Legacy Leadership and Integrity: Part II

Jay Newman, PhD, Founding Partner, Culture By Choice

After yesterday’s Blog post I was asked so how has integrity impacted profitability? The answer to that question is complicated. It’s easy to show how serious breaches of integrity negatively effect profits but much harder to show how the highest levels of integrity positively effect profits. I can provide three excellent examples, however, of companies that have the highest levels of integrity and have been recognized by their industries as such, and what’s happened to their profits over time.

The first company is in the food service industry and they have been highly recognized for being straight shooters and for being caring, giving, and a pleasure to work with. They are clear about what they stand for and what they will not stand for. Over the last 10 years this company has grown from approximately 50 million a year in revenues to a projected 500 million for 2020. Is that phenomenal growth a direct result of that culture? It’s hard to say with certainty but I am willing to bet that it didn’t hurt.

The second company is in the contracting business and they’ve been around for over 100 years and they too are recognized as being of the highest integrity. Not too long ago they had a major set back and it cost the company a great deal of money. The company had many options available to them to deal with a huge financial hit. But the company knew, based on their values and history, that they had only one real option. That option was to pull themselves up by their own bootstraps and get back to work. They evaluated their procedures that lead to their failure and made the necessary changes. The next year started off slow but as people began to see how the company was taking steps to improve without needlessly blaming others and doing everything on the up and up, clients, for the most part, said now that’s a company I want to do business with. I’ve been told that 2019 is shaping up to be a record year. Once again, can we prove that their integrity led to their recovery and record profitability? No, we can’t but we’re pretty sure if they had gone against their values and principles during this recovery year, many clients would have looked elsewhere for a contractor to meet their needs.

The last company I want to mention is a broker. They connect manufacturers with retailers so that the manufacturers don’t have to have a sales team and retailers don’t have to have buyers. They’ve been in business for over 30 years and last year they lost a big chunk of business as a manufacturer they had represented for many years decided to go with a different broker. It was one of those changes that they could see coming but couldn’t stop without violating their values and principles. They took a huge hit and everyone, from the CEO to the office staff took a pay cut. But that CEO told the entire team that everyone would keep their job and the only way anyone would be let go would be if they violated the company’s values and principles. He went on to tell them that he would work tirelessly to find manufacturers to represent that could replace the lost revenue and that he would do it this year. He didn’t have to do it alone. The response he got from everyone was an overwhelming, let’s get to work. Now, nearly a year after disaster struck, the company will not only replace their lost revenue but they will exceed that amount resulting in a net increase in revenues.

Why has this happened? Why did the first company grow so much and these other two companies recover so quickly? Well, it probably won’t happen for every company that is faced with these challenges but companies with the highest levels of integrity have a unique advantage over companies that lack that integrity. That advantage is the trust that employees and customers have. They all enter into the relationship with those companies believing they will get a fair shake. When you really believe in someone you are far more willing to give them a shot. That’s why I think these companies have accomplished what they have. People believe in them.