O. Wilson offers one in his book,
Consilience: The Unity of Knowledge, that effectively reflects the
many facets of this complex concept (emphasis mine):
True character rises from a deeper well than religion. It is the inter-
nalization of the moral principles of a society, augmented by those
tenets personally chosen by the individual, strong enough to endure
through trials of solitude and diversity. The principles are fitted
together into what we call . . . the integrated self, wherein personal
decisions feel good and true. Character is in turn the enduring source
of virtue. It stands by itself and excites admiration in others. It is not
obedience to authority, and while it is often consistent with and rein-
forced by religious belief, it is not piety.2
Let’s look more closely at Wilson’s assertion that character is the
“internalization of the moral principles of a society.” He’s telling us
that a morally intelligent person is one who knows what behavior is
expected by his or her specific culture and context as well as by human
societies in general. Fortunately, we have some idea of what kinds of
moral principles shape nearly every culture’s expectations for social
behavior. Various cultural anthropologists have cataloged lists of
moral principles that they claim are universal for all humans, lists that
typically include some forms of expression for fairness, compassion,
and honesty. Anthropologist and author Donald Brown, for example,
has identified nearly five hundred behaviors and characteristics that all
human societies recognize and display.3
We drew from this list when
we chose the four universal moral principles of integrity, responsibility,
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forgiveness, and compassion—principles demonstrated in a wide range
of common human behaviors and attributes, including:
• Distinguishing right from wrong (Integrity)
• Language employed to misinform or mislead (Lack of integrity)
• Redress of wrongs (Responsibility)
• Self-control (Responsibility)
• Cooperation (Forgiveness)
• Mediation of conflict (Forgiveness)
• Empathy (Compassion)
• Attachment (Compassion)
• Affection—expressed and felt (Compassion)
Steven Pinker, in The Blank Slate: The Modern Denial of Human
Nature, lists all of Brown’s universals and, about them, he says, “Thus
while conflict is a human universal, so is conflict resolution. Together
with all their nasty and brutish motives, all peoples display a host of
kinder, gentler ones: a sense of morality, justice, and community, an
ability to anticipate consequences when choosing how to act, and a
love of children, spouses and friends.”4
Further evidence of these human universal moral principles comes
from a study that compared American children with those in India.5
As my coauthor and I wrote in Moral Intelligence, “The differences
in values were predictable: Indian children displayed more deference
to elders and acceptance of tradition, while American children value
personal autonomy and freedom. But their moral codes were virtually
identical. Both groups of children believed that it was wrong to lie,
cheat, or steal, and both thought that it was important to treat the sick
or unfortunate with kindness.”6
So while societies vary in how they honor and express these moral
principles—parents in one culture may have a very different way of
teaching their children about truthfulness than those in another—in
some form, these principles are embedded in the cultural norms of all
societies.
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Wilson also makes a powerful point when he says that strong char-
acter leads to the integrated self—a joining of head and heart, where
thoughts, feelings, and actions are in harmony, resulting in behavior
that demonstrates the character of an individual who walks the talk of
his or her belief system. Indeed, character has to be expressed through
behavior. Integrity, responsibility, forgiveness, and compassion don’t
live inside us. Our behavior, especially as demonstrated through our
relationships with others, is where our character comes to life. Which
means that, despite the common wisdom, character isn’t some hidden
quality that no one can really know or assess. We reveal our character
all the time through observable behaviors: in the way we treat other
people. As we mature, these character-driven behaviors become auto-
matic reflexes, the character habits that express our guiding principles
and beliefs.
Beyond the way we internalize universal moral principles, therefore,
the definition of character that informed our ROC research includes an
understanding of how we demonstrate those principles in relationship
to other people. Accordingly, we define character as an individual’s
unique combination of internalized beliefs and moral habits that
motivate and shape how that individual relates to others.
While this definition offers some solid footing for our observations
about human character, it doesn’t pave over every gap in our under-
standing. Each of us constantly makes decisions about how to inter-
act with other people, and each of those decisions has the potential
to either harm or enhance the other person’s well-being. So it would
seem logical to assume that we are moral and have strength of charac-
ter when our behavior enhances the well-being of others, and we are
immoral and have less strength of character when our behavior harms
or detracts from the well-being of others.
