domain-b.com : Is honesty the best form of business risk management?

Morality and high performance do not come together just by accident, says Steve Manallack.

Has the simple moral value of honesty gone missing among western business leaders?

Almost daily we see court cases or media coverage and consistently the businesses and their leaders involved have tried to "cover up", or disguise, some problem rather than perform the simple act of coming clean and telling the truth.

Yet there is plenty of evidence of a connection between strong moral principles and business success (one of the best books is Moral Intelligence: Enhancing Business Performance and Leadership Success, Wharton School Publishing, by Doug Lennick and Fred Kiel). Take it even further, many of my fellow PR practitioners believe that a policy of absolute honesty at all times should be at the top of corporate agendas, providing the best long term form of risk management.

Public relations might get part of the blame for the current culture that feels smart managers cover things up or wrap them in so much gloss that the public is deceived. But these people finish up catching themselves out.

PR really is a matter of choosing the right words at the right time for the right audience. As such, it is far removed from covering up. As we say in this industry, "you can't carve rotten wood" and companies with a moral vacuum at the top find this out the hard way.

Despite this reality and the healing power of truth, when business hits a tough spot too often there are teams of managers sitting around debating how we will "handle" the communication challenge - and it seems to be rare that anyone simply says "let's just tell the truth."

When a leader is consistently truthful and act in alignment with good principles and values, they typically produce high performance across sales, profits, people retention, reputation of the business and customer satisfaction. That is, good morality is good for business.

The authors of Moral Intelligence believe that good morality and high performance do not come together just by accident. They claim that successful leaders always attribute their accomplishments to a combination of their business savvy and their adherence to a moral code.

This was graphically expressed by Ed Zore, CEO of Northwestern Mutual and he is quoted in the book as saying, "Being moral – which to me means being fair, predictable, up-front and not devious – all of this has been very important in my career. Everybody knows what I stand for. People know that we will never, ever be deceitful. We won't leave a nickel on the table, but in the end our word is our bond, and this is a real advantage in business because people want to deal with us and want to deal with me."

The authors believe that intangibles such as either moral intelligence or emotional intelligence are "difficult for your competition to copy. Many corporate leaders ignore these differentiating competencies because they are soft skills that are difficult to measure. In recent years, however, an increasing number of organizations have realized the performance benefits of emotional intelligence".

They point out that moral intelligence is new to the analytical playing field, and highlight four key principles that can sustain moral intelligence:

Integrity is creating harmony between what we believe and how we act, doing what we know is right (and this definitely includes telling the truth at all times).

Responsibility is a person who is willing to take responsibility for their own actions, and the consequences – only by taking this responsibility do you stay true to core values.

Compassion is broadened to include caring about others, which then shows our respect for others. It also has a boomerang effect, because generally when a compassionate person is in trouble, we return compassion to them.

Finally, forgiveness is a key principle because without a tolerance for mistakes and acknowledgement of human imperfection, we are likely to be rigid and inflexible, thereby reducing the common good.

The authors describe the importance of moral intelligence as, "Moral intelligence directs our other forms of intelligence to do something worthwhile. Moral intelligence gives our life purpose. Without moral intelligence, we would be able to do things and experience events, but they would lack meaning."

And they promise, "the more you develop your moral intelligence, the more positive changes you will notice, not only in your work but in your personal well-being. Staying true to your moral compass will not eliminate life's inevitable conflicts.

"The evidence is clear – moral intelligence plays a big part in corporate success. Without it, your organisation risks devastating financial failure."

Wouldn't it be nice to see more corporations going for the truth as a core policy, with statements such as "our communication policy is total honesty"?

*Stephen Manallack is a communication consultant, professional speaker and trainer (www.manallack.com.au). His training programs include creating a corporate communication culture, and how managers and leaders can create engaged employees. Stephen is the author of You Can Communicate (Pearson 2002). He is a member of the committee of management of the Australia India Business Council.