an icmr-iipm think tank publication - Cycbth.org

POSTSCRIPT
THE FORTUNE BENEATH INTEGRITY
Leadership is often defined by amalgamation
of a few much-touted clichés that are in
reality nothing but paraphrased thoughts of
great management thinkers. Among all the
attributes a CEO needs to possess, one attribute that
slips between the cup and lips is ‘integrity.’ As told
in Mahabhrata, no leadership is complete without
integrity. This can be corroborated with the very
nomenclature of the word integrity which is derived
from Latin word 'integer' that means (in arithmetic)
complete. Integrity revolves around two skills sets:
high ethics and high professionalism/competence.
Events like Enron, WorldCom, IMF are living (or
shall I say dead) illustration of how lack of integrity
can bring benchmark companies to ruins. In spite
of having traces of integrity, different CEOs actions reap different
results. Superimposing the attributes of integrity on the BCG matrix
would allow a better understanding and wide categorisation of CEOs,
and the rest would automatically fall into place.
The Star CEO (high on ethical integrity and high on professional
integrity): This is the type of CEO who form legacy and is seen as
leader not only by the employees but the corporate world at large.
Steve Job’s deep rooted commitment to innovation that produced
outstanding robust products, always excelled in consumer’s mind
space. His integrity was impeccable too. He always valued
shareholders’ interest, but never took any steps for short cuts or
short term actions to maximise their value.
Narayan Murthy, whose competence in a
nutshell includes founding Infosys in 1981 with
$250, and through the journey of waves of
success, today commands over $6 billion in
revenue. Another exemplar of the winning
combination of performance and ethics is
Ratan Tata of Tata Group. In 1991, when Ratan
took over as the head of the group, its turnover
was Rs.14,000crores – and today its more than 9 times with Rs.129,994
crores! Talking about integrity, no one can beat Johnson & Johnson’s
Tylenol episode in 1982. After death of 7 people consuming tainted
Tylenol, what Johnson & Johnson did was nothing short of an
incredible effort of damage control. Warnings were distributed to
the hospitals, production was stalled, advertisements were all over
the place, and 31 million bottles were pulled back from the market.
It turned out to be an outstanding piece of promotion that touched
people’s heart because of its integrity and competence.
The Cash Cow CEO (low on ethical integrity and high on
professional integrity): These CEOs are the riskiest CEOs. They are
those who have ability to take companies to zenith but can’t be
trusted. These CEOs often indulges in scams, scandals and affairs
and either ruin the companies financially or dents the company’s
image. The impacts of these damages can range from mere jerk to
complete devastation. For instance, HP’s CEO Mark Hurd pulled off
an incredible feat by forcing a workaround of disjointed HP to five
Personal Integrity (ethics)
High
Low
count your chickens before they hatch 42 april 2012
consecutive years of revenue and capital gains
with stocks soaring 130%! However, his personal
conducts were a botch in the company’s
reputation. He was alleged of sexual harassment
to former television actress Jodie Fisher! The
indictment of his unethical business conduct was
certainly inimical. Another CEO, Kenneth Lay of
Enron, who kicked in with a compensation of
$42.4 million in 1999, was one of the most
successful CEOs in the US, but his career has been
clouded by the blotch of Enron scandal! In spite
of having best policies and corporate structure,
it was the lack of personal integrity of the
individual (Kenneth Lay) that made Enron an
infamous history.
The Question Mark CEO (high on ethical integrity and low
on professional integrity): A very rare breed of CEOs. They do
take wrong decisions but never would damage the image of the
company. These CEOs should be given more leadership role and
less decision-making role. Question marks must be analysed in
order to decide whether they are worth the investment and
position. Robert Nardelli, the CEO of The Home Depot and later
on in the same capacity at Chrysler, belongs to this category.
CNBC has named him as the "Worst American CEOs of All Time".
At Home Depot, his policies nosedived completely. In 2006, he
was the only director to attend annual general meeting, and
more astoundingly he would allow the
SRAY AGARWAL
Consulting Editor
Question Marks
Ethical but non
competence
Dogs
Non competence
and non ethical
Stars
Competence
and ethical
Cash Cows
Non ethical but
competence
Low
High
Professional Integrity (competency)
shareholders to speak for just one minute
each! He was finally ousted from the
company on January 2007. He was later
hired for a panacea in Chrysler’s dwindling
fortune, which he could not deliver. And
finally, on April 30, 2009 Chrysler filed
bankruptcy and Nardelli was sacked again!
The Dog CEO (low on both): Fire them ASAP.
John Browne, the CEO of BP, failed in all spheres! Browne was
touched on the raw as more and more disasters started to line up.
A major blast in the BP refinery in Texas, and the infamous oil spill
in Alaska’s Prudhoe Bay. That’s Browne’s professional incompetence.
Simultaneously, his personal promiscuity was exposed too by a UK
daily, The Mail.
In the words of Peter Drucker, “integrity means adhering to
a code of ethics and doing the right thing by sticking to that
code.” It’s clear then, that CEOs are a mixed bag, even though
majority of them are not up to the mark in terms of competence
and integrity. A survey by the Corporate Executive Board,
Virginia revealed that, “having high-integrity cultures are 67
percent less likely to observe significant instances of misconduct.”
Integrity no doubt is the most sought-after attribute a CEO must
posses, but then what's more important is the combinations of
subsets that form that very skill-set. A wrong concoction can be
really poisonous.