Of course, the real world is complex, and so is the nature of our
character. Many of the choices we make, for example, may enhance the
environment or outcomes of one person, while at the very same time
wrecking the lives of others. Finding a balance, wherein our behaviors
promote the most good for the most people, is the ongoing task of all
principled people of strong character. Adam Smith, the widely quoted
source of the “invisible hand,” which has become shorthand for the
notion that the unfettered and unregulated free market operates so that
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everyone benefits, was not an economist but a moral philosopher.7
In
fact, while The Wealth of Nations is currently widely quoted, it was
Smith’s other book, The Theory of Moral Sentiments, that was most
popular in his day. Republished in 2013, the publisher has this to say:
“Without Smith’s essential prequel, The Theory of Moral Sentiments,
the more famous The Wealth of Nations can easily be misunderstood,
twisted, or dismissed . . . Smith’s capitalism is far from a callous, insen-
sitive, greed-motivated, love-of-profits-at-any-cost approach to the mar-
ketplace, when seen in the context of his Moral Sentiments.”8
In general, since the days of Adam Smith, our society has recog-
nized that honoring universal moral principles such as integrity,
responsibility, forgiveness, and compassion leads to a higher standard
of behavior and a safer and more secure world (which, by the way, is
good for business, as the ROC research data has shown). The ROC
definition of character is woven around those principles, which became
the foundation for KRW’s work in assessing leadership character and
calculating the value it brings to business results—and to our world.
Profiling the CEO Character
With the definition of character brought into clear focus, the research
team’s next task was to use that definition to help create a means for
assessing leadership character. Step 1 involved designing a character
profile that encompassed the universal principles that supported our
definition, along with the fundamental behaviors that demonstrate
those principles.
In figure 1-1, you see the ROC Matrix, which illustrates the profile.
This matrix includes the four universal principles of integrity, respon-
sibility, forgiveness, and compassion, each accompanied by a list of the
behaviors that express them.
Because the habitual demonstration of these universal principles
supports and promotes all other behaviors and habits that express
human character, we refer to these four universal principles as Key-
stone Character Habits. As the matrix indicates, the habits of integrity
and responsibility are dominated by our intellect (our “head”); the
other two, forgiveness and compassion, are most often expressions
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of our emotions, or the “heart.” (We talk more about this “head and
heart” connection in chapter 3.)
The behaviors associated with each Keystone Character Habit rep-
resent a person’s default response or reflex behavior when dealing with
other people. Together, the habits and their behaviors contained in the
ROC Matrix form a strong framework for a principled approach to
leadership. As such, they also form the basis of the ROC survey we
created to assess leadership character.
Plotting the Character Curve
The KRW research team created a survey of sixty-four questions tar-
geted at revealing how CEOs demonstrated behaviors that express
the four Keystone Character Habits, along with a similar survey that
explored the behavior of executive teams. (See appendix A for details
on all of the research surveys.) In the surveys, we asked randomly
chosen employees to use ratings ranging from “always” to “never” to
tell us how often their CEOs and executive teams demonstrated such
character-defining behaviors as telling the truth, owning up to their
own mistakes and failures, allowing others to make and recover from
INTEGRITY
HE D
Telling the truth
Acting consistently with principles,
values, and beliefs (walking the talk)
Standing up for what is right
Keeping promises
RESPONSIBILITY
Owning one’s personal choices
Admitting mistakes and failures
Expressing a concern for
the common good
FORGIVENESS
HE RT
Letting go of one’s mistakes
Letting go of others’ mistakes
Focusing on what’s right versus
what’s wrong
COMPASSION
Empathizing with others
Empowering others
Actively caring for others
Committing to others’
development
Figure 1-1
The rOC Matrix
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their mistakes, demonstrating concern for the goals and well-being of
others in the workforce, and following through on commitments.
Using the data from our surveys, we were able to calculate a character
score for each CEO in our study and a separate score for his or her execu-
tive team. We determined that a CEO’s character score would accurately
reflect the employee ratings for the questions covering all four Keystone
Character Habits. Then we plotted each score along a curve, which we
labeled the Character Curve, to show how the CEOs ranked as a group.
