What do a small chocolate maker, a global tire manufacturer, a natural-foods company and an insurance company have in common? They all believe that acting with integrity is helping their businesses perform better.
The recession was caused by a culture of capitalism that was characterized by an all-consuming pursuit of profit that put integrity on the back burner and made irresponsible business practices acceptable. As the recession eases, our expectations of corporations have changed radically. Today, we expect corporations to have a social purpose, and we need new ways to assess performance that are not just in black or red.
How should we account for the feelings that employees have toward their employers? What are the best ways to measure the bottom-line impact of a partnership with a community organization? What is the value of authenticity and transparency? What is doing the right thing really worth?
While there are no easy answers to these questions, integrity has become a common denominator to many of the intangible assets that together are adding up to a new idea about what business success looks like. And return on integrity is a new measure that will help redefine how business operates.
PricewaterhouseCoopers recently launched a global call to action for business integrity. Its framework for integrity involves: establishing integrity as a C-suite and boardroom priority; putting integrity at the core of a company's mission and making it a business, not a moral issue; establishing company codes and standards based on models recommended by leading standard-setting organizations; establishing internal controls to ensure compliance; and reinforcing standards with rewards and compensation schemes.
While making a profit is still the primary aim, making money is an objective that must be balanced with many other variables -- many of which are intangible and hard to measure. "Although often more qualitative than traditional ROI measurement, it is now widely accepted that trust, transparency and integrity are key factors for consumer choice and perception of brand value," says Greg Schneider, co-founder of Vermont-based 3BL Media, a company that disseminates news about CSR and sustainability.
A key measure of return on integrity is the extent to which a corporation's actions are consistently responsible in all areas. Corporations will only earn our trust by acting responsibly time and time again. Practicing corporate responsibility on an ad hoc basis, for the purpose of expediency, or solely because of external pressure or regulation won't produce positive return on integrity because employees and consumers are quick to recognize actions that have the veneer of responsibility but little real substance.
For the last 25 years, Kashi has been on a mission to help people live better lives by providing them with healthy natural foods. "At Kashi, we absolutely subscribe to the belief that our integrity for natural health drives both our short-term and long-term business results," says Jeff Johnson, the company's associate director of natural healthy lifestyles.
Kashi's principles have been put into practice though initiatives such as Kashitopia, an online natural-lifestyle training program that helps employees enhance their natural-living skills as well as by taking its mission on the road with the Kashi Day of Change tour, during which the company teaches people how to better enjoy natural foods and create more sustainable action in their lives.
Businesses also need to put a higher priority on understanding and addressing the social priorities of their employees and external stakeholders. What issues do these people care about? What's important to their families? What are the most pressing issues in their communities?
Askinosie Chocolate is a single- origin chocolate company located in Springfield, Mo. The company's mission is "to serve their farmers, their neighborhood, their customers and each other and to share the Askinosie Chocolate experience by leaving the world a better place than they found it." Askinosie sources all its beans directly from its farmers and has created "Chocolate University" to benefit children in Springfield.
According to Shawn Askinosie, founder and chocolate maker, "Integrity is not a strategy for us. We act the way we act as a company because it is part of who we are. We have behaved this way from day one."
The returns are clear: Employees whose companies support social issues they care about are more likely to be proud of the company's values, more likely to be loyal to their employers, and less likely to look for work elsewhere. This translates into reduced recruitment and training costs as a result of high employee turnover.
While corporations shouldn't assume the government's responsibilities, today the lines of demarcation are often blurry, and corporations with integrity often address issues such as access to education, clean water and jobs. However, the benefits of more engagement at a local level include higher productivity, a more secure license to operate and improved reputation as a result of going above and beyond compliance.
The Michelin Development economic-development program creates sustainable jobs in the communities where Michelin operates by providing low-interest loans and free access to its business expertise to start up small- and medium-size companies. "Michelin Development embodies the principles of the Performance and Responsibility Charter that all of us at Michelin use to conduct business and interact with our communities," says John Tully, president, Michelin Development Co. "Quality and integrity go into every one of our tires and transcend every facet of our business, including Michelin Development."
Finally, corporations that produce positive return on integrity also embody the DNA of who they are and what they do. The Co-operators Group is a Canadian-owned company with over $36 billion in assets that offers a wide range of insurance and investment products. The company adheres to the seven principles of co-operatives developed by the International Co-operative Alliance -- one of which involves bringing meaningful change at a community level. "Thinking in terms of return on integrity, as well as the traditional meaning of ROI, gives us a holistic view of corporate citizenship that also translates into strong financial performance," says Jayne Russell, the company's manager of public relations.
Increasingly we decide what to buy in the same way that we choose our friends. The most important question is, "Can I really trust them?" According to Jeff Johnson from Kashi, "It's no marketing secret that integrity plays a big role in how you go about forming relationships with consumers -- and that translates indirectly to financial performance."
As we recover from a global financial crisis that was caused by decades of irresponsible business practices driven by a singular focus on the bottom line, businesses need to recognize that there is a return on integrity.
|ABOUT THE AUTHOR|
Paul Klein is the founder of Toronto-based Impakt Corp.