Accountability: Integral to Integrity
Architects of Accountable Organizations find that a crucial part of their job is training people to be stakeholders: educating them to embrace ownership on both an individual level and an organizational level. For true stakeholders understand how their choices impact not only themselves, but also the wider organization. They understand and embrace their role in upholding the true bedrock of Accountable Organizations: integrity.
BUILDING THE ACCOUNTABLE ORGANIZATION
Chapter Three: Integrity—Doing the Right Thing
A magazine ad for Charles Schwab features a middle-aged man named John—an individual investor, a regular guy. According to John, he moved his money to the discount brokerage because "before, I very rarely heard a sell recommendation. I feel that Schwab has my interests at heart."
"Let's Put Some Lipstick on This Pig"
In summer 2002, Schwab rolled out a television commercial that took dead aim at its full-service rivals. The ad portrayed a smarmy Wall Street sales manager urging his brokers to push a junk stock to clients.
Sales manager: Tell your customers it's red hot. This one is en fuego. Just don't mention the fundamentals; they stink. Let's put some lipstick on this pig. Get to work, people.
Voiceover: There's never been a better time for Charles Schwab.
The commercial aired just weeks after Merrill Lynch agreed to pay $100 million to settle allegations that the company's investment advice was tainted by conflicts of interest. The investigation, led by New York State Attorney General Eliot Spitzer, brought to light e-mails in which Merrill analysts ridiculed Internet companies they were publicly recommending—companies that were important to Merrill's banking business. Thus, the timing of Schwab's commercial was particularly sharp (too sharp for CBS, which declined to air it). Indeed, Schwab seemed to capitalize on people's disgust with the coziness between analysts and investment bankers on Wall Street: according to the firm, individual investors shifted $30 billion into accounts there in 2002.
Then, the end of the year brought news of a global settlement with the securities industry that dwarfed the earlier Merrill Lynch agreement. Spitzer, the SEC, the NYSE, and other regulators announced in late December that ten of the nation's top investment firms had agreed to pay $1.4 billion to make amends for conflicts of interest regarding stock research. Among other terms, the firms also agreed to sever the links between research and investment banking, including analysts' pay.
Predictably, the announcement was applauded by some and scoffed at by others. However, no matter the ultimate verdict on the effectiveness of the settlement or even its righteousness, the line at the time was that something had to be done, finally, in the name of one thing: integrity. "This agreement will permanently change the way Wall Street operates," declared Spitzer in a press release. "Our objective throughout the investigation and negotiations has been to protect the small investor and restore integrity to the marketplace." Robert Glauber, chairman and CEO of the National Association of Securities Dealers, was quoted as saying the settlement "demonstrates NASD's determination to investigate and sanction practices that harm investors and the integrity of the markets." And Dick Grasso, then NYSE chairman and CEO, added, "Investors need to know that the firms they do business with act only with the highest standards of honesty and integrity, putting investors' interests ahead of all others."
Integrity. It's something to protect, something to fight for. And as the floodwaters of scandal kept rising, the word itself became a lifeline for politicians and business leaders scrambling to reach higher ground. There's a certain magic about it, as Yale law professor Stephen L. Carter relates in his 1996 book, Integrity:
A couple of years ago I began a university commencement address by telling the audience that I was going to talk about integrity. The crowd broke into applause. Applause! Just because they had heard the word integrity—that's how starved for it they were. They had no idea how I was using the word, or what I was going to say about it, or, indeed, whether I was for it or against it. But they knew they liked the idea of simply talking about it. This celebration of integrity is intriguing: we seem to carry on a passionate love affair with a word that we scarcely pause to define.
The word integrity just sounds good. It's one of those words that inspire general impressions of virtue and substance. As Carter says, "Integrity is that stuff we always say we want more of." But how can we truly understand integrity at eye level, as an actionable concept? One person I spoke to said integrity means "what I show and what I feel are congruent." Another described it as "being honest with yourself and others." Magill's Ethics defines integrity as "consistent adherence to moral, intellectual, professional, or artistic principles despite temptation to abandon them." For me, integrity begins with the alignment of beliefs and actions, the correspondence of values and volition. It implies completeness and solidity—for example, we often use the word to refer to the physical soundness of a structure. When people have integrity, who they are and what they do are not divided. They are whole.
I'm sure you know people with integrity. It's likely you admire or respect them, and it's not hard to see why: these people stick to their convictions, even if it costs them personally. But there's more to it, for integrity can't exist in a moral vacuum. If integrity simply meant sticking to one's convictions, one could claim, for example, that bigoted people who commit hate crimes have integrity. No, to have integrity, one's actions must express values that are founded on the Golden Rule—the bedrock morality of "doing unto others"—from which we get the compassion and intuitive sense of justice that define us as decent human beings. People who truly have integrity not only stick to their convictions, they do what's right.
Charles Schwab advertisement, printed in Newsweek, December 29, 2002.
Charles Schwab commercial, rebroadcast as part of a report on National Public Radio's "Morning Edition," June 11, 2002.
The Merrill settlement was included in this total.
"SEC, NY Attorney General, NASD, NASAA, NYSE and State Regulators Announce Historic Agreement to Reform Investment Practices," press release, Office of New York State Attorney General Eliot Spitzer, December 20, 2002. Less than a year later, Grasso would resign amid controversy surrounding his $140 million-plus pay package.
Stephen L. Carter, Integrity (New York: Basic Books, 1996), 5–6.
Ethics (A Magill Ready Reference Book), consulting ed. John K Roth (Pasadena, CA: Salem Press, 1994), 441.