Figure 1-2 shows the complete ROC Character Curve. Each dot on
the graph represents one CEO and executive team in our study. At
the top end of the curve, you see the ten individuals we identified as
Virtuoso CEOs in our survey, as a result of the strong character habits
they demonstrate in the workplace. To be considered a Virtuoso, not
only must the CEO have ratings that would place him or her near the
top of the Character Curve, but his or her executive team ratings had
to rank equally high. One high-scoring CEO was excluded from the
study because he failed to have a high-ranking executive team.
At the other end of the curve are the CEOs whose employees gave
them the lowest character ratings. We chose to call the ten members
of this group Self-Focused CEOs, since in nearly every case their
employee responses described individuals of weak character who
were out to help themselves, no matter what the cost to others.
In both cases, we limited our selection for the two groups to the
CEOs who had given us complete financial data. All of the top-scoring
CEOs provided financial data, but some of the lowest-scoring CEOs
failed to do so. For that reason, we excluded seven of the lowest-scoring
CEOs and replaced them with the next-highest-scoring CEOs in the
Character Curve for whom we had financial data, until we arrived at
a group of ten CEOs who met the criteria for the Self-Focused group.
Putting a Face on the Virtuoso and
Self-Focused Character Categories
Each of the dots on the Character Curve, wherever they fall, represents
an individual leader and the team he or she relies on to help execute
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CEO
research
subjects
Return on
Character
score
The CEO and senior team
demonstrate these behaviors:
100
Always
Almost
always
75
Frequently
Slightly more
than half of
the time
50
About half
of the time
Virtuoso
CEOs
Self-Focused
CEOs
Figure 1-2
The rOC Character Curve
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their organization’s business plan. In our research, we focused on the
groups that made up the “highs” and “lows” of the Character Curve:
the Virtuoso and Self-Focused CEOs. But to understand what those
categories mean in terms of character, we need to take a closer look at
these groups and the people in them.
Although the term virtuoso typically describes a person who pos-
sesses outstanding technical ability at singing or playing a musical
instrument, it applies very well to the act of leadership. Not only is
leadership based on performance, but it is an art that requires disci-
plined practice as well as ability. The Virtuoso CEOs in our research
truly are masters of the art of leadership.
Of course, every member of the Virtuoso CEO group is an individ-
ual; they all differ from each other in many ways, including age, gen-
der, education, personal background, and the size and kind of business
they lead. But all of the Virtuoso CEOs identified in our research share
three common characteristics:
1. They are skilled businesspeople. All Virtuoso CEOs know
how to create a vision, maintain a strategic focus, demand per-
formance, and hold people accountable—and they create great
value for all stakeholders.
2. Their employees consider them to be individuals of strong
character. In each case, employee survey ratings ranked these
CEOs at the top of the Character Curve by indicating that
they consistently demonstrate the four Keystone Character
Habits.
3. They each have selected and lead an executive team of strong
character. No CEO was a Virtuoso if his or her executive team
failed to achieve that same rank.
The Virtuoso CEOs and senior leaders in our group are also real
people with their own, unique personal history. The group includes:
• Dale Larson, who became a CEO at age twenty-nine, when his
father died of cancer and Larson found himself charged with
the responsibility of running the family business. That was sev-
eral decades ago, when the small company had just thirty or
forty employees. Today, Larson’s business employs over fifteen
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hundred people and dominates the storm door industry in
North America with a market share of 55 percent.
• Sally Jewell, who in 2005 became CEO of REI, a consumer
cooperative and America’s largest and most successful outdoor
retailer, with over 120 retail stores across the United States.
Jewell had a successful career as a banker before joining the
REI board in 1996. In 2000, Jewell became the company’s chief
operating officer (COO). She remained on the executive team
for five years before taking on the role of CEO.
• Charles Sorenson, who began his career as a surgeon. His
employer, Intermountain Healthcare, in Utah, underwent rapid
growth, and in 1998 Sorenson advanced into a management
role. Eighteen months before I interviewed him in 2010, he was
named CEO of this large health-care delivery system. Inter-
mountain Healthcare’s growth has continued; at the time of
this writing, the company owns and operates twenty-two hospi-
tals and clinics with over thirty-three thousand employees.
As Virtuoso CEOs, Larson, Jewell, and Sorenson all represent out-
standing examples of leaders whose behavior clearly expresses their
commitment to the Keystone Character Habits. But what about the
folks at the other end of the curve?
While the Virtuoso CEOs can accurately be characterized as put-
ting the success and welfare of people ahead of their own concerns, the
Self-Focused CEOs place their own welfare and success squarely at the
top of their priorities list. Employees aren’t blind to this, and they gave
these CEOs and the executive teams they lead low ratings on the char-
acter survey. Employees of Self-Focused CEOs agree that these leaders
tell the truth “slightly more than half the time.” In other words, these
CEOs and their team members lie to their employees almost half the
time. Likewise, the Self-Focused CEOs:
• Can’t be trusted to keep promises.
• Often pass off blame to others.
• Frequently punish well-intentioned people for making mistakes.
• Are especially poor at caring for people.
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As we discovered in the course of our analysis, the Self-Focused
CEOs create far less value for all involved: a lower return on assets for
investors and less workplace satisfaction and engagement among their
workforce. They appear to be most concerned about their own success
and financial security.
Later in the book, we’ll examine the “everyone for themselves”
environment that this kind of leadership fosters, and the effect these
CEOs have on their organizations’ results. Among this group are these
leaders (with pseudonyms, for obvious reasons):
• Brian, the CEO of a public high-tech manufacturing firm with
thousands of employees.
• James, the CEO of a global nonprofit nongovernmental orga-
nization with thousands of employees operating in many coun-
tries.
• Robert, an entrepreneur in his mid-forties who headed up a pro-
fessional services firm with offices in three US cities and around
150 employees. At the time of our interview, Robert’s business
was flying high, but it has since struggled and closed at least one
of its branches.
In figure 1-3, you can see how the employee ratings of the Virtuoso
CEOs and Self-Focused CEOs compare, in terms of their demonstra-
tion of the four Keystone Character Habits. The Self-Focused group’s
low scores in compassion are particularly noteworthy. The survey data
shows very clearly that employees know where they stand with these
CEOs—as “production units,” not people.
Although in the total sample of CEOs we found a few who rated
highly on one Keystone Character Habit (integrity, for example) but
were rated low on one or more of the others, all Virtuoso CEOs received
high ratings on all four habits.
When we asked the employees of our three Virtuoso CEOs, Larson,
Jewell, and Sorenson, why they had rated their leaders so highly in
these four areas of behavior, here’s what some of them said:
Dale’s [Larson’s] integrity, his level of caring about employees
and the responsibility he feels for the success of the company
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INTEGRITYRESPONSIBILITYFORGIVENESSCOMPASSION
Return on Character score
The CEO and senior team demonstrate these behaviors:
100
AlwaysAlmost
always
75
FrequentlySlightly more
than half of
the time
50
About half
of the time
Virtuoso CEOsSelf-Focused CEOs
70
70
70
65
87
82
91
87
Figure 1-3
employee ratings of CeOs’ character-based behaviors
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are obvious in the way he conducts himself, whether in formal
meetings or in a casual hallway conversation. For forgiveness,
Dale wants people to run their own areas and he understands
mistakes can happen. He allows this and allows people time to
correct and recover. He does not allow ongoing errors that are
detrimental to the company, which is appropriate and good.
Sally Jewell is considered extremely trustworthy and is well respected.
Having worked for several major corporations before joining REI, I
can honestly say I am thrilled to have her in charge and she is as good
as it gets in corporate management.
[Sorenson] is very caring and open with employees and I truly
believe he always wants to do the right thing for the right rea-
son. I do not work directly with him, but he is very accessible to
employees and follows through on issues and concerns. Anytime
I have met with Charles, he has treated me as a valued, equal
associate. There has never been a barrier between him and those
under him.
When we asked the same question of employees of the three Self-
Focused CEOs, Brian, James, and Robert, their responses were:
I was working on a large project which never seemed to get com-
plete support from my CEO. [Brian] would say he supports it but
his actions never seemed to match. In the end the project was can-
celed. Honesty would have been preferred.
There is a widespread feeling that executive management [referring
to James] cares more about their own advancement and the public
perception of the agency than they do about our mission. At the
same time, middle-level managers and rank-and-file care about our
work . . . despite the lack of soul at the top.
Right now our CEO [Robert] is having a personal relationship with
someone at work. They have created a little “team” that empowers
her to treat others poorly. Her success is not based on her talent,
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but on her relationship with him. It’s disappointing to see and
makes others distrust him personally and professionally.
Our research also revealed some interesting differences in the way
CEOs in both categories see themselves. We asked the CEOs to rate
themselves on the same set of survey questions we had given to their
employees.
For the most part, it appears that the Virtuosos are relatively accu-
rate in their self-awareness, with a few humbly underrating themselves.
The majority of the Self-Focused CEOs, however, rate themselves as
highly as the Virtuosos. Figure 1-4 shows, in hard numbers, how these
two ratings compare.
The CEO demonstrates these behaviors:
Character score
EMPLOYEERATINGSELF-RATING
100
AlwaysAlmost
always
75
FrequentlySlightly more
than half of
the time
50
About half
of the time
Virtuoso CEOsSelf-Focused CEOs
83
68
84
87
Figure 1-4
Comparison of CeOs’ and employees’ ratings
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All other differences aside, it is obvious that these two groups of
CEOs differ a good deal in how they behave at work. One group
is perceived by employees to be honest, accessible, and concerned
about the welfare of others. Members of the other group reveal
themselves to employees as dishonest, arrogant, and more concerned
about themselves than others. What is not so immediately obvious,
however, is why the character of the CEO and senior leadership
matters.
In a bottom-line-driven economy (which means, just about every
economy in the Western world), what role does CEO character
play in organizational success? Do we really care how forgiving or
compassionate—or even honest—our business leaders are, as long as
they continue to deliver the goods? To trace the connection between
who a CEO is and what that CEO does, and to thereby reveal the
Return on Character, our researchers had to take a closer look at just
what a CEO brings to the table.
Connecting the Links in the ROC Value Chain
Just about every business has its own value chain—a series of raw
materials or products or processes and other activities that combine
to create the overall value of the organization’s marketable product or
service. That value chain plays a big role in determining the organiza-
tion’s business results.
All CEOs have an impact on business results by virtue of sitting
in the corner office. Those CEOs—along with leaders at every level
throughout the organization—also have their own type of value chain
made up of:
• The various principles, beliefs, and experiences that shape their
character.
• The actions that express that character.
• The individual’s talent and skills in decision making, forming
and leading a strong team, establishing and maintaining a cul-
ture of accountability, strategizing, and so on.
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All of those elements combine to determine just what value any
leader brings to the organization, and business results are a key
measure of that value. The ROC Value Chain, shown in figure 1-5,
illustrates how the combined effect of senior leadership character
and skill sets impacts business results. (We’ll take a closer look at
WHAT THE LEADER DOES
WHO THE LEADER IS
HOW THE LEADER
IMPACTS RESULTS
Genetic
predispositions
Execution
ROC
Vision and
strategy
Senior team
development
Decision
making
Culture of
accountability
Life
experiences
Character habits
and principles
Figure 1-5
The rOC Value Chain
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each of these elements and the research that supports them in sub-
sequent chapters.)
The ROC Value Chain identifies the elements of a CEO’s or other
leader’s magic formula for creating value. Let’s review it step-by-step:
Genetic predispositions and life experiences. While I don’t
endorse the “great leaders are born” concept, neither do I accept
that people begin life with a blank slate. Genetic endowment
sets the stage for how we will view life and approach its chal-
lenges, but then early home life and developmental experiences
determine how we make decisions and deal with people. (We
examine what current research tells us about the genetic founda-
tions of leadership character in chapter 2, “The Human Nature
of Leadership.”)
Character habits and beliefs. All of us are guided by our sub-
conscious minds—perhaps more than we think. Character hab-
its, acquired during our early years and modified throughout
our lifetime, are a large part of our inner world, even though
they operate mostly at a subconscious level. As we saw earlier,
many moral actions that define and express our character are
the result of automatic response patterns that bypass rational
thought. These character habits often appear as our reflexive
response to a given situation—the unfiltered expression of our
beliefs. Character habits, in combination with a leader’s beliefs—
especially his or her aspirational beliefs for the organization—
directly influence the individual’s decision-making skills and
other leadership activities. For that reason, a leader’s character
habits and moral beliefs matter a lot when it comes to value
creation and business results. (In chapter 3, “The Journey from
Cradle to Corner Office,” we examine what the research has to
tell us about how life experiences shape leadership character.)
Decision-making skills. Leadership decisions are a key element
of the ROC Value Chain. No successful CEO ever reached the
corner office without learning some basic leadership and busi-
ness skills along the way, such as forming a vision for the future
of the business, maintaining a strategic focus, creating a culture
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of accountability, and creating and leading a senior team. These
skills all rest on the foundation of a leader’s decision-making
process, which results in both people decisions (who to have on
the senior team, how to grow and develop talent, and so on)
and business decisions (for example, when to make changes in
the business model or how much risk to assume). While lead-
ers make some business and people decisions intuitively rather
than through conscious thought, successful leaders follow a
disciplined decision-making process where intuition is com-
bined with reflective analysis. (Chapter 4, “ROC Leadership in
Action,” describes what the ROC data reveals about the way
character influences a leader’s abilities in disciplined decision
making and other Keystone Leadership Skills.)
Readiness to execute the business plan. The CEO and other
senior executive leaders accomplish nothing unless the organi-
zation is well structured and the workforce is engaged, focused
on the business strategy, and ready to execute the business
plan. The executive team’s character and leadership skills,
therefore, are an extension of the CEO’s influence in the ROC
Value Chain. (In chapter 5, “The Executive Team and ROC,”
we explore what research has to tell us about the role of the
executive team in more detail.)
Return on Character. The business results produced by this
equation are, in fact, the organization’s ROC. When the
links in the ROC Value Chain are operating at an optimum
level, they create great value—not only for investors, but
also for customers, employees, vendors (or others external to
the company who provide critical products or services), the
communities in which the company operates, and, finally, the
environment.
The ROC Value Chain ties together all of the elements that con-
tribute to the business results that any leader brings to the organiza-
tion. But to truly calculate and understand those returns, we need
to examine more closely the individual elements of this formula—a
process we’ll undertake in the next few chapters.
Chapter_01.indd 31 1/19/15 9:47 AM

In this chapter, we’ve walked through the framework of the ROC
calculation. We’ve established just what the term character means
and how we express our character through our behavior and rela-
tionships with others. We’ve also had our first look into the results of
the ROC research, as we examined the Character Curve created by
employee assessments of their leaders’ workplace behavior—and, as
we’ve noted, how dramatically their assessment can differ from the
self-assessment of the CEOs in question.
Before we move on to our in-depth exploration of how CEO charac-
ter shapes business results and how individuals and even organizations
can build stronger “muscle memory” in their own character, we need
to better understand how character is formed. In the next chapter,
therefore, we’ll take a brief tour of human nature and the way our
minds work to form the morals, motivations, and personality woven
throughout our character.
ROC TAKEAWAYS
Character Defined
1. Character is an individual’s unique combination of beliefs and character
habits that motivate and shape how he or she relates to others. Our
character is defined by our behavior—the way we treat other people is
our character in action.
2. Character and solid leadership skills are the basis for distinguishing the
Virtuoso CEOs from the Self-Focused CEOs in the ROC study.
3. The four Keystone Character Habits of Virtuoso leadership are integ-
rity, responsibility, forgiveness, and compassion.
4. To be considered a Virtuoso CEO in the ROC research, employees must
rank the CEO and executive team as demonstrating the Keystone
Character Habits most of the time. According to their employees, Vir-
tuosos demonstrate these habits “almost always.”
Chapter_01.indd 32 1/19/15 9:47 AM

5. Leaders identified as Self-Focused demonstrate the Keystone Character
Habits only slightly more than half the time. They score particularly
low on compassion.
6. The value a leader brings to his or her organization is determined
by the individual’s character (genetic predispositions, experiences,
and character habits) combined with his or her business skill sets
(decision making, vision, focus, accountability, executive team devel-
opment). The business results achieved through this combination rep-
resent the organization’s Return on Character.
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Chapter_01.indd 34 1/19/15 9:47 AM

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